Predicting the Impact of Savings On Educational Outcomes
Methods: This study used data from the National Longitudinal Survey of Youth 1997. The 3,109 samples were derived from two Rounds of surveys in 1997 and 2007. Propensity score matching (PSM) was used to create treatment and control groups that are statistically similar at baseline. Four different types of PSM method were run to evaluate the savings’ impact as treatment. Generalized logistic regression and ordinary least square (OLS) regressions were run to predict the main factors for educational outcomes and examine the mediating effects according to Baron and Kenny’s approach, respectively.
Results: Results from Radius, Kernel, and Stratification matching indicated that the group holding savings for education is more likely to achieve a college degree by about 25%, 12%, and 8%, respectively, than the group without savings. Based on the results from generalized logistic regression, savings for education (OR=1.680, p<.001), young adults’ educational expectations (OR=1.023, p<.001), parents’ educational expectations (OR=1.025, p<.001), the mother’s age at birth (OR=1.048, p<.005), mother’s education level (OR=1.157, p<.001), and parents’ net worth (OR=1.386, p<.001) are statistically significant for college graduation. However, the significance of permanent household income disappeared as the main variables, such as savings and young adults’ and parents’ educational expectations, were added. Finally, results from OLS regressions indicated that the mediators were not statistically associated with savings.
Implications: This study found that savings for education are effective in encouraging young adults to achieve a college degree. In addition, young adults’ and parents’ educational expectations are strong in predicting young adults’ college graduation, even though they do not mediate the association between savings and educational outcomes. Interestingly, the parents’ net worth is important indicators influencing achievement of a college degree, whereas permanent household income is not associated with such achievement. Thus, these findings suggest that asset-based policies and programs encouraging the poor to hold savings and build assets may be a desirable policy strategy to help improve higher educational attainment of young adults from low-income households.