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Giving Money to Your Kids Can Lower Their College Grades

By , Posted on Jul 21, 2013
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The Associated Press: “More money from parents = lower college grades, study finds.”

The study, published in this month’s American Sociological Review, suggests students with some of their own “skin in the game” may work harder, and that students with parents picking up more of the tab are free to take on a more active social and extracurricular life. That may be fun and even worthwhile, but comes at a cost to GPA.

“It allows for a lot of other activities in college that aren’t academic,” said author Laura Hamilton of the University of California, Merced. “Participation in the social scene is expensive — money to hang out, drink.” But “the more you have all these extras, the more you can get dragged into the party scene, and that will drag down your GPA.”

The study is based on figures from three large federal data sets that allow parental contributions and grades to be compared. Hamilton controlled for family socio-economic status, allowing a comparison of similar students whose families make different choices about how much of the cost of college to pick up.

If you are over the age of let’s say 35 or so, you probably agree and understand this.  We are constantly being told by the media and through TV and movies that it is good and natural for kids to be able to be involved in as many activities as possible.  How many of you feel more like a bus driver than a parent, driving your route from home to school, to soccer, to dance, to this or that?  Our kids are involved in so many extracurricular activities that there seems like all of the time for just playing or doing something without structure is used up.

Now take that kid and send them away to college, free from all of the activities that we as parents push them to do in order to make a “well rounded” young adult.  Well, now at college, with us footing the bill for everything so they can “concentrate” on school without the distraction of a job, the time to party is wide open.

Without having a vested interest in the cost of attending school, kids feel like there is nothing to lose if they don’t keep their grades up or even flunk out on a class or two… “my parents pays for everything anyway”

When parents pick up greater absolute amounts and shares of college costs, it affects GPA across the income distribution, though the effect is steepest at families earning over $90,000. At that level, and controlling for other factors, parents not giving their children any aid predicts a GPA of 3.15. At $16,000 in aid, GPA drops under 3.0. At $40,000, it hits 2.95. According to the AP story.

It’s interesting that the study found that students who have their school paid for via grants, scholarships, work-study, student employment and veterans benefits don’t have similar negative effects on GPA, though those with student loans do, along with direct parental aid.   It would seem that the reason for this is that loans and money from the parents have no immediate strings attached.  Where scholarships and grants often carry GPA requirements. There may also be a psychological effect. With grants, “students feel like they’ve earned them in some way” and want to justify them.

The study doesn’t suggest that you should stop supporting students financially, especially considering there is a larger positive effect on graduation rates than the negative effect on GPA. But you should lay out some rules and expectations for your college students. …even if you can afford the whole bill, you might be well served to make your little darlings put up some of their own money or work part-time, so they feel invested.

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