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One Small, Surprising
Way to Ensure Your Kid Gets to College
by Sarah Lorge Butler
Tuesday, May 17, 2011
Here’s a fascinating bit of research that caught my eye: According to a
new report by the College Savings Initiative, kids with a savings
account in their own name are six times more likely to attend college
than those without an account. Yep, you read that right: six times more
likely.
This research examined what happens when kids have ownership, so
they’re the ones who can make deposits and withdrawals at a bank. (It’s
not looking at what happens when their parents open a 529 or Roth IRA
for them with their education expenses in mind.) The amount in the
kids’ account doesn’t matter. It’s the fact of having it that does.
William Elliott III, Ph.D., a professor at the University of Kansas and
a faculty associate with the Center for Social Development at
Washington University in St. Louis, explains that the study looked at
high school students who said that they expected to go to college
sometime in the future. “We controlled for a number of factors,
including academic achievement, family income, wealth, and the
children’s savings,” he says. “And we found they were six times more
likely to attend college shortly after graduating high school if they
had a savings account at a younger age. So if they had a savings
account between ages 12 and 15, it was predictive of them attending
college later in life.”
The balances in those accounts, Elliott says, were low -- on average,
somewhere around $400. Not anywhere near enough to pay for college, or
even a few textbooks.
But Elliott theorizes that ownership of an account gives youngsters a
sense of control. “It’s helping them to be thinking of college, to have
it on their mind in a more concrete way than simply saying, ‘I expect
to go to college,’” he explains. “They’ve taken some actions, they’ve
got a savings account, they’re saving some money. Positive expectations
aren’t quite enough.”
To me, what’s encouraging about this research is that it’s a relatively
easy step to take with a child -- open the account in their name. And
it can give all of us, not just the kiddos, a small sense of power in
an uncertain world. I usually look away when I see the projections on
what college will cost when my daughter and son will be ready to go.
Going to the local bank? That’s something I can handle. The payoff can
be enormous, even if the balance isn’t. Elliott agrees. “That’s what
makes it exciting,” he says. “It’s not a huge step. It’s doable. It’s
possible.”
Read it with links at Yahoo Finance
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