The Racial Wealth Gap, Financial Aid, and College Access

Phillip Levine and Dubravka Ritter

No 30490, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine how the racial wealth gap interacts with financial aid in American higher education to generate a disparate impact on college access and outcomes. Retirement savings and home equity are excluded from the formula used to estimate the amount a family can afford to pay. All else equal, omitting those assets mechanically increases the financial aid available to families that hold them. White families are more likely to own those assets and in larger amounts. We document this issue and explore its relationship with observed differences in college attendance, types of institutions attended, degrees attained, and education debt using data from the Survey of Consumer Finances (SCF), the National Postsecondary Student Aid Study (NPSAS), and the Panel Study of Income Dynamics (PSID). We show that this treatment of assets provides an implicit subsidy worth thousands of dollars annually to students from families with above-median incomes. White students receive larger subsidies relative to Black students and Hispanic students with similar family incomes, and this gap in subsidies is associated with disadvantages in educational advancement and student loan levels. It may explain 10 percent to 15 percent of white students’ advantage in these outcomes relative to Black students and Hispanic students.

JEL-codes: D31 G51 I22 I24 J15 (search for similar items in EconPapers)
Date: 2022-09
Note: CH ED LS PE
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Published as Phillip B. Levine & Dubravka Ritter, 2024. "The racial wealth gap, financial aid, and college access," Journal of Policy Analysis and Management, vol 43(2), pages 555-581.

Downloads: (external link)
http://www.nber.org/papers/w30490.pdf (application/pdf)

Related works:
Working Paper: The Racial Wealth Gap, Financial Aid, and College Access (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:30490

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w30490

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().