How well college graduates do financially depends on their parents
Radnor, Pa .: One last chance for mom to take care of this Villanova University graduate before the 178th school starts on Friday, May 14, 2021 at the Villanova Stadium.
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It is often believed that a college degree opens doors to higher levels of income and wealth.
However, it turns out that another important metric – whether your parents also have a college education – helps determine how much money you will have.
This is based on research by the Pew Research Center, a non-partisan think tank that looked at Federal Reserve data that included parents’ educational attainment.
The study found that 70% of adults with a bachelor’s degree had at least one parent who also had a bachelor’s degree or more.
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Second-generation college graduates who acted as household heads had an average household income of $ 135,800 versus first-generation college graduates of $ 99,600.
Household college graduates whose parents had a bachelor’s degree had average household wealth of $ 244,500, compared to $ 152,000 for those whose parents were non-college students.
The effects were largely the same regardless of age. According to Richard Fry, senior economist at the Pew Research Center, the study measured data for ages 22 to 59.
“Does it also matter in midlife where you come from and who your parents were?” Said Fry. “Yes, it does.
“Not all university graduates feel the same way.”
The study found that first-generation college graduates tended to take on more debt for their education, with 65% owing $ 25,000 or more, compared with 57% of second-generation graduates.
College graduates whose parents were in college were 27% more likely to say they would expect an inheritance, compared with 12% of first-generation graduates who said so.
While college education might not be the “big break,” it doesn’t mean it isn’t valuable to first-generation graduates, Fry said.
This bachelor’s degree is important, valuable, but not the great compensation.
Senior Economist, Pew Research Center
On average, these first-generation graduates are paid more and have higher net worth. They are more likely to be married and likely to live longer.
“College is still valuable to them, but it’s not quite as rewarding as it is to some others,” said Fry.
In particular, the advantage of having a parent with a university degree was only evident in the case of university graduates. So for people with just a high school diploma, it made no difference in their lives whether their parents graduated from college or not.
“It’s nice to have a parent with a college degree,” Fry said. “But it really only shows when you have a college degree yourself.”