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Going To College Didn't Shield Black And Hispanic Families From Financial Ruin

The net worth of college-educated Hispanic families fell 72% from 2007 and 2013. Educated black families lost 60% in the same period.

Last updated on July 3, 2018, at 1:23 p.m. ET

Posted on August 17, 2015, at 6:09 p.m. ET

Charles Dharapak / AP

A new study by the Federal Reserve Bank of St. Louis highlights how college degrees didn't shelter black and Hispanic families from the devastating effects of the financial crisis.

The vast majority of American families, with and without college educations, experienced drops in net worth caused by the collapse of the housing market and the financial turmoil that followed. But black and Hispanic households led by people with four-year college degrees were the hardest hit.

The average net worth of college-educated Hispanic families went down 72% between 2007 and 2013. For black college-educated families, it fell 60%.

For white families headed by someone with a college degree, median wealth declined 16% in the same period, while for college-educated Asian families, wealth went up 5%.

St. Louis Fed / Via stlouisfed.org
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One big reason for the difference is how the housing crisis affected different populations. Black and Hispanic families, especially those that were college educated, were hit the hardest by the collapse in home prices.

Joe Raedle / Getty Images

For college-educated Hispanic families, the average value of homes they owned went down 45% between 2007 and 2013, and for college-educated black families, the decline was 51%.

Non-college-educated black and Hispanic families, by contrast, took on less debt than Asian and white families without college degrees.

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The decline in wealth came at the end of a long period of falling incomes for black and Hispanic college graduates.

Between 1992 and 2013, incomes for white and Asian college-educated families went up 18% and 31% respectively. In the same period, incomes declined by 10% and 12% for college-educated black and Hispanic families.

St. Louis Fed / Via stlouisfed.org

For non-college-educated black and Hispanics families, incomes (while lower) went up 17% and 16% respectively. Incomes rose considerably for white and Asian college educated families.

For all racial groups, graduating from college is associated with a higher median income, but black and Hispanic families get the lowest boost.

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St. Louis Fed / Via stlouisfed.org

While black families get less of an income boost from college, the major discrepancies happen with net worth, which measures a family's assets (like real estate, retirement accounts, and investments), minus debts (like mortgages).

Black families with college graduates have just over 3.5 times the net worth of non-college-educated black families. White families, on the other hand, have 4.5 times the net worth, Hispanic families have 4.5 times, and Asian families have 9.8 times.

And in terms of net worth, getting a college degree can't even get black families on par with less educated white families.

Non-college-educated white families have a median net worth of $43,625, while college-educated black families have a median net worth of $32,780.

St. Louis Fed
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