Parents in the United States frequently supplement the student loans
available to their children by cosigning on a loan, borrowing against
their home equity, or with unsecured debt in their own names. This paper
investigates whether some students are constrained from
attending and completing college by their parents’ lack of access to
credit markets by linking individual parental credit scores to their
children's educational attainment.
The author finds that good parental credit
significantly improves the child's probability of attending college.
Suggestive evidence is provided that the estimated relationship may be
causal and not biased by omitted factors, such as unobserved ability
or other personality characteristics.
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