Parental income, assets, borrowing constraints and children's post-secondary education

Abstract

This study is a test of two theoretical models linking parental economic resources to children's post-secondary education, short-term borrowing constraints, and long-term family background. A series of structural equation models (SEM) is tested using data from a sample of young adults ( N = 650) in the Panel Study of Income Dynamics (PSID). To further understand the role of parental resources in children's education, analyses are conducted for both income and assets, with assets measured by liquid assets and net worth. Findings indicate that both income and assets have consistent long-term associations with children's college entry. When measures of household wealth are incorporated in the analysis, the hypothesis of short-term borrowing constraints is also supported. Implications for research and policy are considered.