Skip to: Content
Skip to: Site Navigation
Skip to: Search


Congress: Don't squander America's big investment opportunity

Earning a college education benefits families and the economy for generations. Unfortunately, students from low-income homes are earning degrees at the lowest rate in three decades. Washington needs to cash in their economic potential by helping them save for college.

By Rachel Black / October 20, 2011


Two years into economic recovery from the Great Recession, over 46 million Americans live in poverty, including 16 million children, according to the latest data released by the US Census Bureau. But beyond these staggering numbers, the report also clearly identifies a key investment opportunity that could produce higher incomes, lower rates of poverty, a more resilient labor force, and even higher tax revenue.

Skip to next paragraph

To cash in on the investment, America needs to help poor children and their families save for college. A growing body of evidence demonstrates strong links between savings and educational outcomes, such as increased academic performance, college attendance, and degree completion, even after controlling for factors like income. Helping more poor students go to college generates benefits that compound throughout their lives, their children’s lives, the economy, and throughout local, state, and federal budgets.

It has long been true that a college education increases job security, earnings, and economic mobility. And this latest Census data shows that workers with more education have been better able to weather the recession’s storm. The unemployment rate, for example, for college graduates is half of that of high school graduates, and their poverty rate is less than a third of the national average.

The problem now is that students from low-income homes are earning college degrees at the lowest rate in three decades. The US Department of Education finds that even low-income students with demonstrated academic success attend college at rates considerably lower than their high-income counterparts (77 percent versus 97 percent, respectively).

One impediment these students encounter is rising tuition costs and the growing gap between a family’s ability to pay and access to traditional forms of financial aid. While higher-income families are better able to absorb these costs, they can be prohibitive for lower-income students or result in financially debilitating student-loan debt.

Expanding existing financial aid for low-income families would help offset costs for students already on a college bound path but the problem is that many low-income students dismiss the possibility of college long before the first payment is made.

The belief that college is financially out of reach can be the greatest impediment to getting more poor youth on a college track. This perception can form as soon as the fifth grade, and students can reduce academic effort and engagement in other preparatory activities in response. One promising way to overcome this expectations barrier is to get children to begin saving for their educational futures as early as possible. Research shows that saving for college is uniquely able to boost both the expectations and resources to expand college access to low-income students.

Unfortunately, these families also face considerable barriers when trying to save, including from complicated and restrictive rules in the public assistance programs designed to increase their financial stability.


Read Comments

View reader comments | Comment on this story