Data researched by the Center for Household Financial Stability has shown that education is playing a big role in American families’ income.
But obstacles remain, considering the rising cost of college and student loan interest rates, which could cause a ripple effect on student’s future wealth. The solutions lean towards investment early on.
Ray Boshara, senior advisor and director of the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis, led a discussion Tuesday at Ozarks Technical Community College explaining how race, education, and age can determine a person’s wealth.
“Generations have always done better than previous generations, that’s the American dream right?” asked Boshara.
“But for young families – at least in terms of their wealth,” Boshara continued during the discussion, “what’s happening is they’re on a path to have less wealth than their parents or grandparents at a similar age.”
According to the center’s key findings, those with a higher level of education saw an increase in wealth as of 2013 than in 1989.
“We have to make earlier investments in life and we have a growing body of evidence that those investments pay off,” said Boshara.
If the child knows their parent is saving money for their education, it will increase their chances in enrolling into college.
Boshara said, “3,000 dollars a year in the child’s first five years from life result in an increase in SAT scores by 20 points and is also associated with a 20 percent increase in earnings later in life.”
This not only helps get the younger generations ahead of previous generations, but also decrease the need for student loans.
Panelist Dana Carroll, Springfield's child advocate for “The Every Child Promise”, also spoke at the event explaining if the community can come together and prepare children for school they will have more success in kindergarten through high school and would want to get a higher education.
Her solution was “if we can improve the access to services for all children from prenatal to six, we will improve the metrics across the early childhood spectrum and that’s going to translate to more children being ready for kindergarten and more ready for scholastic performance K-12 and for life.”
According to the America’s Promise Alliance, the national high school graduation rate reached an all-time high in 2013 hitting at 81.4 percent.
However, African-Americans and Hispanics high school graduation rates and college degree obtainment remains behind Asians and Whites.
One example of how officials are trying to curb this gap, Boshara said, is by offering additional assistance to students in certain areas.
“Every kid in the Normandy School District - where Michael Brown graduated from – gets a 500 dollar college savings account and the treasurer of St. Louis is starting a college savings account for every kid in public schools in St. Louis,” said Boshara.
Officials also stress the importance of community members joining to create scholarship funds and donate money to students from families of low income. That will give more people the opportunity to pursue higher education and in turn generate more wealth.