The impact of the great recession on the ability of parents to fund their children’s college education

Abstract

In the United States, most families in the middle class or higher are expected to finance a significant portion of the cost of their children’s college education. Using data from the Longitudinal Study of American Life (LSAL), we analyse the impact of the Great Recession (GR) on the beliefs about responsibility and plans of parents in their mid- to late thirties to finance the post-secondary education costs of their children. Results demonstrate that the GR was unrelated to parents’ beliefs about their responsibility to finance their children’s post-secondary education, but it was associated with their plans for financing it. Parents who experienced a positive net impact of the GR were more likely to report having a savings plan and being able to borrow money if needed. Parents who experienced a negative net impact of the GR were more likely to report that their child needed a grant, scholarship or loan. College-educated parents were more likely to believe that parents have primary responsibility for financing their children’s education and to have a savings plan in place. However, parents who had had a student loan themselves and who had more children pursuing college were more likely to believe that parents have partial financial responsibility and that children should also contribute financially by getting grants, scholarships and loans.