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The Role of Parental Wealth and Income in Financing Children’s College Attendance and Its Consequences

Author

Listed:
  • V. Joseph Hotz
  • Emily E. Wiemers
  • Joshua Rasmussen
  • Kate Maxwell Koegel

Abstract

This work examines the influence of parental wealth and income on children’s college attendance and parents’ financing decisions and on whether children graduate from college. We also examine 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 parents’ financing of their children’s college attendance increases parents’ subsequent indebtedness but does not reduce their children’s indebtedness, including their student loan debt.

Suggested Citation

  • V. Joseph Hotz & Emily E. Wiemers & Joshua Rasmussen & Kate Maxwell Koegel, 2023. "The Role of Parental Wealth and Income in Financing Children’s College Attendance and Its Consequences," Journal of Human Resources, University of Wisconsin Press, vol. 58(6), pages 1850-1880.
    • Handle: RePEc:uwp:jhriss:v:58:y:2023:i:6:p:1850-1880
    Note: DOI: https://doi.org/10.3368/jhr.1018-9828R2
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    File URL: http://jhr.uwpress.org/cgi/reprint/58/6/1850
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    Cited by:

    1. Daysal, N. Meltem & Lovenheim, Michael & Siersbæk, Nikolaj & Wasser, David N., 2021. "Home prices, fertility, and early-life health outcomes," Journal of Public Economics, Elsevier, vol. 198(C).
    2. Jeremy Kirk, 2024. "The Impact of Parental Resources on Human Capital Investment and Labor Market Outcomes: Evidence from the Great Recession," Working Papers 24-34, Center for Economic Studies, U.S. Census Bureau.
    3. Peter Hinrichs, 2024. "How Much Can Families Afford to Pay for College?," NBER Chapters, in: Financing Institutions of Higher Education, pages 67-97, National Bureau of Economic Research, Inc.
    4. N. Meltem Daysal & Michael F. Lovenheim & David N. Wasser, 2023. "The Intergenerational Transmission of Housing Wealth," CESifo Working Paper Series 10647, CESifo.
    5. Christian Belzil & Arnaud Maurel & Modibo Sidibé, 2021. "Estimating the Value of Higher Education Financial Aid: Evidence from a Field Experiment," Journal of Labor Economics, University of Chicago Press, vol. 39(2), pages 361-395.
    6. Congrong Ouyang & Sherman D. Hanna & Kyoung Tae Kim, 2019. "Are Asian Households in the U.S. More Likely than Other Households to Help Children with College Costs?," Journal of Family and Economic Issues, Springer, vol. 40(3), pages 540-552, September.
    7. Lucy McMillan & Pinghui Wu, 2023. "Job Loss, Credit Card Loans, and the College-persistence Decision of US Working Students," Working Papers 23-19, Federal Reserve Bank of Boston.
    8. Lovenheim, Michael F. & Yun, Jun Hyun, 2025. "The effect of housing wealth on health care spending," Journal of Health Economics, Elsevier, vol. 103(C).
    9. Christian Michael Smith & Laura T. Hamilton & Charlie Eaton, 2025. "Wealth, Race, and Under-Addressed Financial Need in Federal Student Aid Policy," Research in Higher Education, Springer;Association for Institutional Research, vol. 66(5), pages 1-24, August.

    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality

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