New Research on Intergenerational Economic Mobility

Media Release: New research shows college and financial aid improve long-term economic outlook for low-income Washington students

November 7, 2022

Olympia—Many of the most economically disadvantaged recipients of need-based financial aid surpass their parents financially within three years of college graduation, a new report from the Washington Student Achievement Council (WSAC) finds.

A college degree is widely promoted as a path to economic mobility for individuals born into disadvantaged economic circumstances. WSAC’s new report describes the patterns of intergenerational economic mobility for people who received need-based financial aid and graduated with an associate or bachelor’s degree from a public college or university in Washington. The analysis compares the annual wages earned by recent college graduates (three years after graduation) to their parents’ income. Findings suggest that financial aid recipients in Washington experience improved economic outlooks after getting a degree.

“This is ground-breaking research that shows financial aid pays off for graduates and the state,” said WSAC executive director Michael Meotti. “Our state’s investment in building the most affordable educational environment in the country contributes to closing some of the equity gaps that stand in the way of opportunity for all Washington residents."

WSAC’s report, Intergenerational Economic Mobility of Need-Based Financial Aid Recipients in Washington: Evidence from Three Years After Postsecondary Graduation, provides detailed analysis. Key findings include:

There is consistent evidence that education contributes to economic equalization. Among need-based aid recipients, all demographic groups with economic ranks below 50 (the median of the sample) move up after graduating with a two- or four-year degree.
Children from all demographic subgroups born into the most economically disadvantaged families (the bottom quartile of economic ranks in the sample) earn more in wages than their parents’ family income by the third year after graduation.
Children from the most economically disadvantaged families earn more in wages than their parents’ family income regardless of whether they earn an associate or bachelor’s degree.
There is some evidence of an opportunity ceiling for underrepresented minority postsecondary graduates. Black, Hispanic, Native American and Pacific Islander people are less likely to move up to the top quartile from the bottom, and less likely to remain in the top quartile compared to Asian and white people.
The professional/scientific/technical, healthcare/social-assistance and manufacturing sectors employ the most postsecondary graduates moving up from the bottom quartile to the top quartile.

The snapshot and full report can be found on the WSAC website.

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