Asset Building Briefs & Summaries Financial Inclusion

Excluding 529 College Savings Plan Accounts From Oklahoma Public Assistance Asset Limit Tests

Income and resource eligibility guidelines vary widely by state, within states, and by program; however, federal law allows states and their public benefit program administrations some freedom in determining eligibility parameters (Rand, 2007). Low accumulation of assets in poor households is likely due in part to the use of asset tests in public assistance programs, which set low thresholds for eligibility. Individuals or households are required to “spend down” or keep their assets to a minimum in order to qualify for public assistance. This creates a disincentive for regular and tax-preferred savings, and limits the net worth of individuals and families who are eligible for public assistance (Rand, 2007).

Citation

Mason, L. R., Clancy, M., & Lo, S. (2008, May). Excluding 529 College Savings Plan accounts from Oklahoma public assistance asset limit tests (CSD Policy Brief No. 08-14). St. Louis, MO: Washington University, Center for Social Development.