Still think college is the great racial equalizer when it comes to family income? Think again. While nobody is suggesting a long-term career in burger flipping, several organizations are slamming higher education’s reliability in determining family assets, particularly for African American graduates. Information from groups like public policy think tank Demos suggest minority graduates have diminishing returns on the expense of a college education.
“White dropouts do not gain the wealth-building opportunities offered by a college education. Yet, advantages such as greater access to gifts and inheritances offer white households more opportunities [than blacks] to gain and build wealth, even when they have completed less education,” a Demos report states.
That same report found that, on average, only Black and Latino graduates with an advanced degree have middle-class wealth or higher, while white households, on average, need only a high school diploma to attain that same level of wealth. Their report, Asset Value of Whiteness, determined that “black adults with at least some college … had $11,100 in wealth at the median, while Latino adults with at least some college had $20,500 in wealth at the median.”
Those numbers almost sound impressive—until you compare those figures to the $79,600 in median wealth held by whites who attended at least some college.
Median wealth by race (chart by Demos)
Those disappointing returns have everything to do with the amount of wealth you walked into college with, according to experts. In America, white people have the money. Even though America’s white population is shrinking, their share of national cash is still sitting in a shrinking pile of white-owned wallets.
According to Forbes, the median white household will own 86 times more wealth than its black counterpart, and 68 times more wealth than its Latino one, under current trends. This puts white families in a better position to help their white children with college tuition and room and board, among other things. Their grandparents might even own a home they can sell to take the pain out of that college bill, just in time for grandma to move to Florida.
But that’s not the situation with many black families. Thanks to the lingering wealth gap created though America’s decades-long love affair with stuffing blacks into poor-return neighborhoods; the disproportionate hit African-Americans took from the 2008 financial crash and resulting recession; and politicians’ bitter unwillingness to make college more affordable, many black students have to rely exclusively on expensive college loans. This leaves them entering their adult lives saddled with the kind of debt typically associated with a mortgage, and since graduates already have enough debt for a mortgage, they have to delay getting themselves a real mortgage.
This potentially impacts the next generation of black families because home ownership is typically the only manifestation of real wealth in the American household. It’s not in stocks, bonds or gold bricks—so that missing house represents wealth that black young adults may not be able to pass down to their kids. And unlike mortgage debt — which a borrower can escape through foreclosure — there’s no real way to get out of student loan debt, as having student loans discharged through bankruptcy is nearly impossible.
And with many jobs only hiring college graduates, and nearly a third of employers screening candidates with credit checks, earning money to pay off that debt becomes increasingly difficult. It also doesn’t help that employers are already biased against black candidates, with a 2014 study from the Council of State Governments showing that whites with criminal records typically get a more positive response from prospective employers than black applicants with no criminal history. Essentially, blacks are forced into a cycle of going into debt to get an education to get a job to pay off that debt, only to have their credit damaged because they’re systemically denied employment. Rinse, repeat.
Sandy Baum, a nonresident fellow of the Urban Institute’s Education Policy Program admitted that reversing the heinous lack of resources available to black students was an uphill battle, but she had some recommendations to help students reduce the damage. One of them includes attending college as soon as possible rather than putting it off—because late-attendees tend to borrow more, for many reasons. (This isn’t so easy, of course, if you’re taking a year or two after graduation delivering pizza to finance tuition.)
Minority students also tend to take longer to graduate, either because of financial problems or life difficulties (again, often associated with low-income). Baum recommends getting in and getting out, if at all possible. She said black students also disproportionately attend for-profit schools, and suggested more minorities aim for public institutions or community colleges. Some non-public HBCUs, she warned, are also exceedingly expensive and offer few grants or resources to their students. Many low-income students, therefore, should realistically treat certain HBCUs as financially out of reach, despite their appeal.
“A lot of this has to do with guidance,” Baum told Grit Post. “If you’re a first-generation student and you don’t have anybody telling you that it matters where you go to college or what your choices are you might just see a (for-profit school) ad on the subway and go with it. We need to give better advice and regulate the for-profit institution.”
Above all, however, Baum demanded governments and schools offer more grant aid to students.