College Does Not Protect Wealth of Blacks, Hispanics

College graduates weather economic downturns better than those with less education. That's the assumption, but is it true? Only for Asians and non-Hispanic Whites, according to a study by the Federal Reserve Bank of St. Louis. Take a look at the inflation adjusted 2007-to-2013 trend in median net worth by educational attainment of householder for each race and Hispanic origin group...

Asian households
With bachelor's degree: +5%
Without bachelor's degree: -65%

Non-Hispanic White households
With bachelor's degree: -16%
Without bachelor's degree: -33%

Black households
With bachelor's degree: -60%
Without bachelor's degree: -37%

Hispanic households
With bachelor's degree: -72%
Without bachelor's degree: -41%

For Asians and non-Hispanic Whites, a college degree offered some protection during the Great Recession. For Blacks and Hispanics, a college degree meant greater losses. As disturbing as this finding is, it gets worse. The same pattern can be found over the longer term—from 1992 to 2013. Asian and non-Hispanic White households headed by college graduates saw their median net worth grow by more than 80 percent during those years, after adjusting for inflation, while their less-educated counterparts experienced a decline. But Black and Hispanic households headed by college graduates saw their median net worth shrink between 1992 and 2013. For Hispanic college graduates, net worth fell 27 percent during those years versus a 31 percent increase in the net worth of their less-educated counterparts. For Black college graduates, net worth fell 56 percent between 1992 and 2013 while Blacks without a college degree experienced a smaller 4 percent loss.

"College degrees alone do not provide short-term wealth protection, nor do they guarantee long-term wealth accumulation," conclude the researchers. "The underlying factors causing racial and ethnic wealth disparities undoubtedly are complex and deeply rooted. Further research is needed."

Source: Federal Reserve Bank of St. Louis, Center for Household Financial Stability, Why Didn't Higher Education Protect Hispanic and Black Wealth?