$18,000 $2,250 $750
Recently as I was on my way to the Council For Opportunity In Education conference and I was reading a study that was conducted by the Corporation For Enterprise Development. The report was all about the growing racial wealth gap, the causes of it, and potential solutions. The reason it caught my attention is because of the media repeating one number, 228, but first let’s talk about the other numbers.
Based on their findings if the same growth continued over the next 30 years caucasian households would see their wealth grow $18,000 a year while hispanics would see growth of $2,250 a year and African American households would see $750 a year. If you think those numbers are disturbing let’s keep going. If you look at the wealthiest 100 members on the Forbes list their wealth alone is the same as every African American combined. Every African American combined! 100 people! That is still not the important number. The most important number that every news and media outlet picked up on was 228. This report said if nothing changes that it would take African Americans 228 years to close the racial wealth gap with caucasians.
Now that is the number that should cause you to pause. 228 years to close the gap! Also by the way the report said it would only take hispanics 84 years to close the gap. Closing the wealth gap has a lot to do with racial issues and a lot of it does not. Confused yet? What I mean by that statement is that yes there are so many reasons that African Americans are playing catch up (slavery, segregation, housing discrimination, unequal education, etc), but there are also people like Dr. Mary Mcleod Bethune, A. Phillip Randolph, Madame C.J. Walker, Duke Ellington, Thurgood Marshall, Benjamin Banneker, my grandmother, my mother and so many more who rose above all of that terribleness to rise to greatness!
What they overcame to become who they are is nothing short of remarkable and if they were born at the same time I was we can only imagine what more they could have done! During the time they were born yes it should take 228 years or longer to close the wealth gap, but today when the most educated population is the African American woman I can’t accept 228. So why do I disagree? I disagree because of what I see as the possibilities to make change not only to close the racial wealth gap, but to also close the socioeconomic gap. There are people in all races who are looking to close the gap from low and middle income to high income. Every race has individuals who want to close the wealth gap in their lives and that is what this is about and that is what brings me back to the COE conference.
The individuals who attended the conference were TRiO professionals and they work with middle, high school, and college students. These students can be first generation, low income, middle income, or a minority and they are a part of different programs that these professionals run.
This is the US Department of Education’s definition of TRiO: The Federal TRIO Programs (TRIO) are Federal outreach and student services programs designed to identify and provide services for individuals from disadvantaged backgrounds. TRIO includes eight programs targeted to serve and assist low-income individuals, first-generation college students, and individuals with disabilities to progress through the academic pipeline from middle school to post baccalaureate programs.
My definition: I see them as individuals who are able to be on the front line of closing the racial and socioeconomic wealth gap! They all work non-stop to help students reach their highest potential. They are not the only ones, but also GEAR UP professionals and anyone else that works with high school and college students. Here is how it can be done.
The major debt held by most individuals today is student loan debt and it is $1.3 TRILLION dollars and growing! The average student loan debt of a 2016 graduate was $37,000. Do you think the TRILLIONS will stop there? Do you think that this is adding the wealth gap? It will not stop and it will continue to grow the gap unless steps are taken. In the study it looked at the advantages many that are in the upper class have when it comes to higher education. For example upper class and even many middle class students may have parents, grandparents, or aunts that help contribute a portion of college expenses, if not all of their college expenses. So when these students graduate college they either have a small amount of debt or they have no debt at all!
What happens when you send the same student who may be low income, middle income, first generation, or minority to the same school without any funding other than student loans and pell grants? They come out with massive amounts of debt on their back and no idea how they are going to pay back the money. Then you add on top of that life! These students get married, have children, deal with daycare costs, have parents with no life insurance or inheritance pass away and you can see how the gap grows larger and larger! This is a rollercoaster that no one wants to ride and I am talking about the college graduates not the ones who went to college and didn't finish. Their situation is worse, because they have the debt and no paper to show for it!
So how do you prepare a student that is behind financially to catch up with everyone else and possibly pass them? You show them how to handle money the right way so that when they get it they won’t lose it, but instead will make it grow! Here is where TRiO and GEAR UP programs step in. They work with students all around the country who fit into this category and their sole purpose is to get these students into college. To get these students into college academics is extremely important, but to keep them on that college campus and move them across the graduation stage behavior with money has to be a major part of their lives.
I won’t call it financial literacy because that allows people to just check the box. It gives them permission to just invite anyone to come and talk to the students about topics that don’t matter to the students. For example I have seen bank representatives (they are free) come and talk to a 10th grader about credit. Why does a 10th grader need to know about credit? They don’t! They need to know about the millions of dollars in scholarships shared on social media each year. An eleventh grader shouldn't be taught compound interest before they are taught how not to alienate potential scholarships and internships due to their social media behavior.
Students like myself (first gen) need a different approach because we are arriving on college campuses with the same intellect, but not the same bank account. The same “keeping up with the joneses" mentality without the same cash to pull it off.
So, these bright students have conquered high school and they arrive to college with their $5815.00 in Pell Grant aid to pay for the $8,591.00 tuition (UNC). They have nothing to cover the $10K room and board or the $4K in books and other expenses. Wait, they do have something to cover it, DEBT! Debt that piles on year after year until graduation. The student as a freshman is seeing the wealth gap widening, but does not recognize it. Maybe they are first gen and don’t realize that you don’t have to take out the max loans each year or that maybe they can opt into a lower cost meal plan and dorm room. When you are a student with no one in your family with prior college experience you encounter all the negatives and a small percentages of the positives.
You get family members telling you to send your (NOT free money) refund check home every semester instead of that family member encouraging you to meet every career counselor at the career center so you can be front in line for that PAID internship! These students get the negative pressure of how they need to work twenty hours or more a week to take care of home instead of a parent telling them take all of their time to study so that their GPA puts them at the top of the competition! When these students are unable to control their money because they have not been taught in high school or in college they end up in places like pay day loan and pawn shops getting ripped off financially. The gap w i d e n s more.
If this same college student has been taught how to behave with money either before college or during college they don’t fall into these money traps whether the traps are set by family or not. They save those refund checks just in case a true emergency happens the next semester. They use their talents to bring in extra money on their own time instead of being locked into set hours making minimum wage. They create financial independence before college graduation and after graduation they pay off any student loans they may have quickly!
Elementary: Full Circle
I am sure you are asking yourself why are we talking about the elementary space? TRiO, GEAR UP, and higher ed professionals don't primarily focus on elementary students, but their work can affect these students and further close the wealth gap for future generations. Over the years that I have been speaking at high schools, on college campuses, and at corporations I have met thousands of people who had a dream to change the street they grew up on, the community they lived in, the world they call home, but because of debt that dream went away. It never resurfaced and the wealth gap cycle continued.
These potential game changers and their world shifting ideas were pushed down by student loan payments, daycare fees, mortgage and rent payments, car loans, credit card debt, etc. In an alternate universe where they learned how to pay their debt off quickly or not get in the debt in the first place these heroes have went back to their neighborhoods and invested their disposable income at the local elementary school the STATE forgot. They help buy laptops and books so that each student is on the same level as those on the other side of town with upper class parents. Their funds provide extra food so that no student is hungry and always able to focus on their work each and every day. Their most important contribution is their time they have to spend tutoring children and showing them what it takes to go to college. They have this time because they are not working a second job to pay off debt.
While these game changers are providing funds the entrepreneurs have used their extra money to build businesses. Businesses that are needed in their communities. For example imagine someone who creates a business that is able to bring fresh fruits and vegetables to a neighborhood designated as a food desert. This entrepreneur is creating a healthier population less dependent on medications and as a plus possibly supporting a local farmer.
The possibilities are endless of how the wealth gap can be narrowed way before 228 years. I could go on about how HBCUs can narrow the gap faster. How athletes can make strategic investments to close the racial and socioeconomic wealth gap, but this has been long enough. I will stick with the ones who are in danger of falling deeper into the wealth gap and those who have the platform to keep that from happening.
Know that it makes no sense that TRiO, GEAR UP, and other programs that serve the students have to worry about funding each year. Their success will improve the US and global economy dramatically. Wish I could share why, but that would be more paragraphs. Also to flip it around all programs have to be serious about “financial literacy.” This is not directed at everyone, but enough of checking the box and just putting anyone and everything in front of students and it is not causing a change in their financial behavior. It is too much at stake for that!
Neighborhoods can be changed, family finances can move from poverty to generational wealth, your programs can become self funded by your own graduates, and so much more!
Whether you work with me or not you have to make it your mission to bring REAL, ENGAGING, AND GAME CHANGING “FINANCIAL LITERACY” to students. If not 228 years here we come!
If you want to find out about how to close your own wealth gap join my upcoming webinar http://bit.ly/2d03ba0