Simplification, Assistance, and Incentives: A Randomized Experiment to Increase College Savings
Bridget Terry Long, Harvard University
Dr. Bridget Terry Long, Ph.D. is Academic Dean and the Saris Professor of Education and Economics at the Harvard Graduate School of Education. Long is an economist who specializes in the study of education, in particular the transition from high school to higher education and beyond. Her work focuses on college student access and choice and the factors that influence students’ postsecondary and labor market outcomes. Current projects examine the roles of information and assistance in promoting college savings, the completion of aid applications, and college enrollment. Other work examines the effects of financial aid programs, the impact of postsecondary remediation, and the role of instructor quality, class size, and support programs on student outcomes.
Abstract
This paper evaluates an intervention designed to help families
prepare for the expense of their children’s college educations.
Working with the Boston Public Schools, we implemented a series
of school and community workshops focused on the parents of 7th
to 10th graders that provided information about 529 college
savings plans. Using a RCT design, we offered some families
additional help by giving them a simplified way to enroll;
another group also received monetary incentives to invest in such
accounts. We analyze the effects of these different types of
supports by examining their effects on account openings and
subsequent savings behavior. Additional information was
collected on other savings behavior. The results suggest
that low awareness of savings options and the complexity of the
process to open a 529 account are major barriers to
participation. Our $50 monetary incentive had a strong,
positive effect on take-up rates, and importantly, families were
much more likely to engage in additional savings and even sign up
for automatic monthly contributions even though we provided no
additional support or information. These findings have
important implications for policy as well as the way schools and
non-profits could work with families.