The Effects of the State Prepaid Tuition Program on College Attainment
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Ying Shen
Abstract
By locking in today’s tuition rate for future college attendance, the prepaid tuition program (PTP) is designed to encourage parents to invest in their children’s human capital. The purpose of this paper is to examine the effects of the state PTP on college attainment by using data from the 2011–2013 American Community Survey. By exploiting cross-state variation in the timing of the implementation of the state PTP, I found that the program adoption was associated with a 0.7–1.0 percentage point increase in college enrollment rates and a 0.5–0.7 percentage point increase in college completion rates.
Acknowledgment
I amgrateful to Kirk Doran, Abigail Wozniak, Joseph Kaboski, William Evans, Terence Johnson and seminar participants at Notre Dame for their valuable conversations and comments. Any errors are my own responsibility.
Summary statistics.
| Whole sample | States with prepaid tuition program | States without prepaid tuition program | |
|---|---|---|---|
| Male | 0.4998 | 0.4991 | 0.5004 |
| (0.0005) | (0.0008) | (0.0007) | |
| White | 0.7756 | 0.7806 | 0.7721 |
| (0.0004) | (0.0007) | (0.0006) | |
| College enrollment | 0.6134 | 0.5994 | 0.6231 |
| (0.0005) | (0.0008) | (0.0007) | |
| College completion | 0.4335 | 0.4228 | 0.4410 |
| (0.0005) | (0.0008) | (0.0007) | |
| Unemployment rate | 5.5513 | 5.6903 | 5.4540 |
| (0.0016) | (0.0023) | (0.0021) | |
| Number of states | 44 | 12 | 32 |
| Number of observations | 1,394,145 | 573,638 | 820,507 |
Data from 2011 to 2013 IPUMS-ACS. Means weighted by IPUMS-ACS weights. Standard errors are reported in parentheses. I exclude seven states that had the prepaid tuition program before but closed the program to new participants by the end of 2008. I only include the U.S.-born population who are born between 1969 and 1986. The unemployment rate variables are used of the year when a person is 18 years old.
Account usage and 12th grade students information.
| State | # account used | Source | Years | # of 12th grade students | Source | Years |
|---|---|---|---|---|---|---|
| FL | 163,264 | Florida Prepaid College 2005/2006 Annual Report | 1988–2006 | 2,138,470 | Florida Department of Education | 1988–2006 |
| IL | 19,138 | 2012 College Illinois Annual Report | 2003–2013 | 1,425,242 | Illinois State Board of Education’s Public District/School Fall Enrollment and Housing Report Data | 2003–2013 |
| MI | 27,400 | Prepaid Tuition Program 2012–2013 Annual Report | 2002–2013 | 1,307,514 | MI School Data | 2002–2013 |
| TX | 263,191 | Texas Prepaid Higher Education Tuition Program Annual Report 2013 | 1996–2013 | 4,387,045 | Texas Education Agency | 1996–2013 |
Florida: the program 2005/2006 annual report does not have account usage information by birth year, but only has aggregate data, showing that since the program started, 163,264 Prepaid College Plan students have attended college. The 12th grade student data stem from 1996, and I assume the number of 12th grade students in Florida is 100,000 in each year from 1988 to 2005. Illinois: the 12th grade student data in Illinois only contains students in public schools. Texas: the 12th grade student data in Texas only contains students in public schools. The data stem from 1997, and I assume the number of 12th grade students in Texas in 1996 is 200,000.
Effects on college attainment (four states).
| College enrollment (1) | College completion (2) | College enrollment (3) | College completion (4) | |
|---|---|---|---|---|
| Program | 0.0087*** | 0.0073** | 0.0125*** | 0.0080*** |
| (0.0032) | (0.0029) | (0.0031) | (0.0024) | |
| State fixed effects | Y | Y | Y | Y |
| Cohort fixed effects | Y | Y | Y | Y |
| Covariates | Y | Y | Y | Y |
| State-cohort trends | N | N | Y | Y |
| n | 1,136,042 | 1,136,042 | 1,136,042 | 1,136,042 |
See notes for Table 2. I only include the states without the prepaid tuition program and four states with the prepaid tuition program (FL, IL, MI, TX).
Control for state tuition.
| College enrollment (1) | College completion (2) | College enrollment (3) | College completion (4) | |
|---|---|---|---|---|
| Program | 0.0090*** | 0.0069** | 0.0074** | 0.0048* |
| (0.0031) | (0.0030) | (0.0032) | (0.0027) | |
| State fixed effects | Y | Y | Y | Y |
| Cohort fixed effects | Y | Y | Y | Y |
| Covariates | Y | Y | Y | Y |
| Control for tuition | Y | Y | Y | Y |
| State-cohort trends | N | N | Y | Y |
| n | 1,394,145 | 1,394,145 | 1,394,145 | 1,394,145 |
See notes for Table 2. In this table, I control for state-year tuition.
State 529 college savings plans information.
| State | Plan name | Year | State | Plan name | Year |
|---|---|---|---|---|---|
| AL | CollegeCounts 529 Fund | 2002 | MT | Achieve Montana | 2002 |
| CollegeCounts 529 Fund Advisor Plan | 2002 | Montana Family Education Savings Program – Bank Plan | 1998 | ||
| AK | T. Rowe Price College Savings Plan | 2001 | NE | Nebraska Education Savings Trust – Direct College Savings Plan | 2001 |
| University of Alaska College Savings Plan | 1991 | TD Ameritrade 529 College Savings Plan | 2010 | ||
| John Hancock Freedom 529 | 2001 | Nebraska Education Savings Trust – Advisor College Savings Plan | 2001 | ||
| AZ | Arizona Family College Savings Program | 1999 | NV | USAA 529 College Savings Plan | 2002 |
| Fidelity Arizona College Savings Plan | 2005 | SSGA Upromise 529 Plan | 2002 | ||
| Ivy Funds InvestEd Plan | 2001 | The Vanguard 529 Savings Plan | 2002 | ||
| AR | GIFT College Investing Plan | 1999 | Putnam 529 for America | 2010 | |
| iShares 529 Plan | 2007 | NH | UNIQUE College Investing Plan | 1998 | |
| CA | The ScholarShare College Savings Plan | 1999 | Fidelity Advisor 529 Plan | 2001 | |
| CO | Direct Portfolio College Savings Plan | 2004 | NJ | NJBEST 529 College Savings Plan | 1998 |
| Smart Choice College Savings Plan | 2009 | Franklin Templeton 529 College Savings Plan | 2003 | ||
| Stable Value Plus College Savings Program | 2003 | NM | Scholar’sEdge | 2001 | |
| Scholars Choice College Savings Program | 1999 | The Education Plan’s College Savings Program | 2000 | ||
| CT | Connecticut Higher Education Trust (CHET) | 1997 | NY | New York’s 529 College Savings Program – Direct Plan | 1998 |
| Connecticut Higher Education Trust (CHET) – Advisor Plan | 2010 | New York’s 529 Advisor-Guided College Savings Plan | 2003 | ||
| Delaware College Investment Plan | 1998 | NC | National College Savings Program | 2001 | |
| DC | DC 529 College Savings Program (Direct-sold) | 2002 | ND | College SAVE | 2001 |
| DC 529 College Savings Program (Advisor-sold) | 2002 | OH | Ohio CollegeAdvantage Direct 529 Savings Plan | 2000 | |
| FL | Florida 529 Savings Plan | 2002 | BlackRock CollegeAdvantage Advisor 529 Savings Plan | 2009 | |
| GA | Path2College 529 Plan | 2002 | OK | Oklahoma College Savings Plan | 2000 |
| HI | Hawaii’s College Savings Program | 2002 | Oklahoma Dream 529 Plan | 2009 | |
| ID | Idaho College Savings Program (IDeal) | 2001 | OR | Oregon College Savings Plan | 2001 |
| IL | Bright Start College Savings Program – Direct-sold Plan | 2000 | MFS 529 Savings Plan | 2002 | |
| Bright Directions College Savings Program | 2005 | PA | Pennsylvania 529 Investment Plan | 2002 | |
| Bright Directions College Savings Program | 2007 | RI | CollegeBoundfund (Direct-sold, Alternative RI) | 1998 | |
| IN | CollegeChoice 529 Direct Savings Plan | 1997 | CollegeBoundfund (Advisor-sold) | 1998 | |
| CollegeChoice CD 529 Savings Plan | 2011 | SC | Future Scholar 529 College Savings Plan (Direct-sold) | 2002 | |
| CollegeChoice Advisor 529 Savings Plan | 1997 | Future Scholar 529 College Savings Plan (Advisor-sold) | 2002 | ||
| IA | College Savings Iowa | 1998 | SD | CollegeAccess 529 (Direct-sold) | 2002 |
| IAdvisor 529 Plan | 2006 | CollegeAccess 529 (Advisor-sold) | 2002 | ||
| KS | Learning Quest 529 Education Savings Program (Direct-sold) | 2000 | TN | TNStars College Savings 529 Program | 2012 |
| Schwab 529 College Savings Plan | 2003 | TX | Texas College Savings Plan | 2002 | |
| KY | Kentucky Education Savings Plan Trust | 1990 | Lonestar 529 Plan | 2002 | |
| LA | START Saving Program | 1997 | UT | Utah Educational Savings Plan (UESP) | 1996 |
| ME | NextGen College Investing Plan – Client Direct Series | 1999 | VT | Vermont Higher Education Investment Plan | 1999 |
| NextGen College Investing Plan – Client Select Series | 1999 | VI | CollegeWealth | 2007 | |
| MD | College Savings Plans of Maryland – College Investment Plan | 2001 | Virginia529 inVEST | 1999 | |
| MA | U. Fund College Investing Plan | 1999 | CollegeAmerica | 2002 | |
| MI | Michigan Education Savings Program | 2000 | WV | SMART529 Select | 2004 |
| MI 529 Advisor Plan | 2009 | SMART529 WV Direct College Savings Plan | 2002 | ||
| MN | Minnesota College Savings Plan | 2001 | The Hartford SMART529 | 2002 | |
| MS | Mississippi Affordable College Savings (MACS) Program | 2001 | WI | Edvest | 1997 |
| MO | MOST - Missouri’s 529 College Savings Plan (Direct-sold) | 1999 | Tomorrow’s Scholar 529 Plan | 2001 | |
| MOST - Missouri’s 529 Advisor Plan | 2006 |
Source can be retrieved from: http://www.savingforcollege.com/.
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Artikel in diesem Heft
- Frontmatter
- Research Articles
- Incumbent and Entrant Bidding in Scoring Rule Auctions: A Study on Italian Canteen Services
- Did Right-To-Work Laws Impact Income Inequality? Evidence from U.S. States Using the Synthetic Control Method
- Sometimes Your Best Just Ain’t Good Enough: The Worldwide Evidence on Subjective Well-being Efficiency
- On the Intergenerational Transmission of STEM Education among Graduate Students
- The Effect of Health Insurance on Young Adult HIV Testing: Evidence from the Affordable Care Act Dependent Coverage Mandate
- Charging for Higher Education: Estimating the Impact on Inequality and Student Outcomes
- New Evidence of the Effect of Beijing’s Driving Restriction and Other Olympic-Year Policies on Air Pollution
- Classroom Composition and Student Academic Achievement: The Impact of Peers’ Parental Education
- The Effects of the State Prepaid Tuition Program on College Attainment
- Changes Over Time in the Cost of Job Loss for Young Men and Women
- Letters
- Is Environmental Tax Harmonization Desirable in Global Value Chains?
- The Economic Impact of State Splitting in Brazil
Artikel in diesem Heft
- Frontmatter
- Research Articles
- Incumbent and Entrant Bidding in Scoring Rule Auctions: A Study on Italian Canteen Services
- Did Right-To-Work Laws Impact Income Inequality? Evidence from U.S. States Using the Synthetic Control Method
- Sometimes Your Best Just Ain’t Good Enough: The Worldwide Evidence on Subjective Well-being Efficiency
- On the Intergenerational Transmission of STEM Education among Graduate Students
- The Effect of Health Insurance on Young Adult HIV Testing: Evidence from the Affordable Care Act Dependent Coverage Mandate
- Charging for Higher Education: Estimating the Impact on Inequality and Student Outcomes
- New Evidence of the Effect of Beijing’s Driving Restriction and Other Olympic-Year Policies on Air Pollution
- Classroom Composition and Student Academic Achievement: The Impact of Peers’ Parental Education
- The Effects of the State Prepaid Tuition Program on College Attainment
- Changes Over Time in the Cost of Job Loss for Young Men and Women
- Letters
- Is Environmental Tax Harmonization Desirable in Global Value Chains?
- The Economic Impact of State Splitting in Brazil
