Parental Credit Constraints and Child College Attendance

Abstract

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. I find 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.