Child Development Accounts, Parental Educational Expectations, and Savings for College Education: Evidence from SEED OK Social Experiment

Youngmi Kim, Virginia Commonwealth University
Jin Huang, Saint Louis University
Michael Sherraden, Washington University in St. Louis

Child Development Accounts (CDAs) are universal and progressive savings accounts, ideally opened for every child at birth or as early as possible with financial incentives offered to low- and moderate-income families. We aim to investigate how CDAs are related with parental educational expectations and financial investment for child’s college education. We use data from the SEED for Oklahoma Kids (SEED OK) policy experiment implemented in Oklahoma for the purpose of testing the policy idea of CDA. The results from logistic regression analyses (N=2,156) show that (1) SEED OK treatment significantly increases the likelihood of mothers’ holding a 529 account and (2) those with higher expectations tend to increase 529 account holding for child’s future college education. However, evidence of mediating effect by expectations is not found. CDAs may be an effective policy intervention to improve parental investment and financial planning for college education, especially for socio-economically disadvantaged populations.