A college education, often perceived as a ticket to a better life, is not enough to bridge the racial and ethnic wealth gap for blacks and Hispanics.
That’s according to a new report from the Federal Reserve Bank of St. Louis, which found that not only do black and Hispanic college graduates not enjoy the same income and wealth boosts experienced by white and Asian grads, they actually fare worse than blacks and Hispanics without four-year college degrees.
“The long-term trend is shockingly clear,” said William R. Emmons, an economist at the Federal Reserve Bank of St. Louis and one of the authors of the report. “White and Asian college grads do much better than their counterparts without college, while college-grad Hispanics and blacks do much worse proportionately.”
Between 1992 and 2013, the report said the median-income of college-educated white families rose 13 percentage points more than their noncollege educated white peers, while college-grad Asian families experienced a 31 percent increase in median income.
“Conversely, median Hispanic and black college-grad incomes fell 10 percent and 12 percent, respectively, while the median incomes of their noncollege counterparts rose 16 percent and 17 percent, respectively,” the report said.
Emmons said the racial income divide is mainly driven by lingering discrimination. Blacks and Hispanics are often held back by inequities in hiring. In other words, Hispanic and black grads are being bypassed for many high paying jobs after college.
However, many white and Asian college grads have obtained advanced degrees, which allow them to move further up the income ladder.
College grads typically earn more money and build up more wealth than their noncollege educated peers. An education can also provide a buffer during periods of financial crises. But black and Hispanic grads struggle even there. The New York Times said:
But while these [black and Hispanic] college grads had more assets, they suffered disproportionately during periods of financial trouble.
From 1992 to 2013, the median net worth of blacks who finished college dropped nearly 56 percent (adjusted for inflation). By comparison, the median net worth of whites with college degrees rose about 86 percent over the same period, which included three recessions — including the severe downturn of 2007 through 2009, with its devastating effect on home prices in many parts of the country. Asian graduates did even better, gaining nearly 90 percent.
The Times said many college-educated black and Hispanic families not only took out more student loan debt than their peers, they’ve also had to take on heavy debt to try to achieve middle-class status, including borrowing more to buy a home.
For this reason, the Great Recession and housing bust took a disproportionate toll on Hispanic and black families.
The report concluded: “Higher education alone cannot level the playing field,” though it did say that college degrees do continue to have value for black and Hispanic students.
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