A recent study shows the more parents pay for college, the lower the students' grades. The finding busts the college myth that fortunate students who have their higher education paid for succeed in college more than their less financially set peers.
Students with high levels of support from their parents at private, out-of-state and more expensive four-year colleges had lower GPAs, according to the research. The impact of these "parental scholarships" on grades was lower (but still present) at elite institutions.
The study, "More Is More or More Is Less? Parental Financial Investments during College" was conducted by Laura T. Hamilton, an assistant professor at the University of California at Merced. It was published online on January 3 by the American Sociological Review before it will appear in its printed journal.
More is not more after all when it comes to parental contribution to college costs because it does not increase student GPAs. "(P)arental investments create a disincentive for student achievement," Hamilton wrote, although "(e)vidence shows that parental financial investments increase college attendance." This applies to wealthy parents with hefty nest eggs and middle class parents strapped for cash.
The research used government data. It analyzed the effect of financial parental investments on student grades and earning a college degree.
"The findings suggest seemingly contradictory processes. Parental aid decreases student GPA, but it increases the odds of graduating," Hamilton wrote. She adjusted for differing parental socio-economic circumstances and student alternate funding sources.
Apparently, students without much of a financial stake in their college education have a greater likelihood of coasting through higher education rather than maximizing their college opportunities. "As a result, students with parental funding often perform well enough to stay in school but dial down their academic efforts," Hamilton found.
Thorough college prep includes figuring out college costs and how to pay them. Students can have a financial stake in their higher education endeavors. Failure to achieve can cost them after graduation.
For FAFSA filers, colleges can award a federal student loan to help pay for college. FAFSA is the Free Application for Federal Student Aid. The Direct Loan is a financial obligation of the student, not the parent, requiring repayment. Subsidized loans are interest-free during college. Since it is a need-based loan, the U.S. Department of Education pays the interest while in school. The interest on the unsubsidized loan accrues during college and must be repaid.
These federal student loans come with a six-month grace period after graduation before repayment starts. There was no accruing interest during the grace period for Direct Subsidized Loans but recent changes effect new borrowers. For those Direct Subsidized Loans first disbursed between July 1, 2012, and July 1, 2014, students will be responsible for paying any interest that accrues during the grace period. If the subsidized loan is repaid before the grace period starts, no interest accures. It becomes an interest-free loan.
Generous parents can offer to repay the loans rather than paying for college up front, if certain conditions are met, such as maintaining a certain GPA. Many scholarships attach similar requirements. Some colleges offer academic probation for poor grades. If student grades slip enough to put their "parental scholarship" in jeopardy, parents can give them a second chance warning.
Higher education is a financial investment in a student's future. Parents and students can plan to protect their investment with college prep.