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College Was Supposed to Close the Wealth Gap for Black Americans. The Opposite Happened.

By: Rachel Louise Ensign and Shane Shifflett.

Black college graduates in their 30s have lost ground over three decades, the result of student debt and sluggish income growth.

Black millennials thought college would help them get ahead. Instead, it is setting them back.

The median net worth of households with Black college graduates in their 30s has plunged over the past three decades to less than one-tenth the net worth of their white counterparts, according to a Wall Street Journal analysis of Federal Reserve data. The drop is driven by skyrocketing student debt and sluggish income growth, which combine to make it difficult to build savings or buy a home. Now, the generation that hoped to close the racial wealth gap is finding it is only growing wider.

More than 84% of college-educated Black households in their 30s have student debt, up from 35% three decades ago, when many baby boomers were at the same age. The younger generation owes a median of $44,000, up from less than $6,000. By comparison, 53% of white college-educated households in their 30s have debt, up from 27% three decades earlier. The median amount rose to $35,000 from $8,000. All figures are adjusted for inflation.

Meanwhile, Black graduates’ household incomes have grown more slowly than those of college graduates in general, according to a Journal analysis of census data. Median income for Black college-educated households in their 30s increased 7% from the early 1990s to late 2010s to about $76,000. Income for their white counterparts rose 13% to about $114,000.

“Not only are black families quite far behind, but they’ve fallen further and further behind for millennials,” said Ana Hernández Kent, senior researcher at the Institute for Economic Equity at the Federal Reserve Bank of St. Louis. “It will be very difficult for these older black millennials to build wealth."

America’s racial wealth gap has persisted since the end of slavery. It has grown and shrunk over the years, but black families have never been able to catch up with their white counterparts, making it difficult to pass on substantial wealth to the next generation. For decades, racist lending policies made it nearly impossible to get a mortgage in many areas, depriving black families of the opportunity to build wealth through home ownership. The 2008 financial crisis hit black communities disproportionately, further eroding black wealth.

The median net worth of black households with college graduates in their 30s has fallen to $ 8,200, from about $ 50,400 three decades ago, according to the analysis. During the same period, their white peers saw their median net worth rise 17% to $ 138,000. Equity is calculated by subtracting a person’s debts, such as mortgage and college debt, from assets such as homes and stocks.

The Journal’s analysis is based on the Federal Reserve’s Survey of Consumer Finances, which examines household wealth and census data. The analysis sorted the data by age, race and level of education. The Journal aggregated the results from 1989, 1992, and 1995 and compared them to the results of surveys conducted in 2016 and 2019 to capture more families with graduates in their 30s than participating in a single survey.

Kesha McKinney and her husband own their home and have Roth IRAs for their two young sons. They are also limiting their spending and hope to retire at age 45.

“Our friends call us the rich,” said Ms. McKinney, who is 32 and works for Detroit City Council.

But Ms. McKinney also has over $ 120,000 in debt from undergraduate and graduate degrees. She usually makes the minimum monthly payments, but doesn’t think she will ever repay them.

“The student loan debt is hanging over me like a rainy day,” she said.

Tuition fees have skyrocketed in recent years, but black students are receiving less help from their parents to cover them. In 2012, 64% of white families contributed an average of nearly $ 73,400 to the education of their college-aged children, according to a study of nearly 3,000 households released by the St. Louis Fed. Only 34% of black families helped, at an average of $ 16,000.

Yet higher education has given black graduates access to top positions in U.S. government and business. While young black graduates have less wealth than whites who did not attend college, they still make more money and have more wealth than young black adults without a college degree – and they have more freedom. to pursue careers in specific areas of interest.

Deontay Wright, 29, grew up in a housing project in East St. Louis, Ill., Where his single mother sometimes struggled to feed him and his brother.

Mr. Wright’s mother made sure he did his homework and pushed him to excel in school. He studied accounting on a scholarship at Tuskegee University. He struggled to pay off his student loans for a few years after graduation.

Mr. Wright now works as a CFO with a Washington, DC area defense contractor. He has side businesses that do taxes, cook, and take photos.

He still owes about $ 14,000 on his student loans, but the payments are no longer a burden. He also has an emergency savings fund, 401 (k), and investment accounts where he trades stocks and cryptocurrencies.

Last year he bought a four bedroom townhouse. His mother cried when he flew her in to see him.

But others find it more difficult to exceed their parents’ level of wealth. Terrance Cleggett took out $ 46,000 in student loans to attend Bowling Green State University. He enjoys his job as a social studies teacher at a public high school in Cleveland and appreciates its perks, like time off and good health care. Three years ago he bought his first house.

With about $ 30,000 in student debt, he said, he’s in about the same place financially his parents were at his age, but his job is more fulfilling. Her mother worked in a box factory and her father was an auto mechanic. Neither went to college.

“The only downside is the loans,” said Cleggett, 30. “Everything else is great.”

Black households are less likely than whites to own stocks, retirement accounts, or homes, the traditional way to build long-term wealth in the United States, according to a 2018 study by Edward N. Wolff, professor of economics at New York University. About 41% of black households with a university education in their 30s owned a home in the late 2010s, up from 43% in the early 1990s and much lower than the current rate of 67% of homeownership among women. white peers, according to a Journal analysis of census data.

Ristina Gooden graduated from Ohio State University in 2012 with a degree in hospitality and about $ 18,500 in student debt. Her parents, both college graduates, helped but couldn’t cover everything.

After college, she made about $ 50,000 a year in event planning, worked part-time at local bakeries, and started paying off her loans.

In 2019, Ms. Gooden began graduate studies at Vanderbilt University to become a Minister. She was afraid of draining her savings but wanted to give back to her community. She also felt a deep need to be recognized as intellectual.

“This is so deeply ingrained in us: ‘How much work can I do to be considered a full person? ”, Said Ms. Gooden, 31. and see me as the smartest person in the room.

Ms. Gooden expects to graduate with $ 100,000 in student loans. She believes she will have to wait until her mid-40s to buy a house on her own, but may be able to buy sooner with the help of her parents or a future partner. Thinking about debt is stressful. “It’s like a burden that I will carry for the rest of my life,” she said.


Picture: unsplash | Raul De Los Santos

Write to: Rachel Louise Ensign at | Shane Shifflett at


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