Parental Credit Constraints and Children’s College Education
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What fraction of college-age youths in the United States comes from liquidity-constrained families? This question is important because such youths may have difficulties borrowing for college education and be less likely to enroll. While most earlier studies have concluded that credit constraints in education are not pervasive, these studies have relied on indirect measures and data sources from the 1980s. The contribution of this descriptive study is the use of parents’ reports of borrowing limitations in the National Longitudinal Survey of Youth (NLSY79) Young Adult Supplement to evaluate the pervasiveness of credit constraints in the early 2000s. The results indicate that about 20 percent of college-age youths are potentially credit-constrained and are less likely to attend college.
Key wordsCredit constraints Education finance Human capital
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