An Assets Perspective to the War on Poverty: Access to Higher Education

Over the past week, we’ve been taking a look at what we’ve learned since the War on Poverty began about why assets matter – and why they should be a key piece of our anti-poverty approach going forward. On Monday, Hannah Emple examined the relationship between assets and health, and on Tuesday, Elliot Schreur discussed how assets are essential to economic mobility. Today, in the final installment of our series, I’ll explore why assets matter for education – and how we can do better.

As we’ve noted in our other posts, the world has changed drastically since President Johnson’s presidency – and higher education is no exception.  A far greater proportion of Americans are attaining college degrees today than they were fifty years ago, but at a drastically higher price. Tuition and fees for higher education have skyrocketed, at private and public institutions alike, leaving the average graduate with over $35,000 in debt. A 1964 graduate of the University of Minnesota, for example, would have paid about $6732 in today’s dollars for tuition and fees – compared to $51,144 for the class of 2017. Financial aid is increasingly distributed based on “merit,” rather than need, creating yet another barrier for low-income students. Meanwhile, a college education has never been more important for finding work.

The result? Rather than being the “great equalizer,” higher education is in fact perpetuating inequality and exacerbating racial wealth disparities.

Systemic reforms that make higher education more affordable will be essential to reversing this trend. But asset building interventions also have a role to play, particularly given mounting evidence that having a savings account set aside for college, in the student’s name, dramatically increases the odds of college attendance and completion. It turns out it’s not just actual affordability, but perceptions of affordability that matter, and savings can instill a “college-bound identity” among students who might otherwise see college as out of reach.

So how can policymakers put this research into practice? First, by establishing automatic, universal children’s savings accounts. This idea has long been a priority of the Asset Building Program, and recent state initiatives show that it works. In San Francisco, more than 13,000 students have opened savings accounts since 2010 through the Kindergarten to College program. More recently, Cuyahoga County established savings accounts seeded with $100 for all 15,000 of the county’s kindergarteners. By starting the savings process early, and embedding these accounts within the school setting, programs like these are hoping to increase the odds of college attendance for all students.

Second, states can bolster their existing college savings vehicles, 529 accounts, by making them work better for lower-income families. As my colleague Rachel Black outlined earlier this week, 529s as currently designed generally benefit only wealthy households. To make these accounts more effective and inclusive, she explains, they should be universal, automatic and progressive.

Higher education remains a gateway to opportunity and upward mobility. But over the past fifty years, just getting in the door has carried a tremendous and ever rising price tag. To keep a degree within reach for all students, the next generation of anti-poverty policy needs to provide structures, incentives and opportunities to develop savings for higher education.