Poor Students Gain Less From College Degree Than The Wealthy


Conventional wisdom puts a premium on obtaining a bachelor’s degree, which is believed to be a worthy investment that can lead to sizable earnings in the future. Evidence shows, however, that not everyone with a degree has the same or equal earning potential, with family background as a critical factor.

A recent analysis from Brookings Institution showed that college graduates from poor families benefit less in wages compared to their wealthier peers.

Students from families with an income below 185 percent of the federal poverty level – qualifying them for the free lunch program in schools – earn 91 percent more than those armed with just a high school diploma.

However, degree holders from wealthier families or those with incomes above 185 percent of the level saw a 162 percent wage boost.

And the wage gap between poor and non-poor graduates also tends to widen over time.

“Bachelor’s degree holders from low-income backgrounds start their careers earning about two-thirds as much as those from higher-income backgrounds, but this ratio declines to one-half by mid-career,” reveals Brad Hershbein, economist and author of the study that analyzed the Panel Study of Income Dynamics, which tracked 19,000 people and their descendants for almost 50 years.

He added that graduates from low-income groups initially earned 80 percent as much as those from higher-income ones, yet this dropped to 70 percent by the middle of their career.

According to Hershbein, many economists assume that this wage increase pattern – with such “degrees of dissimilarity” – also applies to those from different backgrounds, as well as in terms of race and gender.

What then accounts for the startling gap? The authors said that it could be the availability of educational resources during childhood, where low-income students access fewer resources while growing up. The disparity may continue to grow, making it hard for them to maximize their bachelor’s degree.

The place of one’s childhood and the school that one attended may also be factors at play, which the team is currently investigating and weighing alongside other considerations.

It is deemed troubling that college degree does not turn out to be the “great equalizer” it is set out to be, particularly in the face of high college costs and student debt. To promote economic mobility, experts and policy makers are urged to address a range of factors to “equalize” the benefits of higher education for everyone.

“A more comprehensive approach [than just promoting post-secondary education] may be needed,” said Hershbein.

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