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Explaining the “Parent Boost” for Income and Wealth

Thursday, December 5, 2019

Does the amount of education your parents achieved affect the future income and wealth of your own household?

“We would hope that your own education matters more to your family’s income and wealth than your parents’ education,” Ana Hernandez Kent, a policy analyst with the St. Louis Fed’s Center for Household Financial Stability. “And it does, but your parents’ education still matters.”

During a recent Dialogue with the Fed event, Kent looked at the predicted income and wealth of two college-educated groups of Americans:

  1. “Continuing-generation” grads, meaning those holding at least a four-year degree and also having at least one parent with a four-year degree or higher
  2. “First-generation” grads, meaning those holding at least a four-year degree, but with parents who do not

The “parental boost” of the first group is notable, Kent says. As an example, consider households headed by age 50 whites:

  • Continuing-gen grads have an expected median income of $152,000 per year and $613,000 in net worth.
  • First-gen grad households have an expected median income of $113,000 per year and $412,000 in net worth.

“You don’t have control over whether or not your parents went on to get a (four-year college) degree,” Kent said, joking, “unless you do, and that is a very rare camp of people.”  

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Posted In Financial  |  Tagged ana hernandez kentcollegecollege graduateseducationwealthincomedialogue with the feddwtfhousehold financial stabilityhfs
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