Report: College Savings Policies Largely Benefit Wealthy Families
Quick Takeaways:
- White families and those with higher incomes are most likely to begin preparing to pay for college, in some cases before their child enters formal schooling.
- Black families are only less likely than whites to financially prepare for college in kindergarten, though their likelihood of actively preparing to finance college increases in secondary school.
- Current policy efforts to encourage college savings may further exacerbate the inequalities of who saves for college.
By Brittany Hackett, Communications Staff
Wealthier families are more likely to financially prepare their children for college before they enter kindergarten and current policy efforts to encourage college savings may further exacerbate the inequalities, according to a new study published in TCRecord that examines how families pay for college.
As college costs continue to increase, policymakers and financial aid administrators are encouraging families to begin saving for their children’s college expenses “long before” they enroll, the report authors -- Nicholas Hillman, Melanie J. Gast, and Casey George-Jackson -- note. However, the complexity of college savings plans and the amount of discretionary resources needed to begin saving makes it difficult for low-income families to begin the process.
For their study, the researchers reviewed current literature on parental investments in college savings, as well as the National Center for Education Statistics’ (NCES) 2009 High School Longitudinal Survey (HSLS:09). The authors of the report explored the differences in how families from different socioeconomic backgrounds and races/ethnicities plan to help their child pay for college, how they begin to financial prepare for the investment, and in what ways they set aside money via college savings accounts.
Overall, the HSLS:09 indicates that white families and those with higher incomes are most likely to begin preparing to pay for college, in some cases before their child enters formal schooling.
“In effect, parents’ educational expectations for their child (and their resulting financial planning behaviors) precede the formation of the child’s own postsecondary aspirations or other markers of their future engagement in higher education,” the researchers write. “What may seem like a natural decision on the part of parents turns out to be a mechanism for reproducing class advantage because these privileges are passed from one generation to the next, even before parents obtain information about their child’s academic potential or motivation.”
Among the families who expected their ninth grader to go to college following graduation, just over 75 percent said they expect to help their child pay for college. However, families with lower incomes were significantly less likely to help pay for their child’s college education than families with higher incomes. The odds are 0.44 times as great that parents with an income of less than $15,000 will plan to help their child pay for college as they are for a family member with an income between $55,000 and $75,000. Hispanic and Asian students are significantly less likely to have help from their family in paying for college than white students, with the odds being 0.835 and 0.536, respectively, as great as white families.
For example, families in the two wealthiest income groups – those with incomes of $75,000 to $115,000 and $115,000 and higher -- have odds of ever financially preparing for college that are 1.296 and 2.308 higher than middle-income families. Higher income families are also more likely to engage in the behavior of preparing for paying for college very early in their children's’ lives.
Low-income families are significantly less likely than middle-income families to financially prepare to send their children to college, and Hispanic and Asian families are less likely than whites to financially prepare for college prior to ninth grade. Black families are only less likely than whites to financially prepare for college in kindergarten, though their likelihood of actively preparing to finance college increases in secondary school.
Publication Date: 7/16/2015
You must be logged in to comment on this page.