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PCaMS: Robert A. Nathenson - College Savings Behavior of 529 Account Holders: Initial Findings from a Partnership with the Pennsylvania Treasury Department

  • PWBM's Philadephia Office 3440 Market Street, Suite 300 Philadelphia, PA 19104 United States (map)

Location: PWBM’s Philadelphia Office
Date / Time: Thursday, April 4, 2019, 12:00 PM - 1:30 PM

Robert A. Nathenson, Quantitative Education Researcher and Health Economist at the Consortium for Policy Research in Education at the University of Pennsylvania’s Graduate School of Education, gave the presentation “College Savings Behavior of 529 Account Holders: Initial Findings from a Partnership with the Pennsylvania Treasury Department”.


As part of an ongoing partnership with the Pennsylvania Treasury Department to evaluate their new Keystone Scholars Initiative, I use a unique longitudinal dataset of quarterly contributions and withdrawals of the population of account holders in Pennsylvania’s official 529 program to identify important patterns and variation in college savings behavior of Pennsylvanian households. I document variation in contribution patterns between households that choose the Investment Plan (a market-based option) and the Guaranteed Savings Plan (low-risk accounts with guaranteed growth tied to tuition) and how these patterns evolve with account age and age of beneficiary. I explore geographic variation in savings patterns at the county and zip-code level, including the penetration rate (proportion of households with a child under the age of 18 in the area with an account) and how savings patterns correlate with geographic characteristics. I also examine, by geography, the proportion of account holders with an investment plan, which could be interpreted as a measure of financial literacy or risk aversion in the community. While Pennsylvania households in rural areas are less likely to choose the Investment Plan option and contribute fewer dollars to their accounts than suburban households, they are not worse off with respect to college affordability, which is likely driven by attendance to less expensive local institutions of higher education. I also present preliminary work on the impact of the Recession and the 2017 federal tax law on college savings, particularly on withdrawal patterns, infra-marginal savings, and revenue receipt implications for the Pennsylvania Revenue Department. Because I observe (for Guaranteed Savings Plan accounts) school of attendance, future work will relate contribution patterns and place of residence to college choice, including in-state/local vs national searches, and the implications of this decision on the likelihood of graduating, student loan debt, and labor market returns.