IE 11 is not supported. For an optimal experience visit our site on another browser.

Want to go to college, kid? Check the home value

When home values go up, so does the likelihood those households will send their kids to college. That surprising result of new research may not bode well for kids now reaching college age, several years into a deep real estate slump.Michael Lovenheim, an assistant professor of policy and analysis at Cornell University, analyzed data from the 2000s, a decade that saw an unprecedented boom in housi
Scott Olson / Getty Images / Today

When home values go up, so does the likelihood those households will send their kids to college. That surprising result of new research may not bode well for kids now reaching college age, several years into a deep real estate slump.

Michael Lovenheim, an assistant professor of policy and analysis at Cornell University, analyzed data from the 2000s, a decade that saw an unprecedented boom in housing prices. He found that at times and in places where home prices were rising, college enrollment also saw a boost.

Lovenheim said he adjusted his data to account for other factors that might contribute to kids going to college, such as higher household wealth. Even with those controls, the housing effect was still there.

Lovenheim found the effect was particularly pronounced for families with annual income under $70,000, perhaps because those families are likely to be wealthy enough to own a home but may earn too much to qualify for substantial financial aid.

Those families may have been able to finance college using their home equity, or they may simply have felt more financially secure because of the rising value of their home.

The big question is what this finding might mean now that the housing boom has gone bust. Lovenheim said it’s too early to tell  what effect the housing bust has had on college enrollment.

There are other factors at play now, too.  A weak economy can drive more people to college because they don’t see any job prospects without a degree. Financial aid also became more readily available during the recession.

“If you are just taking all else equal, the loss in housing wealth should reduce college-going behavior among middle-class families,” he said. “However, all else has not been held equal.”

He noted that many families are struggling not just with falling home values but also with stock market losses and high unemployment. That, too, could impact whether parents feel they can afford to send their kids to college.

“Families are just less well off now than they were five years ago, and particularly a lot of middle-class families,” he said. “(Going to college) is going to be harder and require more debt.”

The findings will be published in next month’s Journal of Labor Economics.

Related:

Parents rich? You may have to pitch in for college anyway

How we view college: Overpriced, unaffordable but worth it

What’s rising faster than health care? College costs