, Volume 55, Issue 5, pp 1727–1748 | Cite as

Financially Overextended: College Attendance as a Contributor to Foreclosures During the Great Recession

  • Jacob W. Faber
  • Peter M. RichEmail author


Although subprime mortgage lending and unemployment were largely responsible for the wave of foreclosures during the Great Recession, additional sources of financial risk may have exacerbated the crisis. We hypothesize that many parents sending children to college were financially overextended and vulnerable to foreclosure as the economy contracted. With commuting zone panel data from 2006 to 2011, we show that increasing rates of college attendance across the income distribution in one year predict a foreclosure rate increase in subsequent years, net of fixed characteristics and changes in employment, refinance debt, house prices, and 19-year-old population size. We find similar evidence of college-related foreclosure risk using longitudinal household data from the Panel Study of Income Dynamics. Our findings uncover a previously overlooked dimension of the foreclosure crisis, and highlight mortgage insecurity as an inadvertent consequence of parental investment in higher education.


Higher education College spending Foreclosure Great Recession Parental investments 



Both authors contributed equally to the production of this article. Our work was supported by the Russell Sage Foundation (Award 83-14-09). We thank Richard Arum, Dalton Conley, Ingrid Gould Ellen, Matt Hall, Mike Hout, Pat Sharkey, Florencia Torche, Chris Wildeman, and participants at the May 2015 Russell Sage Foundation conference on Intergenerational Mobility in the United States. We also thank the editors and anonymous reviewers for their helpful comments and suggestions.

Supplementary material

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Copyright information

© Population Association of America 2018

Authors and Affiliations

  1. 1.Robert F. Wagner School of Public ServiceNew York UniversityNew YorkUSA
  2. 2.Department of Policy Analysis and ManagementCornell UniversityIthacaUSA

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