Payoff from a college degree does not provide the same economic rewards for African Americans and Hispanics as it does for other groups. In fact, in households of color, those with a college degree actually fared worse than their counterparts without college degrees.
A recent study from the Federal Reserve Bank of St. Louis reports that a college education does not narrow the racial and ethnic economic gap. White and Asian college graduates do much better than their counterparts without college, while black and Hispanic college graduates do proportionately worse than their non-college degree counterparts. The study found that from 1992 and 2013, the net worth of whites with college degrees increased about 80 percent and for Asians with college degrees the increase was almost 90 percent. Whites without college degrees experienced about an 11 percent drop in net worth and Asian non-grads lost more than 44 percent.
During that same period, net worth declined about 56 percent among college-grad African-Americans and about 3.8 percent among African-Americans without degrees. For Hispanics with degrees a 27 percent decline in net worth occurred while a median 31 percent increase occurred in Hispanics without degrees.
Several factors explain these findings. Included among them are strong racial/ethnic discrimination in the job market, types of training and jobs minorities get, collapse of the housing market, the heavy debt many blacks and Hispanics accumulate (e.g. college loans and housing loans), paying more for less, lack of diversity in assets, and prior family wealth. Suggestions to counteract the economic gap include attending highly competitive colleges, choosing majors in fields such as technology and medicine, diversifying assets, holding more cash in savings to cushion against financial shocks, and avoiding taking on heavy debt.
William Emmons, St. Louis economist and one of the authors of the research report, said: “There is a lot of risk and a lot of unfairness in what color you are, what education your parents had…the playing field is not leveled. Higher education alone cannot level the playing field. It has to be multi-pronged effort.”