One of the main assumptions of federal financial aid policy is that parents are responsible for financing their children’s college education, conditional on their ability to pay. Ability to pay, however, does not ensure willingness to pay. Among both wealthy and low-income parents, there is substantial variation in the financial support that parents with similar resources provide to their children. Differences in parents’ willingness to pay for college may help explain disparities in college access, but this possibility has never been systematically investigated. In this dissertation, I explore how adolescents’ expectations of cash gifts and co-residency from their parents affect whether and where they enroll in college. To do so, I analyze data from the National Longitudinal Survey of Youth 1997. First, I employ hurdle models to estimate children’s expectations of both types of support under a scenario in which they enroll in college and under a scenario in which they forego college. Because children who enroll almost always receive more financial support than children who do not, I label the difference between these expected amounts ;;the college premium.” I find that particular types of children can expect to receive larger cash college premiums than others, and thus have particularly large financial incentives to attend college. First and foremost are the children of highly educated parents, but children from the top half of the income distribution, children who have high solidarity with parents, and children whose parents hold norms of adolescent financial dependency also can expect large increases in cash gifts from parents if they attend college. The only children who receive larger co-residency college premiums than their peers are the children of separated parents. Thus, these children may be particularly incentivized to attend local institutions such as community colleges since co-residency support cannot be used to attend distant colleges.Next, I use multinomial regression to examine the relationship between children’s expected college premiums and their probability of foregoing college, attending a two-year college, or attending a four-year college. I find that the size of children’s cash college premium has a positive relationship with college attendance, particularly at four-year colleges. I also find that, unlike with the cash college premium, the co-residency college premium has no relationship to children’s enrollment outcomes. The results from this study suggest that policymakers and educational researchers who wish to reduce educational stratification should look more closely at the intersection between children’s expectations of parental support, parental willingness and ability to pay for college, and the way postsecondary education is financed in the United States.
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Paying Kids' Way: Parental Financial Support and Adolescents' College Choices