ACHAB - Affording College with the Help of Asset Building
Socioeconomic disparities in higher education attainment are still prominent and pervasive across many countries. People from families with low incomes are less likely to attain postsecondary education largely due to a mix of inadequate financial resources, poor academic preparation, and low educational expectations. Although many countries offer need-based grants and loans to help families with low incomes afford college, these financial aid policies have two important limitations. First, the amount of aid is often inadequate to cover all education-related costs, and second—and perhaps even more importantly—students and their families often have to apply to college before even knowing whether they will benefit from financial support. Incentivized savings programs such as matched savings programs may represent an additional approach to encouraging the college participation of students from disadvantaged socioeconomic backgrounds.
We estimate the impact of a matched savings account program on high school students’ college enrollment and persistence through a randomized controlled trial carried out in Italy. The tested program (Percorsi, Fondazione Ufficio Pio) provided low-income high school students with a 4:1 match rate for savings dedicated to higher education expenditures and required that they attended financial education classes. ACHAB is a project funded by the DG Employment, Social Affairs and Inclusion of the European Commission through the Progress Programme – Call for proposals for social policy experimentations supporting social investments (VP/2013/012). ACHAB involves the following partners: Ufficio Scolastico Regionale del Piemonte, Ufficio Pio – Compagnia di San Paolo, ASVAPP and FBK-IRVAPP, Istituto Tecnico Industriale Pininfarina.
The program increased rates of enrollment and persistence in university by about nine percentage points. Effects were even larger for vocational school students, who have poorer social backgrounds and lower academic preparation. Incentivized savings programs have potential to reduce social disparities in higher education participation, though the lower saving capacity of poorer households can generate regressivity in program design.