(Download) "VI. Identifying Under-Contributing Parents (Parents Who Won't Pay: Expected Parental Contributions and Postsecondary Schooling)" by Public Finance and Management # eBook PDF Kindle ePub Free
eBook details
- Title: VI. Identifying Under-Contributing Parents (Parents Who Won't Pay: Expected Parental Contributions and Postsecondary Schooling)
- Author : Public Finance and Management
- Release Date : January 01, 2005
- Genre: Law,Books,Professional & Technical,
- Pages : * pages
- Size : 281 KB
Description
While the reduced form results from the previous section do not allow a direct determination of the effect of having under-contributing parents on a child's postsecondary schooling, the descriptive statistics provided in Table 5 are suggestive of such an effect. In this table, parents are classified according to whether or not they make their expected parental transfer. The first two columns define this expected transfer as the EPC and show that 68% of parents transfer too little according to this definition. They also show that children with under-contributing parents achieve lower schooling outcomes than children with parents who are making their expected transfers. The probability a child enrolls in a four-year program is .71 if the child has under-contributing parents and .74 if the child has parents who are making their contributions when vocational students are excluded. The difference is smaller when vocational students are included. Average net schooling expenditures are also lower for students with under-contributing parents, suggesting that they are attending lower cost and possibly lower quality schools. Yet, the academic ability of the students in the two groups is roughly the same, as measured by standardized test scores and high school GPAs. Under-contributing parents have much larger EPCs on average (compare $7,040 with $1,000), yet make much smaller transfers (compare $1,507 with $2,489) than parents who transfer at least their EPC. Comparing parental income and net worth across the categories is even more striking. Under-contributing parents earn over $31,000 per year and have net worth of over $124,000 on average compared to the $9,000 average income and $44,000 average net worth of parents who are making their expected contributions. Thus it appears that parents who have a greater ability to pay also have a greater unwillingness to pay. One disadvantage of the EPC classification, however, is that it does not take the child's contribution or the cost of schooling into account. It is possible that parents are transferring less than their EPC because their children have enough funds to cover their own schooling. Alternatively, the total cost of schooling may be less than the calculated EPC. Thus an alternative benchmark is proposed that takes these expected probabilities into account. This benchmark is the expected parental share of schooling expenses faced by the family and is equal to the minimum of the EPC and [(EPC/(EPC + ESC)) * NE], where ESC is the Expected Student Contribution calculated according to the formula in Appendix Table A2 and NE represents net schooling expenditures, that is, tuition and fees minus scholarships and grants. Because ESC is calculated to be zero for all respondents in the analysis sample, however, this expression simplifies to min[EPC, NE]. Noting that parents may under-contribute by choosing a low-cost institution for their child, predicted rather than actual net expenditures are used in this calculation. Predicted expenditures are calculated by applying the coefficients from a net schooling expenditures regression similar to the gross expenditures regression in Table 3 to each individual's values of the explanatory variables.