Higher Education Protects Wealth During Tough Times – Unless You’re Latino

Higher Education Protects Wealth During Tough Times – Unless You’re Latino
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Graduated from college? Chances are you’ll be able to get through an economic recession, unless, of course, you’re black or Latino.

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You read that correctly!

In a study from the Federal Reserve Bank of St. Louis, researchers found that higher education doesn’t offer those of a brown or black hue the same kind of protection it does white and Asian people who have matching four-year college degrees.

Studying both the 2007 and 2013 periods, authors William Emmons and Bryan North learned that the education-wealth gap exists in both long-term and short-term cases of economic downturn.

According to the report, between 2007 and 2013, black families headed by someone with a college degree experienced a median wealth decline of 60 percent. For Latinos, the loss was even greater. College-educated Hispanic households felt a 72 percent drop to their median real net worth. In contrast, white families headed by someone with a four-year college degree witnessed a 16 percent drop in wealth, while equally educated Asian households actually gained 5.1 percent more in their median real net worth.

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While the report doesn’t explain why these inequities exist among higher-educated families of different races, Emmons and North do suggest that debt might play a major role. For instance, in 2007, black and Latino households had median debt-to-income ratios that far exceeded white and Asian families.