is supposed to be the great equalizer ó the way to
pull yourself out of a low-income background and
position yourself for a better shot at the American
does it work?
somewhat, but college is not as powerful as you might
believe. Although low-income students do give themselves
an earnings boost by getting a bachelorís degree, they
donít come close to students from middle- or
high-income backgrounds with the same degrees, according
to a new study.
students end up earning 162 percent more over their
careers than those who stopped their education after
finishing high school, said one of the researchers,
economist Brad Hershbein of the W. E. Upjohn Institute
for Employment Research. But college graduates from
low-income backgrounds only increase their lifelong
earnings 91 percent.
increase of 91 percent is still pretty good," but
it "is much less" than the 162-percent boost,
difference in lifetime earnings would likely be a shock
for people who grew up poor and figured putting the
effort into earning a bachelorís degree would help
them like anyone else finishing college.
with economist Tim Bartik, Hershbein tracked people from
age 25 to age 62, using family data collected in the
national Panel Study of Income Dynamics. The researchers
identified 25-year-olds from low-income backgrounds by
focusing on families with children that qualified for
free or low-cost school lunches through the federal
assisted school lunch program. Their incomes were
slightly above the poverty line. To meet the school
lunch criteria, a family of four would have a $36,000
income, said Hershbein.
earnings gap between the poor and nonpoor college
graduates also widened as time passed," Hershbein
said in a recent report for the Brookings Institution.
Immediately after college, the pay the low-income grads
received was about a third lower than graduates who had
come from families with more money. But by the time
people reached midcareer, the advantage of a college
education slipped. In their 40s, the college graduates
from low-income backgrounds were making only half of
what graduates from nonpoor households were earning.
their late 50s, earnings for college graduates who grew
up poor decreased substantially. Their earnings fell to
the same level as at the start of their careers, the
researchers report. The graduates who had been raised by
higher-income families experienced some decline late in
their careers, but a much smaller decline.
researchers have not yet identified causes for the vast
difference in pay and are continuing to dig through
possibility could be that people raised in higher-income
families are more likely to pursue graduate degrees
after receiving bachelorís degrees. People with
graduate degrees tend to make more money. But the
researchers determined that advanced studies were a
small factor in the immense difference in earnings.
said the choice of majors and careers could be a factor,
although he is not yet certain. It could be that the
poor are attracted to careers where they help others ó
positions that often are low-paying. If thatís the
case, students need to be aware that although they are
going to college they may not get the level of pay they
expect based on pursuing a bachelorís degree, he said.
awareness is crucial as students take on student loan
debt. As a rule of thumb, monthly payments on student
loans after college should require no more than 8
percent of a personís monthly salary.
possibility has been suggested by other studies:
Students from low-income backgrounds tend to choose
lower-quality colleges. Studies show that the quality of
a college ó not just a degree ó matters. More
selective colleges may provide a broader network for
students, giving them advice on how to advance and
introductions to people who can help them.
fact, in one study, economist Alan Krueger and Stacy
Dale found that attending elite colleges was not
significant in outcomes for affluent students but helped
low-income students considerably. Krueger noted that
people from more affluent backgrounds have networks
through their families and other contacts that can help
them advance. Low-income students, without built-in
networks, can gain access to influential networks
through highly selective colleges.
said low-income students that would qualify for more
selective colleges often donít apply to those colleges
because they have not had contact with them.
up in low-income communities, the students havenít
seen their friends going anywhere but state college
nearby, he said. And selective colleges also "are
not reaching out to low-income students."