New indicators report shows escalating disparities for poor students, students of color

Tuesday, May 17, 2022
A photo illustration of a mini mortarboard (graduation cap) sitting on top a stack of $100 bills

Report from The Pell Institute and PennAHEAD highlights stark differences in debt burden and benefits of higher education among ethnic groups in the U.S. – a gap that has significantly widened in recent years

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Matthew Vlahos, Senior Associate Director, Penn GSE Communications

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WASHINGTON, D.C. (May 17, 2022) – The burden of higher education debt has painful and long-lasting consequences for poor students and students of color, according to a report released today that has annually tracked trends and indicators in postsecondary enrollment since 2015.

The disparity itself is not new, but the gap is widening – and fast. For example, the most recent data show that nearly half of Black students owe more money four years after graduating than they originally borrowed, in contrast to 17 percent of white students. And even 10 years after attaining a bachelor’s degree, 37 percent of Black Americans reported a negative net worth, nearly double the average for their white peers.

“Rising inequality of income and wealth in the United States, and the increasing cost of higher education, threaten college access and students’ career pathways. Too many college students, especially students of color, struggle with high student debt and limited family resources that must be addressed through asset-based solutions,” said Terry Vaughan III, Ph.D., Vice President of Research and the Director of The Pell Institute for the Study of Opportunities in Higher Education at the Council for Opportunity in Education and one of the report’s authors.

The report Indicators of Higher Education Equity in the United States: 2022 Historical Trend Report – is released annually by The Pell Institute and the University of Pennsylvania Alliance for Higher Education and Democracy (PennAHEAD) at the Penn Graduate School of Education. It found that while higher education can still provide an entrance to the middle class and financial improvement for many poor and first-generation students, it mires many in debt. Attaining long-term gains, the authors note, is much more difficult than in the past.

“What we see, more clearly than in previous reports, is a vast divide in outcomes between families with assets and those without,” said co-author Laura Perna, Ph.D., vice provost of the University of Pennsylvania and an executive director of PennAHEAD. “There is a very notable difference among ethnic groups in the growth of median wealth. That stark inequality sets the stage for years of struggle for many students who try to better their lives through higher education.”

Margaret Cahalan, Senior Research Fellow of the Pell Institute, co-founder of the Indicators project and co-author states: “A key theme of the 2022 Indicators report is re-imagining Higher Education as a basic Human Right. Unfortunately, the statistics we track show anything but equal access to higher education in the U.S. If higher education is a human right, necessary for full participation in the knowledge economy, then basic structural changes are needed in our higher education system to ensure that each person has the right to develop their diverse talents to become full participants in the society.” 

Key data in the report, drawn from various sources, highlight the increasing gaps associated with college: 

  • Impossible costs  The well-documented rise in the cost of college hits low-income students hardest despite qualifying for Pell grants. In 2016, of students whose families are in the lowest income quartile), the average net price of a college education was equivalent to 94 percent of family income, $32,542. (4b(ii) Page 163)
  • Inequities in Average Amount Borrowed  Of students from low-income families who received Pell grants, the average amount borrowed ($43,983) to attend college far exceeded the amount borrowed ($25,375) by students from higher income families who never received Pell Grants. Blacks who qualified for Pell Grants borrowed an average of $58,644; Whites who qualified for Pell grants borrowed an average of $31,578. (4e(ii) Page 175)
  • Unable to Meet Essential Expenses – Even 10 years after obtaining a bachelor’s degree, more than one third (37 percent) of Black Americans reported a negative net worth. Nearly one third had difficulty meeting essential expenses in the last 12 months. (4e(vi) page 182). About 18 percent of Whites and 26 percent of Hispanics reported a negative net worth; 11 percent of Whites struggled to meet essential expenses as did 19 percent of Hispanics.
  • Uneven Growth of Median Wealth – White families had a median wealth of $108,320 in 1983 and $162,176 in 2019, in constant 2020 dollars, an increase of 50 percent. Yet in contrast, Black median wealth was $7,188 in 1983 and $9,111 in 2019, a rise of just 27 percent. Hispanic median wealth was $4,151 in 1983 and $14,173 in 2019, an increase of 241 percent. White median wealth is 18 times higher than Black median wealth and 11 times higher than Hispanic median wealth. (Figure. 8b(ii) Page 38)
  • Negative Wealth Almost the Same for Black families 1983-2019 – Some American families have negative wealth, meaning they owe more than they have in assets. But while 15 percent of White families had negative wealth in 2019, an increase from 11 percent in 1983, fully a third of Black families had negative wealth in 2019, about the same as in 1983 (34 percent). Hispanic negative family wealth dropped from 40 percent in 1983 to 31 percent in 2019. (8b(ii) Page 38)
  • Student Debt is Soaring – In 2021, 43 million people had student debt amounting to $1.75 trillion, up from $330 billion in 2003. (4c Page 164)
  • Students from Low-Income Households Less Likely to Attend Selective Schools – More than two-thirds of students whose families are in the lowest quintile of income attend two-year institutions or less. Just four percent of such students attend highly competitive four-year institutions. In contrast, 33 percent of students whose families are in the highest quintile of income attend highly competitive colleges and universities. (2f Page 113)
  • Difference in Quality of Education – Of those who graduated from high school by 2013, 33 percent of Asians, 17 percent of whites, 7 percent of Hispanics and 5 percent of Blacks attended most- or highly-selective institutions. On average, the nation’s highly selective colleges and universities spend far more on students ($52,770) than selective ($22,120), moderately selective ($20,641), and broad access ($15,159) institutions. (3d(i) Page 148)
  • Growing Gender Gap for Bachelor’s Degrees – In 1980, the genders were evenly split. In 2019, women earned 57 percent of bachelor’s degrees bestowed and men, 43 percent. (5a and 5b Page 198)

"These data show that while we have a system of higher education that promises to be the strongest vehicle for upward social mobility it still segments opportunity by familial wealth. We need to move collectively and urgently to address these persistent and prevalent gaps in opportunity across higher education,” says Erick Montenegro, Senior Research Associate for The Pell Institute.

The report also has a wealth of information on how the 50 states and Washington, D.C. differ in the cost of post-secondary education available, percentage of students approved for free or reduced-price lunch, wealth inequality, percentage of the population with a bachelor’s degree, and other data of interest.

The Pell Institute for the Study of Opportunities in Higher Education

The Pell Institute conducts and disseminates research and policy analysis to encourage policymakers, educators, and the public to improve educational opportunities and outcomes for low-income, first-generation college students and students with disabilities. It is the research arm of the Council for Opportunity in Education, a nonprofit organization established in 1981 that is dedicated to furthering the expansion of college opportunities for low-income, first-generation students, and students with disabilities.

University of Pennsylvania Alliance for Higher Education and Democracy (PennAHEAD)

PennAHEAD is dedicated to fostering open, equitable, and democratic societies through higher education. Located within the Graduate School of Education of the University of Pennsylvania, PennAHEAD conducts original research and applies a multidisciplinary, research-based approach to address the most pressing issues regarding the societal contributions of higher education in the United States and the world.

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NOTE TO EDITORS: The complete 320-page report is available for download at pellinstitute.org.

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