Summary of Research on CSAs

  1.     College Savings Accounts (CSAs) help foster a college-bound identity in children: One of the driving forces behind interest in CSAs is the potential they have shown for changing the way people think about their futures. The concept of a ‘college-saver identity’ may explain the effects of small-dollar CSAs on children’s educational outcomes. CSAs can (1) make college seem near, not far away, (2) equip a child with a strategy for overcoming inevitable obstacles in his/her path to college, and (3) frame college as consistent with what ‘people like me’ do (Elliott, 2013).


  1.     CSAs help foster a college-bound identity in parents: Research has linked parents’ educational expectations with children’s academic achievement and later college enrollment (Davis-Kean, 2005). Zhan and Sherraden (2011) found that financial assets are positively related to parents’ and children’s educational expectations (i.e., financial assets are associated with college expectations).


  1.     Having a CSA helps raise educational expectations: CSAs can raise both children’s and their parents’ expectations for their postsecondary academic achievement, which can eventually lead to increased college enrollment. Findings from the SEED for Oklahoma Kids research experiment, in which children were randomly selected from a state population and randomly assigned to receive $1,000 in a CSA at birth, indicate that having a CSA improves parents’ college expectations for their children (Kim, Sherraden, Huang, and Clancy, 2015). Parents in the treatment group had higher expectations for their children, and their expectations were more likely to remain constant or increase during the time period studied than parents in the control group. College expectations are important because research has demonstrated a clear link between parents’ and children’s educational expectations and children’s college enrollment, likely through multiple channels, including parental engagement in children’s schooling (Singh, et al., 1995).


  1.       Having CSA accounts helps build healthy social-emotional skills in kids, which leads to higher academic achievement: Research from SEED OK indicates that infants randomly assigned to receive CSAs demonstrated significantly higher social-emotional skills at age four than their counterparts who did not receive a CSA (Huang, Sherraden, Kim, & Clancy, 2014). Rigorous experimental studies conducted by education researchers show a causal link between social-emotional well-being and academic achievement (Durlak et al., 2011). CSA research suggests that these positive effects on children’s social and emotional well-being are realized through influences on parent/child interaction, including by reducing maternal depression (Huang, Sherraden, & Purnell, 2014) and interrupting the effects of material hardship on children’s development (Huang, Kim, & Sherraden, 2016).


  1.     Having a CSA correlates to higher academic achievement in kids: Analysis of secondary data has found that children with dedicated assets for education have higher math scores than those without such assets (Elliott, 2009; Elliott, Jung, & Friedline, 2010; 2011). Some studies specifically found that school-designated savings have greater effects than general savings, particularly for low-income students. Examination of CSAs’ effects on academic achievement provides preliminary confirmatory evidence. Elliott et al., 2016 analyzed math and reading scores in Promise Indiana. Effects were stronger for the subsample of students eligible for free/reduced lunch. For this group, having a CSA had a positive, statistically-significant relationship with both reading and math scores, accounting for nearly 29% of the variance in reading scores and 23% of the variance in math scores.


  1. CSAs increase college enrollment and completion rates: CSA seed amounts of less than $500 have been extremely successful in increasing college graduation rates for low-income students holding those accounts. Children in low- and moderate-income households with college-saver identities and school-designated savings of $500 or less are about three times more likely to graduate college than children who have a college-bound identity only (Elliott, Song, & Nam, 2013). In the only CSA program tested on babies (SEED OK), ownership of a $1000 CSA was effective in changing maternal health, parental expectation and child development outcomes. However, there was no comparison group with lower amounts of CSA funding to determine whether this could have been done at a cheaper cost. Also, an aggregation of studies done by AEDI found that low dollar accounts (<$500) increase a child’s chance of graduating college by a factor of 4.


  1.     CSAs increase a child’s financial ability to attend college: One way that children’s assets appear to increase educational attainment is by bridging the distance between high school and college for those who have the desire and ability to continue their educations but may fail to make this transition (Elliott & Beverly, 2011). This derailing of college hopes—termed ‘wilt’—is particularly common among students of color and those with low incomes (Elliott & Beverly, 2011). CSAs counter wilt through the cultivation of college-saver identities, which help students to overcome inevitable difficulties in their path (Elliott, 2013). Having a college-saver identity means that children not only expect to go to college, but also have identified saving as a strategy with which to confront the challenges associated with this goal.


  1.     CSAs help develop savings habits in children and parents: While it is clear that CSAs in general increase children’s “college bound identity” and thus the likelihood of going to college. CSA ownership also has shown positive impact on early childhood development and increased family assets. Studies have found that saving as a child or adolescent can predict saving as an adult (Ashby, Schoon, & Webley, 2011). Youth who have education savings are more likely to hold assets in other vehicles such as stocks, retirement accounts, and real estate as adults (Friedline & Elliott, 2013; Friedline, Johnson, & Hughes, 2014).


  1.     Evidence suggests having a CSA can help kids build lifelong assets: CSAs may serve as a springboard for young adults to accumulate assets after completing postsecondary education. Emerging correlational research using secondary data analysis suggests that accruing savings as a child may be associated with increased likelihood of asset accumulation as a young adult. For example, Friedline and Elliott (2013) find that children between ages 15 and 19 who have savings are more likely to have a savings account, credit card, stocks, bonds, a vehicle, and a home at age 22 to 25 than if they did not have savings of their own between ages 15 and 19. The evidence suggests that CSAs may be a gateway not only to greater educational attainment, itself a conduit of economic mobility, but also to asset accumulation through a more diversified asset portfolio.


  1.     Having a CSA can help students avoid acquiring excessive student loans: Controlling for key differences, Elliott & Rauscher (2016) found that acquiring a relatively small amount ($10,000) in student loans associated with 18% decrease in rate of achieving median net worth. Other research has found that student debt compromises net worth (Hiltonsmith, 2013), retirement savings (Elliott & Nam, 2013), and homeownership (Brown & Caldwell, 2013).

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