Saving for post-secondary education in individual development accounts

Journal of Sociology and Social Welfare, Sept, 2005 by Min Zhan, Mark Schreiner

Beyond these changes to college costs and the structure of financial aid, welfare reform made post-secondary education--especially four-year college degrees--more difficult for low-income people. The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) replaced Aid to Families with Dependent Children (AFDC) with a Temporary Assistance for Needy Families (TANF) block grant (U.S. Congress, 1996). This law transformed the 60-year-old welfare system into a work-based system which requires states to place increasing percentages of adults in work or work-related activities. Historically, most work-relief programs until the first half of this century did not offer extensive opportunities for training and manpower development of welfare recipients, primarily to avoid opposition from trade unions (Charnow, 1943). Since the 1960s, however, a few training and manpower development programs such as the Manpower Development and Training Act (MDTA) program, the Work Incentive program (WIN), the Comprehensive Employment and Training Act (CETA) program and the Job Training Partnership Act (JTPA) programs were implemented with federal funding. The Job Opportunities and Basic Skills Training (JOBS) program, which was the centerpiece of the Family Support Act (FSA) of 1998, permitted the states to support postsecondary education, including two- and four-year college degrees.

TANF's work-participation mandates have shifted the focus of welfare-to-work programs away from education and training toward quick job placement. The new system of welfare provision includes a number of regulations that discourage welfare recipients from pursuing post-secondary education. First, TANF is designed to place recipients directly into jobs. States are penalized unless they put a large share of their adult recipients into work programs. This makes states less likely to provide education or meaningful job training. Second, job programs under TANF are narrowly defined, and most post-secondary education and job training do not count as "work". For example, recipients enrolled in post-secondary education for longer than a 12-month period are, for the most part, excluded from a state's calculation of its work-participation rates (Greenberg, Strawn, & Plimpton, 1999). Third, recipients are limited to 60 months of benefits (whether or not consecutive), and states can specify shorter time limits. Poor women with children and limited resources often take longer than four or five years to finish a Bachelor's degree (Mathur, 1998; Naples, 1998). Fourth, no more than 20 percent of caseload can count vocational training toward meeting the work requirement, including teen parents in secondary school. This cap may further limit the number of those seeking to enroll in higher education.

These factors can greatly reduce welfare recipients' access to post-secondary education, especially 4-year college degrees. Studies show that in the last few years, the college attendance of welfare recipients has decreased (Center for Women Policy Studies, 2002; Jacobs & Winslow, 2003; Jones-Deweever, Peterson, & Song, 2003). For example, the Center for Women Policy Studies found that the college enrollment of welfare recipients had dropped by 46%, 60%, and 77% in different states such as Wisconsin, New York, and California. Other studies have also noted a drop in the number of students in universities who receive welfare (Snow, 1997; Spatz, 1997).