Paul L. Caron
Dean




Saturday, April 10, 2021

Dorothy Brown: College Exacerbates The Racial Wealth Gap

Washington Post op-ed:  College Isn’t the Solution for the Racial Wealth Gap. It’s Part of the Problem, by Dorothy Brown (Emory):

Higher education is supposedly the ticket to a better future, and it usually translates to a larger salary regardless of race, according to a 2011 study from the Georgetown University Center on Education and the Workforce. But college does not pay off for Black students the way it does for White students. At virtually every step — from taking out loans to facing a racist job market to dealing with repayment plans — Black students and their families have disadvantages. As a result, the Black-White wealth gap widens.

Black college graduates have higher debt loads, on average, than White college graduates. Black debt rises over time, White debt diminishes. Upon graduation, the average Black graduate owes $23,400 vs. the White graduate’s $16,000, according to the Brookings Institution. Four years later, the gap triples. Even at the top end of the income spec­trum, Black students have higher student loans ($4,643, on average) than White students ($3,835), and Black parents take out larger loans to help pay for college ($3,303 vs. $1,903).

What accounts for that difference? First, it’s the schools students attend. Wealthier colleges, which can afford to award financial aid and scholarships, disproportionately admit White students: White students are almost five times as likely to go to a selective university than Black students, even when controlling for income. Meanwhile, a higher share (12 percent) of Black students attend for-profit colleges than very selective universities (9 percent), because online and part-time features allow them to work while getting their degrees. These schools usually do not award any financial aid and are in effect extremely expensive, given their low graduation rates

Another factor is the wealth disparity between Black and White families. Black college students are less likely than their White peers to receive tax-free gifts from their parents and grandparents. ...

Student debt can be the difference between a financial future of hope or one of despair. Its forgiveness is a contentious political issue: whether to cancel the first $10,000 or $50,000, or all of it; whether forgiveness should be tailored by the borrower’s income or wealth or degree; whether such a policy would liberate a whole generation of borrowers or mostly benefit the highest earners. These debates often miss the reality that college is not the same experience for Black students as it is for their White peers. ... American racial inequality makes it virtually impossible to attain equal footing with White families through college. Our efforts to address the costs of higher education should acknowledge that reality.

Prior TaxProf Blog coverage:

https://taxprof.typepad.com/taxprof_blog/2021/04/dorothy-brown-college-exacerbates-the-racial-wealth-gap.html

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