The Role of Parental Wealth and Income in Financing Children's College Attendance and its Consequences

49 Pages Posted: 8 Oct 2018

See all articles by V. Joseph Hotz

V. Joseph Hotz

Duke University; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Emily Wiemers

University of Massachusetts Boston

Joshua Rasmussen

Duke University

Kate Maxwell

Duke University

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Abstract

This paper examines the influence of parental wealth and income on children's college attendance and parental financing decisions, graduation, and quality of college attended, and whether parental financing affects the subsequent indebtedness of parents and children. We find that higher levels of parents' wealth and income increase the likelihood that children attend college with financial support relative to not attending college, and that parental wealth increases the likelihood that children graduate from college. We show descriptive evidence that parental support for college increases the subsequent level of housing debt that parents hold but does not reduce student debt for children.

Keywords: college attendance and graduation, financing college, effects of parental wealth and income

JEL Classification: I2, I22, I243

Suggested Citation

Hotz, V. Joseph and Wiemers, Emily and Rasmussen, Joshua and Maxwell, Kate, The Role of Parental Wealth and Income in Financing Children's College Attendance and its Consequences. IZA Discussion Paper No. 11842, Available at SSRN: https://ssrn.com/abstract=3261701 or http://dx.doi.org/10.2139/ssrn.3261701

V. Joseph Hotz (Contact Author)

Duke University ( email )

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National Bureau of Economic Research (NBER)

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IZA Institute of Labor Economics ( email )

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Emily Wiemers

University of Massachusetts Boston ( email )

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Joshua Rasmussen

Duke University

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Durham, NC 27708-0204
United States

Kate Maxwell

Duke University ( email )

Durham, NC 27708-0097
United States

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