Study: Housing bust could mean lower college attendance$this->bbcode_second_pass_quote('', 'T')he study, by Cornell economist Michael Lovenheim, finds evidence that when home values soared in the late 1990s and early 2000's, many families borrowed against that new equity to send kids to college, boosting overall college attendance nationwide. Now that the boom is over and families have less equity in their homes, it could mean fewer students heading to college, especially kids from middle and lower income households.
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Using data from cities across the U.S., Lovenheim found that a strong correlation between home prices and college attendance does exist. According to his model, each $10,000 in home equity increases the likelihood of a student enrolling in college by 1.37 percent. "Because home equity increased by an average of nearly $60,000 between 2001 and 2005, this marginal effect leads to sizable changes in college enrollment due to the housing boom," Lovenheim said.
Overall, Lovenheim estimates that the housing boom increased nationwide college attendance by nearly 8 percent.