Children of welfare recipients attain less education than do children whose parents do not receive welfare. In this study, we build on Boudon’s (1974) distinction between primary and secondary effects of social background on educational attainment to develop a theoretical argument concerning how parental welfare dependency may affect children’s educational performance and attainment, and test the argument empirically using Danish administrative data. We consider four educational outcomes: mandatory school leaving GPA, enrolling in an upper secondary program before turning 21, and having obtained an upper secondary education at age 21, and starting a tertiary education before turning 22. To control for selection into family contexts and other family-level confounders, we rely on sibling fixed effects models and control for endowments at births using birthweight. Duration of parental welfare dependency negatively affects likelihood of enrolling in, and completing, upper secondary education at age 21 for children whose parents had education above primary level. Parental welfare dependency does not substantially affect GPA, and only paternal welfare dependency affects the likelihood of enrolling in tertiary programs. Results indicate that duration of parental welfare dependency does not lower educational performance, and mainly lowers attainment of upper secondary degrees for individuals who never would progress beyond upper secondary level.