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

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.