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


  • Hotz, V. Joseph

    () (Duke University)

  • Wiemers, Emily

    () (University of Massachusetts Boston)

  • Rasmussen, Joshua

    () (Duke University)

  • Maxwell Koegel, Kate

    () (Duke University)


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.

Suggested Citation

  • Hotz, V. Joseph & Wiemers, Emily & Rasmussen, Joshua & Maxwell Koegel, Kate, 2018. "The Role of Parental Wealth and Income in Financing Children's College Attendance and Its Consequences," IZA Discussion Papers 11842, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp11842

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    References listed on IDEAS

    1. Christopher D. Carroll & Misuzu Otsuka & Jiri Slacalek, 2011. "How Large Are Housing and Financial Wealth Effects? A New Approach," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(1), pages 55-79, February.
    2. Cooper, Daniel & Luengo-Prado, María José, 2015. "House price growth when children are teenagers: A path to higher earnings?," Journal of Urban Economics, Elsevier, vol. 86(C), pages 54-72.
    3. Philippe Belley & Lance Lochner, 2007. "The Changing Role of Family Income and Ability in Determining Educational Achievement," Journal of Human Capital, University of Chicago Press, vol. 1(1), pages 37-89.
    4. Lance Lochner & Todd Stinebrickner & Utku Suleymanoglu, 2018. "Parental Support, Savings and Student Loan Repayment," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 20182, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).
    5. Bleemer, Zachary & Brown, Meta & Lee, Donghoon & Strair, Katherine & Van der Klaauw, Wilbert, 2017. "Echoes of rising tuition in students’ borrowing, educational attainment, and homeownership in post-recession America," Staff Reports 820, Federal Reserve Bank of New York.
    6. Dan A. Black & Jeffrey A. Smith, 2006. "Estimating the Returns to College Quality with Multiple Proxies for Quality," Journal of Labor Economics, University of Chicago Press, vol. 24(3), pages 701-728, July.
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    More about this item


    college attendance and graduation; financing college; effects of parental wealth and income;

    JEL classification:

    • I2 - Health, Education, and Welfare - - Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid

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