To understand racial inequities in higher education, don’t just look at income disparities among different groups of Americans. Be sure to look at enduring wealth gaps, too.
That’s the takeaway from a new report by the Institute for Higher Education Policy, known as IHEP. “For decades, assessing income has served as the tried-and-true method for creating financial-aid packages — scholarships, grants, and loans — for our nation’s college students,” the report says. But as important as income is to consider, it says, “examining income alone masks deep and persistent inequities in wealth by race or ethnicity.”
Examining income alone masks deep and persistent inequities in wealth by race or ethnicity.
While the median income of white households is nearly twice as large as that of Black households, IHEP’s analysis found, their median wealth, or net worth, is 13 times greater. The wealth of white households is about twice that of Latino/a households. And those gaps affect a student’s access to, and ability to pay for, college, as well as their odds of graduating, taking on student debt, realizing career aspirations, and landing a high-paying job.
The report examines the cyclical nature of wealth — how an individual’s financial resources both affect and are affected by their postsecondary experiences and outcomes. It finds that:
- People who receive a wealth transfer of at least $10,000 from parents or grandparents are nearly twice as likely to save for their children’s college education than those who do not.
- The impact of income and wealth on enrollment varies by race and ethnicity. Among Latino/a Americans, for instance, wealth is a stronger indicator of enrollment than income. But among white Americans, income is a better indicator than wealth. And among Black Americans, the likelihood of enrollment is similar when considering either income or wealth.
- Borrowing rates vary by race and ethnicity. The wealthier a white student’s household is, the less likely they are to borrow, but the same isn’t necessarily true for other racial groups.
- Though greater wealth among Black and Latino/a Americans would increase college enrollment among those groups, the report finds that financial resources aren’t the only barrier. Differences in college enrollment by race and ethnicity persist even for Americans with the highest incomes and greatest wealth. In that group, Black Americans are least likely to enroll in college (79 percent) and white Americans are most likely to do so (92 percent). “This corroborates research that shows that many Black students also face nonfinancial barriers to college enrollment,” the report says, “and commonly used recruitment, admissions, and enrollment policies and practices serve to exclude students of color while privileging their white peers.”
IHEP’s report offers several recommendations. Colleges, it says, should consider designing recruitment, outreach, and admissions policies that serve applicants from low-wealth backgrounds — and identify student-support practices that might mitigate college-completion disparities by wealth.
The report’s authors also suggest re-examining the role of wealth in the disbursement of financial aid: “More research is needed to understand whether and how accounting for wealth in the distribution of need-based financial aid would promote equitable postsecondary access, success, and postcollege outcomes, compared with approaches that do not consider wealth. Researchers and policymakers should explore which policy designs would best support more equitable outcomes while minimizing unintended consequences, like increasing administrative burden for students from low-wealth backgrounds when they are applying for aid, or advantaging families with particular types of assets.”
One complication when it comes to assessing the role that wealth plays in college access and success: There’s a dearth of quality data. “Most existing datasets capture detailed information on either higher education or wealth, not both,” IHEP’s researchers write. They propose a series of recommendations for collecting and publishing more — and more granular — data that might provide deeper insights into the role that wealth plays in college opportunity and outcomes.
“Expanding access to high-quality, disaggregated, and complete data on wealth and higher education can help researchers and policymakers develop a blueprint to expand higher education access and success, and build on-ramps to wealth creation, especially for Black, Latinx, Indigenous, underrepresented Asian American, Native Hawaiian, and Pacific Islander communities, and all other race and ethnic identities.”
