Closing the College Expectations and Attendance Gap through Savings

A growing body of research suggests that parental and children’s savings can make college attendance and completion more likely among low- and middle-income families – not only by creating greater financial stability, but by creating and maintaining expectations for attending and completing college. But what about those students who already expect to attend and complete college? Do savings and wealth play a factor on their attendance as well?

A new working paper by William Elliott III and Sondra Beverly from the Center for Social Development at Washington University in St. Louis (New America’s partners on the College Savings Initiative), titled The Role of Savings and Wealth in Reducing Wilt between Expectations and College Attendance examines the factors behind “wilt” – the phenomenon in which high school graduates expect to graduate from a four-year college yet, for some reason, do not attend. The findings indicate that students from educated, wealthier backgrounds are more likely to expect to graduate from college. That said, parental wealth is not a significant predictor of college attendance among students with expectations to graduate. However, youth savings (that is, when a student has an account in his or her name) is a consistent and significant predictor of college attendance for those that expect to attend and graduate.From the study: 

  <div style="margin-left: 40px;">A remarkable 55% of youth with no account of their own experience wilt—the highest level among all groups examined. In multivariate analyses, youth who had an account are about seven times more likely to attend college than similar youth who did not have an account. Youth who had an account and had also designated a portion of the savings in that account for school are almost four times more likely to attend than those without an account. Moreover, when youth savings is included in regression models, academic achievement is no longer a significant predictor of college attendance.</div>  <div>&nbsp;</div>  <div>The goal here is fairly straightforward, then: More accounts. The authors lay out a few good policy options to get there. First, creating a universal system of accounts at birth would provide account ownership to each child in the U.S. So too could providing college savings accounts for each child in a state-run 529 plan (as Maine does).</div><div>&nbsp;</div><div>Absent that, creating incentives and opportunities for families to open accounts in a child’s name – by providing matching funds, allowing account enrollment at tax-time or in the workplace on behalf of a family member, among other things – could have an impact on both expectations <i>and </i>“wilt” in future generations.</div>