Two Key Takeaways on Education and Income

During a recent Dialogue with the Fed event, researchers with the St. Louis Fed’s Center for Household Financial Stability explored whether education is the great equalizer. In terms of income and wealth, can first-generation college graduates “catch up” to other college graduates whose parents also attained a four-year degree?

As seen in the video below, Policy Analyst Ana Hernández Kent discussed two of the Center’s key findings.

The Head-Start Effect

Holding demographics—age, race and a household head’s educational attainment— constant, Kent said that families with at least one parent with a college degree can expect higher income at the median than families headed by someone without college-grad parents.

That holds true even if the household head does not personally have a four-year degree: “Even if you’re a non-grad, if your parent has a degree, we would expect your income and your wealth to be higher than someone with no college in either generation,” Kent said. 

The Upward-Mobility Effect

According to the Center, first-generation college graduates get a bigger “boost” up the income ladder after earning a four-year degree than do continuing generation college grads.

For first-gen grads, “we would expect that boost that you get from college to be bigger than for a continuing gen grad,” Kent explained. 

• Dialogue with the Fed: Grading On a Curve: Do First-Gen Grads Fall Flat?
• On the Economy: Does Your Parents’ Education Matter to Your Own?
• Open Vault: Making the Dean’s “Other” List: Reflections of a First-Generation College Grad