In Money for College, Middle-Class Black Families Are at an Extreme Wealth Disadvantage Compared to Their White Peers

Although some of the nation’s most prestigious colleges and universities have substantially increased their financial aid budgets, many middle- and upper-middle-class families must still rely on savings and other forms of wealth in order to pay for their children’s higher education.

Here black families are at a major disadvantage compared to their white peers. Less than half of all black families own their home as opposed to three quarters of all white families. Home equity loans are a frequent means of paying for college.

The latest Black Investor Survey, conducted by Ariel Capital Management and Charles Schwab, finds that the percentage of black families with incomes of at least $50,000 that are invested in the stock market dropped from 74 percent in 2002 to 57 percent in 2007. Black middle- and upper-middle-class families have average savings of $48,000 compared to more than double that figure for whites. White families, on average, have triple the assets of black families in 401(k) retirement accounts.