WASHINGTON, D.C. – College savings accounts like the ones the Obama administration proposed Thursday represent a “new formula for reaching the American dream,” a leading scholar in the field of children’s savings and college success said.
“The savings accounts “do not teach children to sit at home as some might want to suggest,” said Dr. William Elliott III, assistant professor at the University of Kansas School of Social Welfare. “They teach children that effort mixed with societal resources is the new formula for reaching the American dream.”
Through the savings accounts proposed by the Obama administration, 10,000 high school freshmen participating in GEAR UP -– a federal program that helps low-income students prepare for college — will be given $200 in seed money to start the account, which will be opened by their respective states. The federal government will then match up to $10 per month for four years, enabling the accounts to total $1,160 by the time the students graduate from high school.
Elliott said it’s not the amount of money in the accounts that matters, but rather how the act of saving money for college creates a certain college-going mindset.
“There does seem to be an effect from just owning an account and what people think that will do for them in the future,” Elliott said in response to an observer who noted that $1,100 could hardly purchase a few credit hours in today’s higher education environment.
Elliott said the bigger idea is to get students to invest in their future by showing them that society is willing to invest in them.
“The meta-message is: you pay your share, we will pay our share,” Elliott said. “It is the recognition by the individuals and society that each must invest if either is to be successful.”
Elliott made his remarks Thursday at the New America Foundation during a panel discussion titled “Financing College Success: Innovations to Promote Readiness, Access, and Completion.”
The event –- which featured and was attended by several Obama administration officials from the U.S. Department of Education -– came on the same day that the administration proposed a “demonstration project” to set up college savings accounts for 10,000 high school freshmen involved in GEAR-UP.
The proposed $8.7 million project — officially known as the “College Savings Account Research Demonstration Project” –- would add to what the U.S. Department of Education says are underutilized programs run for low- and moderate-income levels at the state level throughout the nation.
Debra Saunders-White, Deputy Assistant Secretary for Higher Education Programs within the U.S. Department of Education, said the proposed demonstration project is meant to build upon the emergent body of research about the benefits of college savings accounts for children from families of lesser economic means.
It will do so by researching the impact that college savings accounts have on college access and success by comparing the outcomes of students who get the accounts with the outcomes of a control group comprised of GEAR UP students who aren’t given the savings accounts.
GEAR UP currently serves 700,000 students nationwide.
Students in both the treatment and control groups will be told what group they are in, Saunders-White said.
“This is eyes wide open,” Saunders-White said in response to a question about the ethics of having a control group.
Grant applications are expected to be posted in August with awards being made by September and the first savings account being set up in the 2013-2014 school year.
Part of the goal of the project is to inform policymakers of what investments help boost college degree attainment, in line with the Obama administration’s goal to have the United States reclaim its former status as the most-college educated country in the world by the year 2020. Ironically, Saunders-White noted, research on the effects of the project are not expected until 2020.
The mechanics of the program are still malleable; Saunders-White noted that the public is invited to submit comments about the program for 30 days once it is announced in the Federal Register today.
Congressman Chaka Fattah, D-Penn., who is revered as the “father of GEAR UP,” said his hope is that the demonstration project will “create a model that we can draw real evidence from.”
“As we look to increase the rates of young people going to college, we have a lot of work to do and there’s no possibility of reaching that goal without reaching the population served by GEAR UP,” Fattah said.
Fattah also shared that he is sponsor of a bill known as the American Dream Accounts Act of 2012. The proposed legislation would enable competitive grants to be awarded to eligible entities to establish and administer the accounts for a group of at least 30 low-income public school students who are high school freshmen or younger.
Fattah said his legislation was “based in large part” on Elliott’s research and the work that the New America Foundation has been promoting through its Asset Building Program, for which Dr. Elliott serves as senior research fellow. A recent series of papers that Dr. Elliott did for the New America Foundation can be found here.
“What we want to do and what GEAR UP is about is taking what works to scale,” Fattah said. He said a primary objective is to broaden empirical evidence so policymakers can see “directly what we know to be true.”
“But we need to see it play out in a variety of circumstances throughout the country,” Fattah said. “Then we can look to further integrate this into GEAR UP and other programs that have similar aims and goals.”