A new report suggests that children’s savings accounts are correlated with enrolling in and graduating from college. The researchers found the association even when holding factors such as parents’ expectations and school involvement, family income, and children’s academic achievement were controlled for. It was true for low- to moderate-income children as well as children of racial minorities. What does this mean?
The authors suggest a few things. First, children who have savings accounts have fewer doubts about whether their families will be able to afford college and may experience higher expectations for college-going. That just gets students into college, but how do they stay enrolled and graduate? The authors also found that children with savings accounts had significantly higher math scores than their peers, but acknowledge that much of the difference may be accounted for by family net worth because children in higher-income families experienced greater math gains. Interestingly, savings accounts were more significantly related with higher math scores for white children and higher reading scores for black children.
So what do we do with this information? Should the government step in and create a savings account for all children as proposed in the ASPIRE Act? I think they present a good argument that savings accounts for children that are designated for educational purposes will have a great impact on reducing government financial aid later, but I fear the bureaucracy this plan would bring. I think saving for college should be the responsibility of the family.
My impression after reading this report was that there must be some quality that sets certain families apart that, regardless of family income and academic achievement, encourages savings and college-going. What comes to mind is delayed gratification. Parents who create savings accounts for their children are thinking about the future and setting expectations that the child will be able to use that money for their education someday. That means these parents are not using this money now. Children see their parents modeling this delayed gratification and will hopefully internalize it themselves. Not only is there a greater sense of expectation on the child to attend college, which may encourage the child to do better in school, but the child may be more likely to put off playing video games and study. If the child is learning about delayed gratification when it comes to money, he might put the dollar in his piggy bank rather than spend it on candy or stickers. As the child grows up, she might be better able to delay gratification when it comes to her social life and academics, spending more time studying than “hanging out” with friends because she knows the reward is greater in the end. She might delay gratification and put off sex or practice safer sex, which means she won’t get pregnant, have a baby, and potentially drop out of school, hindering her college success.
Can the government teach delayed gratification or intrinsic motivation? I see these programs that pay students to do well on tests or reward students for simply showing up to school and think the government is failing these students in the long run with extrinsic motivation and instant rewards.