Abstract
Research indicates that welfare receipt is an important predictor of household savings towards offspring’s postsecondary education. Meanwhile, a growing body of literature suggests that Children’s Savings Accounts (CSAs) are effective in promoting the saving rate of American households. In this study, we first examine whether there is a negative association between welfare receipt and saving for college and then test if participation in the Harold Alfond College Challenge (HACC) mitigates the negative association. As hypothesized, the predicted conditional probability of saving for college among welfare beneficiaries is 0.02 lower than non-welfare beneficiaries, regardless of their HACC account ownership. Welfare recipients who enroll in the HACC program are about 27% more likely to save for college than those who are not enrolled in the program. Research and policy implications are discussed.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Notes
A robustness check was performed including assets (coded as a dummy variable according to the probability distribution, 0 = Less than $55,000, 1 = > = $55,000). The sample size for the robustness check was reduced to 343, compared to it was 744 for the original model. Covariates were retained to best replicate the specification of the original model except for children’s health because of the skewed probability distribution. Associations between saving for college and welfare receipt, CSA, and the interaction term was not significant. Nonetheless, the model of the robustness check was not statistically significant than a null model, which kept us from drawing much useful information from this check. Because of the decreased sample size, different specification of the model, and the insignificant overall model fit, the robustness check provides limited information, which are less likely to be reliable.
References
Advisory Committee on Student Financial Assistance. (2010). The rising price of inequality: How inadequate grant aid limits college access and persistence. Advisory Committee on Student Financial Assistance. https://files.eric.ed.gov/fulltext/ED512174.pdf
Beverly, S. G., & Clancy, M. M. (2017). Asset limits for means-tested public assistance: Considerations for child development account proponents (p. 6). https://csd.wustl.edu/Publications/Documents/PB17-24.pdf
Beverly, S. G., & Sherraden, M. (1999). Institutional determinants of saving: Implications for low-income households and public policy. The Journal of Socio-Economics, 28(4), 457–473. https://doi.org/10.1016/S1053-5357(99)00046-3
Beverly, S. G., Sherraden, M., Zhan, M., Williams Shanks, T. R., Nam, Y., & Cramer, R. (2008). Determinants of asset building (p. 105). Washington University in St. Louis, Center for Social Development. https://openscholarship.wustl.edu/cgi/viewcontent.cgi?article=1164&context=csd_research
Clancy, M., & Beverly, S. (2017). Statewide child development account policies: Key design elements (CSD Policy Report 17–30). Washington University, Center for Social Development. https://openscholarship.wustl.edu/cgi/viewcontent.cgi?article=1042&context=csd_research
Clancy, M. M., Beverly, S. G., Sherraden, M., & Huang, J. (2016). Testing universal child development accounts: Financial effects in a large social experiment. Social Service Review, 90(4), 683–708. https://doi.org/10.1086/689756
Clancy, M., & Sherraden, M. (2014). Automatic deposits for all at birth: Maine’s Harold Alfond College Challenge (CSD Policy Report 14-05; p. 11). Washington University, Center for Social Development. https://openscholarship.wustl.edu/cgi/viewcontent.cgi?article=1125&context=csd_research
Cramer, R., Black, R., & King, J. (2014). Children’s Savings Accounts: Research, practice, and implications for policy design (p. 14). New America Foundation.
Curley, J., Ssewamala, F., & Sherraden, M. (2005). Institutions and savings in low-income households (No. 05-13; p. 36). Center for Social Development Washington University in St. Louis. https://openscholarship.wustl.edu/cgi/viewcontent.cgi?article=1266&context=csd_research
Edmit. (2021). The Edmit guide to financial aid. https://www.edmit.me/resources/guide-to-financial-aid
Elliott, W., Lewis, M., O’Brien, M., LiCalsi, C., Brown, L., Tucker, N., & Sorensen, N. (2017). Contribution activity and asset accumulation in a Universal Children’s Savings Account Program. University of Michigan, Center on Assets, Education, and Inclusion. https://aedi.ssw.umich.edu/sites/default/files/publications/Contribution-Activity-and-Asset-Accumulation.pdf
Fisher, I. (1930). The theory of interest: As determined by impatience to spend income and opportunity to invest it. Augustusm Kelly Publishers.
Friedline, T., Johnson, P., & Hughes, R. (2014). Toward healthy balance sheets: Are savings accounts a gateway to young adults’ asset diversification and accumulation? Federal Reserve Bank of St. Louis Review.
Gehr, J. (2018). Eliminating asset limits: Creating savings for families and state governments. Center for Law and Social Policy (CLASP).
Gutter, M., Hayhoe, C. R., & DeVaney, S. (2008). Economic and psychological determinants of savings behavior: A conceptual model. 2.
Hamilton, L. (2018). Stricter welfare rules are not the solution to poverty. Environment and Social Psychology. https://doi.org/10.18063/esp.v3.i1.687
Hosmer Jr, D. W., Lemeshow, S., & Sturdivant, R. X. (2013). Applied logistic regression (Vol. 398). Wiley
Houle, J. N., & Warner, C. (2017). Into the red and back to the nest? Student debt, college completion, and returning to the parental home among young adults. Sociology of Education, 90(1), 89–108. https://doi.org/10.1177/0038040716685873
Huang, J., Beverly, S., Clancy, M., Lassar, T., & Sherraden, M. (2013). Early program enrollment in a statewide child development account program. Journal of Policy Practice, 12(1), 62–81. https://doi.org/10.1080/15588742.2012.739124
Huang, J., Beverly, S. G., Kim, Y., Clancy, M. M., & Sherraden, M. (2019a). Exploring a model for integrating child development accounts with social services for vulnerable families. Journal of Consumer Affairs, 53(3), 770–795. https://doi.org/10.1111/joca.12239
Huang, J., Beverly, S. G., Kim, Y., Clancy, M. M., & Sherraden, M. (2019b). Financially vulnerable families reap multiple benefits from child development accounts (No. 19–40; p. 2). https://openscholarship.wustl.edu/cgi/viewcontent.cgi?article=1896&context=csd_research
Huang, J., Sherraden, M., Kim, Y., & Clancy, M. (2014a). Effects of child development accounts on early social-emotional development: An experimental test. JAMA Pediatrics, 168(3), 265. https://doi.org/10.1001/jamapediatrics.2013.4643
Huang, J., Sherraden, M., & Purnell, J. Q. (2014b). Impacts of child development accounts on maternal depressive symptoms: Evidence from a randomized statewide policy experiment. Social Science & Medicine, 112, 30–38. https://doi.org/10.1016/j.socscimed.2014.04.023
Kim, Y., Huang, J., Sherraden, M., & Clancy, M. (2017). Child development accounts, parental savings, and parental educational expectations: A path model. Children and Youth Services Review, 79, 20–28. https://doi.org/10.1016/j.childyouth.2017.05.021
Kim, Y., Sherraden, M., Huang, J., & Clancy, M. (2015). Child development accounts and parental educational expectations for young children: Early evidence from a statewide social experiment. Social Service Review, 89(1), 99–137. https://doi.org/10.1086/680014
Leonard, T., & Di, W. (2014). Is household wealth sustainable? An examination of asset poverty reentry after an exit. Journal of Family and Economic Issues, 35(2), 131–144. https://doi.org/10.1007/s10834-013-9357-0
Lewis, M., & Elliott, W. (2015). A regional approach to children’s savings account development: The case of New England (Report 04-2015). Center on Assets, Education, and Inclusion. https://aedi.ssw.umich.edu/sites/default/files/publications/publication-csa-reports-new-england.pdf
Lewis, M., O’Brien, M., Jones-Layman, A., O’Neill, E. A., & Elliott, W. (2017). Saving and educational asset building within a community-driven CSA Program: The case of promise Indiana. Poverty & Public Policy, 9(2), 188–208. https://doi.org/10.1002/pop4.176
Little, R. J. A. (1988). A test of missing completely at random for multivariate data with missing values. Journal of the American Statistical Association, 83(404), 1198–1202. https://doi.org/10.1080/01621459.1988.10478722
Lusardi, A. (2008). Household saving behavior: The role of financial literacy, information, and financial education programs (No. w13824). National Bureau of Economic Research. https://doi.org/10.3386/w13824
Ma, J., Baum, S., Pender, M., & Libassi, C. (2019). Trends in college pricing 2019 (No. 01469–962; p. 36). College Board. https://research.collegeboard.org/pdf/trends-college-pricing-2019-full-report.pdf
Ma, J., Pender, M., & Libassi, C. (2020). Trends in college pricing and student aid 2020 (No. 01706–061; p. 51). College Board. https://research.collegeboard.org/pdf/trends-college-pricing-student-aid-2020.pdf
MacKinnon, D. P. (2011). Integrating mediators and moderators in research design. Research on Social Work Practice, 21(6), 675–681. https://doi.org/10.1177/1049731511414148
Maital, S., & Maital, S. L. (1994). Is the future what it used to be? A behavioral theory of the decline of saving in the West. The Journal of Socio-Economics, 23(1–2), 1–32. https://doi.org/10.1016/1053-5357(94)90018-3
McKernan, S.-M., Ratcliffe, C., & Nam, Y. (2010). The effects of welfare and Individual Development Account (IDA) program rules on asset holdings. Social Science Research, 39(1), 92–110. https://doi.org/10.1016/j.ssresearch.2009.07.008
Nam, Y. (2008). Welfare reform and asset accumulation: Asset limit changes, financial assets, and vehicle ownership*. Social Science Quarterly, 89(1), 133–154. https://doi.org/10.1111/j.1540-6237.2008.00525.x
Nam, Y., Kim, Y., Clancy, M., Zager, R., & Sherraden, M. (2013). Do child development accounts promote account holding, saving, and asset accumulation for children’s future? Evidence from a Statewide randomized experiment. Journal of Policy Analysis and Management, 32(1), 6–33. https://doi.org/10.1002/pam.21652
Nam, Y., Link to external site, this link will open in a new window, Hole, E., Sherraden, M., & Clancy, M. M. (2018). Program knowledge and racial disparities in savings outcomes in a child development account experiment. Journal of Family and Economic Issues, 39(1), 145–162. https://doi.org/10.1007/s10834-017-9544-5
National Center for Education Statistics. (2018). Fast facts: Income of young adults. Fast facts: Income of young adults; National Center for Education Statistics. https://nces.ed.gov/fastfacts/display.asp?id=77
O’Brien, R. (2008). Ineligible to save? Asset limits and the saving behavior of welfare recipients. Journal of Community Practice, 16(2), 183–199. https://doi.org/10.1080/10705420801998003
O’Brien, M., Lewis, M., Jung, E. J., & Elliott, W. (2017). Harold Alfond College Challenge (HACC) 2017 Savings report for households who opted-in to the program from 2008 to 2013. University of Michigan. https://aedi.ssw.umich.edu/sites/default/files/publications/Harold-alfond-college-challenge-2017-savings-report.pdf
Quezada, D., Markoff, S., & Copeland, M. (2019). The movement soars ahead: The state of the children’s savings field 2018. Prosperity Now. https://prosperitynow.org/sites/default/files/resources/CSA_State_of_Field_2018.pdf
Ratcliffe, C., McKernan, S.-M., Wheaton, L., & Kalish, E. (2016). The unintended consequences of SNAP asset limits (p. 8). Urban Institute. https://www.urban.org/sites/default/files/publication/82886/2000872-The-Unintended-Consequences-of-SNAP-Asset-Limits.pdf
Sallie Mae. (2018). How America saves for college (p. 88). Sallie Mae. https://www.salliemae.com/about/leading-research/how-america-saves-for-college/
Schreiner, M., & Sherraden, M. (2007). Can the poor save. Saving and Asset Building in Individual Development Accounts. Transaction.
Sherraden, M. W. (1991). Assets and the poor. ME Sharpe.
Sherraden, M., Birkenmaier, J., & Collins, J. M. (2018). Financial capability and asset building in vulnerable households: Theory and practice. Oxford University Press.
Sherraden, M. S., Huang, J., Frey, J. J., Birkenmaier, J., Callahan, C., Clancy, M. M., & Sherraden, M. (2015). Financial Capability and Asset Building for All. 31.
Sprague, A., & Black, R. (2012). State asset limit reforms and implications for federal policy. New America Foundation. https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.392.9296&rep=rep1&type=pdf
StataCorp. (2017). Stata Statistical Software (15.1) [Computer software]. StataCorp LLC.
Thaler, R. (1985). Mental accounting and consumer choice. Marketing Science, 4(3), 199–214.
Tversky, A., & Kahneman, D. (1986). The framing of decisions and the evaluation of prospects. In Studies in logic and the foundations of mathematics (Vol. 114, pp. 503–520). Elsevier
U.S. Census Bureau. (2018). QuickFacts: Maine. https://www.census.gov/quickfacts/ME
Webber, D. (2018). Higher Ed, lower spending. Education Next. http://search.proquest.com/docview/2123680476/abstract/9D9BEF8DD51A42C4PQ/2
Zhan, M., Sherraden, M., & Schreiner, M. (2004). Welfare recipiency and savings outcomes in individual development accounts. Social Work Research, 28(3), 165–181. https://doi.org/10.1093/swr/28.3.165
Zheng, H., Elliott, W., & O’Brien, M. (2021). Using children’s savings accounts and early awards to build college savings among welfare recipients: The case of promise scholars. Journal of Poverty. https://doi.org/10.1080/10875549.2021.1910105
Ziliak, J. P. (2003). Income transfers and assets of the poor. The Review of Economics and Statistics, 85(1), 63–76. https://doi.org/10.1162/003465303762687712
Funding
This study was funded by the Charles Stewart Mott Foundation (N027461) and Poverty Solutions (U060367).
Author information
Authors and Affiliations
Corresponding author
Ethics declarations
Conflict of interest
The authors declare that they have no conflict of interest.
Ethical Approval
All procedures performed in studies involving human participants were in accordance with the ethical standards of the University of Michigan Institutional Review Boards and/or national research committee and with the 1964 Helsinki declaration and its later amendments or comparable ethical standards.
Informed Consent
Informed consent was obtained from all individual participants included in the study.
Additional information
Publisher's Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Rights and permissions
About this article
Cite this article
Zheng, H., Harris, E., Elliott, W. et al. The Role of Children’s Savings Accounts in Promoting Savings for College Among Welfare Recipients: The Case of Harold Alfond College Challenge (HACC). J Fam Econ Iss 44, 285–296 (2023). https://doi.org/10.1007/s10834-022-09837-0
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10834-022-09837-0