Today, the New America Foundation and the Center for Social Development at Washington University in St. Louis (CSD) released the first of a four-part series of reports "Creating a Financial Stake in College" that outline the vital role that children's savings play in achieving college success. This series builds on CSD research led by Professor William Elliott III that shows children who expect to graduate from a four-year college and have a savings account in their name are about six times more likely to attend college than similar children without an account, controlling for many other factors.
"We should recognize the power of savings to influence college attendance, and work to create opportunities for more children to succeed in college," said Elliott, Assistant Professor in the School of Social Welfare at the University of Kansas, Faculty Associate at CSD, and a Senior Research Fellow in the Asset Building Program at the New America Foundation. "Elliott's research is very important," said Michael Sherraden, Director of the Center for SocialDevelopment. "It documents that having a savings account is associated with college success."
Reid Cramer, Director of the Asset Building Program at the New America Foundation, said "Creating access to children's savings accounts can help students build up resources and create a financial stake in college. Instead of going into debt, young people should be encouraged to save money in advance."
In "Creating a Financial Stake in College" Dr. Elliott argues:
- Savings during childhood has been associated with positive college outcomes in research studies. For example, even when controlling for race, family income, parents' education, and academic achievement, students ages 17-23 who had savings growing up are more likely to be "on course" (enrolled in or graduated from college) than peers who did not have savings.
- Not all children have equal access to savings opportunities. Creating greater access to children's savings for college could reduce reliance on student loan debt and be a more cost-effective way of getting more students to college. According to the College Board, over $65 billion was spent on student loan debt in 2009, up over ten percent from the prior two years.
- Leveling the playing field will require the development of universal savings opportunities, such as Children's Savings Accounts. Creating a universal system of Children's Savings Accounts would create a self-reinforcing cycle: children's savings lead to more positive expectations, and more positive expectations lead to having savings and increased college attendance.
Reports in the "Creating a Financial Stake in College" series will be introduced over the coming weeks. The series includes: Report I: Why Policymakers Should Care about Children's Savings; Report II: Does Structural Inequality Begin with a Bank Account?; Report III: We Save, We Go to College; Report IV: Ideas for Refining Children's Savings Accounts Proposals.