College Savings and Stock Market Participation

27 Pages Posted: 28 Aug 2021 Last revised: 11 Mar 2023

See all articles by Alexey Vasilenko

Alexey Vasilenko

Northeastern University - D’Amore-McKim School of Business

Date Written: August 26, 2021

Abstract

This paper empirically studies how college savings motives affect household stock market participation. More than 65% of households saving for college allocate at least a portion of their college savings to stocks, which are also the most popular class of risky assets for college savings investments. Employing the implementation of a financial aid program that eliminated college saving motives for some military households, I demonstrate that it reduced the probability of stock market participation outside of retirement accounts for these households by more than a quarter. I provide additional evidence that college savings motives explain a significant share of stock market participation by demonstrating that only one form of college savings, education savings accounts, accounts for 21% of stock market participation outside of retirement accounts for households with children.

Keywords: college savings, portfolio allocation

JEL Classification: D14, G50, I22

Suggested Citation

Vasilenko, Alexey, College Savings and Stock Market Participation (August 26, 2021). Rotman School of Management Working Paper No. 3912392, Available at SSRN: https://ssrn.com/abstract=3912392 or http://dx.doi.org/10.2139/ssrn.3912392

Alexey Vasilenko (Contact Author)

Northeastern University - D’Amore-McKim School of Business ( email )

360 Huntington Ave.
Boston, MA 02115
United States

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