Housing Crisis Influences College Choices

Housing Wealth Impacts Where You Go to College  By: Lisa Scherzer 

Brought to you by: Lone Star Ed Consulting , CEO Lauren Kahn, MA  512-294-6608

Lauren Kahn is an educational consultant located in Austin, TX and helps families find colleges and school placements for students throughout the country. 

image from: directbanc.com

At the height of the housing boom in the early 2000s, it was natural for homeowners to feel wealthier than they were. Inflated property values translated into a so-called wealth effect: Confident the value of their homes would climb ever higher and bolstered by the cash obtained by easy refinancing, owners spent freely.

A new study published by the National Bureau of Economic Research looks into what role this housing wealth — a household's overall finances — played in homeowners' decision-making when it comes to sending their children to college.

The study -- "The Effect of Housing Wealth on College Choice: Evidence From the Housing Boom" and co-authored by Professors Michael Lovenheim and C. Lockwood Reynolds --  found homeowners that experienced a windfall from the housing boom were more likely to send their children to college, to send them to four-year public institutions instead of two-year institutions and to send them to state "flagship" institutions — which are better resourced, have higher faculty-student ratios and SAT scores and are also more expensive to attend -- rather than nonflagship public institutions.