Child Development Accounts, parental savings, and parental educational expectations: A path model

Parents' expectations for their children's education, and efforts to foster suitably positive expectations, are worthy of policy attention. Previous research indicates that early saving for a child's postsecondary education can foster and sustain high parental expectations, yet little is known about the operative mechanisms. This study presents analyses from a randomized experiment with Child Development Accounts (CDAs), a policy to encourage early financial investments for education and to shape parents' expectations concerning their young children's educational goals. Our research provides key evidence on whether parental account holding for children's college (a) has a positive impact on parents' expectations for their children's educational attainment and (b) mediates the CDA's effect on their educational expectations at an early stage in their child's development. We employ data from the SEED for Oklahoma Kids (SEED OK) experiment, the first randomized social experiment to test universal and progressive CDAs. We conduct a path analysis and a supplemental analysis with marginal structural models (n = 2160). We find that holding a college-savings account has a significant effect on parents' educational expectations for their children and that whether one holds an account mediates the effect of CDAs on such expectations. Findings suggest that CDAs may promote early parental financial investment and high expectations. Research and policy implications are discussed.