College attendance = better-paying job. It's a simple equation that many know to be true, but just how much of a difference post-secondary education has on income can be surprising. According to US Census data, Texas high school graduates earn approximately 41% more than those without a high school diploma or GED, and employees with bachelor's degrees earn an average of 84% more than high school graduates. A report last week from Georgetown University further underscored the importance of continuing education, with more and more employers requiring more than a high school degree of those they hire. Meanwhile, new research out this week from a former state demographer says improving high school graduation, reducing poverty, and increasing college-going are all essential for Texas's future success.
Although continuing education past high school is a big step toward ensuring economic stability later on in life, for many young Texans—especially the one in five who live in poverty—the road to higher education can be difficult. Texas ranks 42nd in the nation in education by income level, meaning family income plays a major role in determining whether or not a child will attend college. So how do we get more low-income youth to pursue post-secondary education, especially in a time when budget cuts and diminished endowments mean less help from grants and scholarships?
According to a study by the Center for Social Development, the answer may be unexpectedly simple. This study of 453 youth found that those who had a savings or bank account were three to seven times more likely to attend college than those with no account, even when controlling for other variables such as family income, race, and academic achievement. If the act of simply having a bank account can have this effect on college attendance, how much more powerful would it be if each child had someone to help them save for their futures?
Increasing post-secondary education is just one impact that asset building programs such as college savings plans, child savings accounts, individual development accounts, and other matched savings programs have on the financial security of Texas families, as our new paper
Preventing Poverty through Asset Building discusses. Other examples include the increased planning for the future, better financial behaviors, improved security, and higher self esteem reported by parents whose children participated in the Savings for Education, Entrepreneurship, and Downpayment (SEED) program (hyperlink). Matched savings programs help account holders reach their goals by matching their withdrawals for educational, entrepreneurial, or homeownership expenses dollar for dollar—or sometimes more. Research shows that even the lowest income earners meet their savings goals.
Given that the estimated annual cost of child poverty for Texas is a whopping $57.5 billion, any way we can effectively reduce the number of poor children will save the state money. While child poverty won't be eliminated overnight, it's helpful to remember that the children of today become the parents of tomorrow. Helping today's children envision and pursue a brighter future can increase the likelihood that they and their kids will enjoy greater economic stability.
