Project Evaluation

Smoothing the Cost of Education: Primary School Saving in Uganda

Even when there are no official school fees, the financial burden of purchasing uniforms, books, and other school supplies prevents low-income students from remaining in school. In Uganda, researchers tested whether a school-based savings program reduced dropout rates by enabling students and their families to save for school-related expenses. A version of the program that labeled savings for educational purposes, rather than fully committing money to educational expenses, increased the amount students saved, expenditures on educational supplies, and test scores.
Policy Issue:
Although many countries in Sub-Saharan Africa have close to universal primary school enrollment, many students drop out before completing primary school or fail to continue to secondary school. While children drop out for a number of reasons, financial concerns are often an important factor. Even when governments eliminate school fees, there are still many costs associated with attending school. Providing materials such as uniforms, food, pens, pencils, and workbooks is often a significant challenge for low-income families. Furthermore, these families may lack access to formal savings services, making it difficult to set aside money for education. Even when families do have some savings, there is no guarantee they will use the money for educational expenditures. This evaluation assesses the impact of a school-based savings program that aims to encourage students and their parents to save for school expenses.
Context of the Evaluation:
Uganda’s primary school enrollment rates have greatly increased since the government began providing free universal primary education. This policy has eliminated most, though not all, costs of attending school. Gross primary school enrollment rose from 87 percent of primary school-age children in the early 1990s to 123 percent in 1997.1 Retaining pupils, however, is more difficult and as few as 32 percent of children entering primary school complete all seven grades. While the government covers the cost of teachers and schools, many schools require uniforms, and families are responsible for providing school supplies such as paper, writing instruments, and workbooks. Official policy prohibits preventing a child from enrolling due to an inability to pay, but the majority of dropouts cite financial strain.
Description of the Intervention:
Researchers partnered with the Private Education Development Network (PEDN) and FINCA Uganda to implement and test the “Super Savers” program in public primary schools. Children in grades five through seven, the final three years of primary school, were given the opportunity to deposit money into lockboxes on a daily or weekly basis. The money was deposited into the school’s bank account at the end of each trimester. The bank accounts did not earn interest. At the beginning of the next trimester, bank representatives returned to the school to disperse the funds. On the day the funds were paid out, PEDN organized a small market at each school where students could purchase school supplies or school services such as practice exams or tutoring sessions.
Schools were randomly assigned to return students’ deposits in one of two ways:
o   Cash payout: students received their savings in cash, which meant they could spend the funds as they wished.
o   Voucher payout: students received their savings in the form of a voucher that could only be used to buy supplies or school services at the market set up at the school. This created a binding commitment to spend any savings on educational expenditures.
There were 39 schools in each group, and an additional 58 schools served as a comparison group receiving no savings account.
Half of the schools with each type of savings account were also randomly assigned to receive parent outreach, in which workers from PEDN hosted a meeting for sixth- and seventh-grade parents to describe the various ways they could support their children’s education and to promote the savings program as a tool to help families finance school expenditures.
Results and Policy Lessons:
Researchers found that students deposited significantly more in the less restrictive savings accounts, which returned deposits in cash. On average, students in schools that received cash payouts deposited 2,267 Ugandan shillings, while the average student who received voucher payouts deposited 1,147 shillings.
When combined with parent outreach, students in the cash treatment were significantly more likely to have a complete set of school supplies, including uniforms, notebooks, math workbooks, and shoes. They also had test scores that were 0.11 standard deviations higher than the comparison group. There were no significant effects on school supplies or test scores among students who received cash payouts without parent outreach or among students who received vouchers, with or without parent outreach. These results suggest that it was necessary to combine providing a savings account, which made funds available, with parental outreach, which led households to use the saved money on education, for the program to lead to improvements in educational spending, and later, student learning.
The purpose of the voucher payouts was to restrict students to spend savings on educational expenses. However, in this context, the severe limits deterred students from saving at school. Instead, the weaker, rather than the stronger, commitment was more effective at increasing savings and, when combined with parental involvement, lead students to spend savings on items that helped improve learning.

1The gross primary enrollment ratio is a ratio of the number of enrolled primary school children, regardless of age, to the total number of primary school-aged children in the population. It can be greater than 100 percent if older children are enrolled in primary school.
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