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A College Degree Is Worth Less If You Grow Up Poor

The more well-off you already are, the more college increases your future income.

A College Degree Is Worth Less If You Grow Up Poor

College isn't the "great equalizer" for everyone.

Photo: Flickr user Rodney Martin

In the standard mythology of the American dream, college is a step on the path to making it. The poorer you are, the more it seems you might benefit from a degree. Education is still "the great equalizer," Arne Duncan, the U.S. secretary of education, told a crowd in 2015.

But the benefit of a bachelor's degree is actually less for poor students than for anyone who grows up middle-class or rich. Recent research from the Brookings Institution found that kids who grow up poor—those who qualify for the federal free and reduced lunch program—do end up earning more if they get a four-year degree. That bump in income is just quite a bit smaller than it is for students from better-off families.

Poor kids who ended up going to college earned 91% more than their peers who never went beyond high school. Other college grads earned 162% more. The gap gets worse over time: By the age of 50, middle and upper-class college grads earn nearly $100,000 on average, while college grads from low-income families earn around $50,000.

"We kind of stumbled on this by accident," says researcher Brad Hershbein. He and his coauthors were studying a program in Kalamazoo, Michigan, that guarantees local students a free college degree. They looked at the benefits by group—men versus women, white students versus students of color, and students from poor families versus the rest. "That's when we discovered this pattern—that the returns to getting a bachelor's degree were much lower for the people who grew up poor."

Until that point, most researchers and policymakers had assumed that a college degree gave everyone similar benefits: poorer graduates might not end up earning as much, but they'd be proportionally better off. By gender or race, the proportional benefits of going to college are similar. The same isn't true for class.

It's a fact that was harder to notice in the past because little data was available. Researchers looking at the returns to education often look at an entire group rather than individuals. The Brookings team found a rare data set that looked at individuals—tracking 18,000 people for almost 50 years, with details on what their parents earned when they were in high school.

Now the researchers are analyzing the data to try to figure out why there's a difference. They are looking at all of the details: what their neighborhoods and families were like, the quality of their schools, and their majors and choices of career.

As they've started to play with the numbers, they've noticed one tentative result—the pattern seems to show up mostly in white students. Black students who grew up getting a free lunch actually see more of a benefit from college.

As they figure out what may be causing the differences, they'll also consider what this might mean for policy. Hershbein thinks college is still worth it for everyone (though some recent college graduates disagree. Goldman Sachs notes that 2015 graduates won't break even for almost a decade, and the lowest-earning grads won't break even until they're 50).

"Personally, I still think that even if college isn't going to give quite the boost to people who grew up poor as it did to people who didn't grow up poor, it's still giving them a pretty big boost—and moreso than other things that we know how to do," Hershbein says.

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