This research examined what happens when kids have ownership, so they're the ones who can make deposits and withdrawals at a bank. (It's not looking at what happens when their parents open a 529 or Roth IRA for them with their education expenses in mind.) The amount in the kids' account doesn't matter. It's the fact of having it that does.
William Elliott III, Ph.D., a professor at the University of Kansas and a faculty associate with the Center for Social Development at Washington University in St. Louis, explains that the study looked at high school students who said that they expected to go to college sometime in the future. "We controlled for a number of factors, including academic achievement, family income, wealth, and the children's savings," he says. "And we found they were six times more likely to attend college shortly after graduating high school if they had a savings account at a younger age. So if they had a savings account between ages 12 and 15, it was predictive of them attending college later in life."
The balances in those accounts, Elliott says, were low -- on average, somewhere around $400. Not anywhere near enough to pay for college, or even a few textbooks.
But Elliott theorizes that ownership of an account gives youngsters a sense of control. "It's helping them to be thinking of college, to have it on their mind in a more concrete way than simply saying, 'I expect to go to college,'" he explains. "They've taken some actions, they've got a savings account, they're saving some money. Positive expectations aren't quite enough."
To me, what's encouraging about this research is that it's a relatively easy step to take with a child -- open the account in their name. And it can give all of us, not just the kiddos, a small sense of power in an uncertain world. I usually look away when I see the projections on what college will cost when my daughter and son will be ready to go. Going to the local bank? That's something I can handle. The payoff can be enormous, even if the balance isn't. Elliott agrees. "That's what makes it exciting," he says. "It's not a huge step. It's doable. It's possible."