Each year, 1.3 million students fail to graduate, dropping the United States’ high school graduation rate to 69%. One of the most salient predictors of high school dropout is socio-economic status (SES), which makes important an improved understanding of the reasons why SES affects educational outcomes. In this study, multilevel mediation models were utilized to examine parental investment in school as a mediator of the relationship between SES and educational outcomes among an ethnically diverse sample of 64,350 7th to 9th grade students from 199 rural communities and towns in the U.S. (50% male, 63% non-Hispanic White). These relationships were assessed at the individual and school district level. Results indicate that parental investment is an important mediator at both levels. Within school districts, 28% of the effect of SES on the expectation to graduate from high school is mediated by perceived parental investment. Between school districts, 60% of the effect of concentrated disadvantage on the district’s high school graduation rate and nearly all (87%) of the effect of concentrated disadvantage on the average expectation to graduate from high school among students in the district is mediated by perceived parental investment. Implications for prevention are discussed.