Building an Asset-Based Bridge to Higher Education: The American Savings for Personal Investment, Retirement, and Education Act of 2010

Abstract

Over the last two decades, social research has identified various socioeconomic and psychological effects of asset holding on educational outcomes. Based on empirical studies, a structured savings program, Child Development Accounts (CDAs), was proposed as a promising financial aid strategy. Subsequently, the American Savings for Personal Investment, Retirement, and Education (ASPIRE) Act was developed as a representative asset-building policy that proposes universal CDAs. This article presents the limitations of current financial aids and discusses how the ASPIRE Act could be a novel policy solution for raising college accessibility for low-income children.

Keywords:

• CDAs
• ASPIRE Act
• financial aid programs
• college accessibility

Notes

1. For more information, readers are encouraged to read an article by Elliott, Destin, and Friedline (2011).

2. A study reported that there will be a shortfall of 300,000 college graduates per year through 2018 (Carnevale, Smith, & Srohl, 2010).

3. The GINI index is a statistical method that can be used to measure the distribution of income. An index of zero represents a state where every family earns the same amount. Higher figures represent greater income inequality among families.

4. There are two types of 529 college plans: prepaid tuition plan and college savings plans (U.S. Securities and Exchange Commission, 2007). Prepaid tuition plans are guaranteed to cover fixed proportions of tuition prices in the future, regardless of price increases. However, this present paper pays more attention to the college savings plans.

5. Qualified higher education expenses include tuition, mandatory fees, books, supplies, room or board expenses, and equipment required for enrollment or attendance. In 2009 and 2010 only, computer purchases are also a qualified educational expense (College Savings Plans Network, 2010).

6. Education savers are defined those who hold a 529 or the federal Coverdell Education Savings Account.

7. A number of community, state, and research partners have played a crucial role in SEED, such as the Corporation for Enterprise Development, the Initiative on Financial Security at the Aspen Institute, and the School of Social Welfare at University of Kansas.