Individual Development Accounts and Post-Secondary Education: Evidence From a Randomized Experiment

This paper presents evidence from a randomized field experiment testing the impact of a 3-year matched savings program on educational outcomes 10 years later. We examine the effect of an Individual Development Account (IDA) program on educational enrollment, degree completion, and increased education level. The IDA program, which ran from 1998 to 2003 in Tulsa, Oklahoma, provided low-income households with financial education and matching funds for qualified savings withdrawals, including a 1:1 match for educational uses. We find a significant impact on education enrollment and positive, but non-significant impacts on degree completion and increase in level of education. We also examine the interaction between gender and treatment assignment and find that the IDA had a strong positive effect on increased educational attainment for males, but not for females.

This paper was presented during the Assets and Education Symposium, a March 2012 conference cosponsored by the University of Kansas School of Social Welfare and CSD. The symposium was convened to explore the role of savings and asset holding in post-secondary educational achievement. Many of the original conference papers are accessible in the center’s online collection and were subsequently developed for publication in Assets and Educational Attainment: Theory and Evidence, a special issue of Economics of Education Review.

Subsequent publication: Grinstein-Weiss, M., Sherraden, M., Gale, W. G., Rohe, W. M., Schreiner, M., & Key, C. C. (2013). Long-term effects of Individual Development Accounts on postsecondary education: Follow-up evidence from a randomized experiment. Economics of Education Review, 33, 58–68. doi:10.1016/j.econedurev.2012.12.007

Project: American Dream Policy Demonstration (ADD)