Background: Adverse childhood experiences have negative outcomes for children, yet previous research suggests the independent effect of parental alcohol problems is inconsistent. Objectives: Our aim was (1) to compare educational attainment among Danish and Finnish youth with parental alcohol problems and (2) to study the associations between parental alcohol problems and children’s educational attainment in these two Nordic welfare states. Data and methods: Administrative longitudinal data on children born in 1991 in Finland ( n = 64,696) and Denmark ( n = 64,138) and their biological parents. The children were followed until their 21st birthdays. We applied a mediation analysis to investigate how the association between parental alcohol problems and children’s educational attainment is mediated by four indicators for poor socioeconomic family background (low parental education, long-term economic distress, psychiatric disorders, and living in a non-intact family). Results: At age 20 years, Finnish children were more likely to complete their education than their Danish peers. Young adults with parental alcohol problems faced early school leaving more frequently in both countries compared with their peers, but the relative risk was higher in Finland. In both countries, long-term economic distress mediated the highest proportion of the effect of alcohol problems (39% in Denmark and 34% in Finland). Low parental education and psychiatric disorders mediated part of the effect, but not to the same degree as economic distress. Conclusions: Ensuring education for children with parental alcohol problems is a key to improving their long-term outcomes in different life domains. Consequently, healthcare, social work and education sectors should prioritise advancing education among these children in order to prevent their exclusion from education and labour markets, and they should cooperate closely in doing so.