Despite a long-standing idea that a college education protects minorities against hardships that plague their communities, a new study discovered that Black and Hispanic students don’t often get to enjoy the protections of the college degree cloak promised to White students.
According to the New York Times, the study shows that college degrees aren’t narrowing the racial wealth gap by much. In fact, the study — set to be released Monday — suggests that “higher education alone cannot level the playing field.”
From 1992 to 2013, the median net worth of blacks who finished college dropped nearly 56 percent (adjusted for inflation). By comparison, the median net worth of whites with college degrees rose about 86 percent over the same period, which included three recessions — including the severe downturn of 2007 through 2009, with its devastating effect on home prices in many parts of the country. Asian graduates did even better, gaining nearly 90 percent.
It’s not immediately clear why college degrees are failing minority students, but one answer could lie in the housing market. According to the Times, Blacks and Hispanics have most of their wealth tied to their home ownership, while White and Asians “accumulated more assets in the stock and bond markets.” This is particularly important when considering how the housing bubble negatively affected Black and Hispanic families, wiping out what wealth they may have accumulated.
The collapse of the housing bubble played havoc with college-educated black and Hispanic families, who on average accumulated a huge amount of debt relative to the size of their paychecks. They borrowed a lot to buy homes, only to see them plunge in value during the mortgage crisis. While the average value of a home owned by a white college graduate declined 25 percent, homes owned by black and Hispanic grads fell by about twice that.
The housing boom and bust particularly whipsawed college-educated Hispanics: From 2007 to 2013, their net worth fell a whopping 72 percent.
This is not to say that college-educated minorities aren’t in a better position than those who don’t have college degrees, the report notes. While they are still set to accumulate more wealth, they are harder hit during periods of financial crisis, the Times writes.
At the very basic level, Blacks and Hispanics are also still subject to discrimination that keeps them out of high-paying jobs. In fact, the Times notes that even in the best of economic times, the Black unemployment rate has stayed at a constant high — even for college graduates. And minorities are usually at the low-end of family wealth, which means inheriting or borrowing money to pay a loan, tuition, or a down payment on a house are slim.
Read the entire report for a more comprehensive breakdown of how college degrees have failed to protect Black and Hispanic graduates, here.