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A child’s chances of going to college may depend not just on family income, but on whether their family has any wealth to fall back on.
New research from Duke University’s Sanford School of Public Policy finds that children who grow up in “net worth poverty” are significantly less likely to attend college, especially when that financial hardship lasts for much of their childhood.
Net worth poverty refers to families whose total assets minus debts fall below a minimal threshold, leaving them without financial reserves to weather emergencies or invest in opportunities. While income poverty measures what families earn, net worth poverty captures what they have.
“We often talk about college affordability in terms of income,” said Christina Gibson-Davis, the study’s lead author and a professor at Sanford. “But this research shows that having even modest levels of wealth may play a critical role in whether young people are able to pursue higher education.”
The study, published in Demography, follows a national sample of children from birth through early adulthood using data from the Panel Study of Income Dynamics. It is the first to examine how exposure to net worth poverty over time relates to key educational milestones, including high school graduation and college attendance.
The researchers find that net worth poverty is both widespread and persistent. Three-quarters of children in the study experienced it at some point, and nearly one-third lived in net-worth poverty for most of their childhoods.
That persistence matters. Children who spent more than half their childhood in net worth poverty were 11% to 20% less likely to attend college than their peers.
Unlike income poverty, which can fluctuate as earnings change, net worth poverty often lasts longer and is harder to escape. Families without savings or assets have fewer ways to recover from financial shocks or invest in their children’s futures.
“Net worth poverty is not just another way of measuring income poverty,” said Gibson-Davis. “It reflects a deeper lack of financial security that can shape the decisions families make and the opportunities available to their children.”
The study also finds that net-worth poverty is more strongly associated with college attendance than with high school graduation, likely because of the higher costs and financial risks of pursuing postsecondary education.
Even after accounting for income poverty, the effects of net worth poverty remained. This suggests that wealth plays an independent role in shaping children’s outcomes.
The findings build on earlier work showing that children are the age group most likely to experience net worth poverty in the United States. Together, the research points to the need for a broader understanding of economic disadvantage that goes beyond income alone.
The study’s authors include Christina Gibson-Davis, Lisa Gennetian, and Shuyi Qiu of Duke’s Sanford School of Public Policy, all affiliated with the Center for Child and Family Policy, and Lisa Keister of Duke’s Department of Sociology.
Key Takeaways:
- Net worth poverty is widespread: 75% of children experienced it at least once during childhood.
- It is more persistent than income poverty: Many children remain in net worth poverty for years.
- Duration matters: Children in net worth poverty for most of their childhood are less likely to attend college.
- Wealth matters for college: Net worth poverty has a stronger association with college attendance than with high school graduation.
- Wealth offers a fuller picture of financial security: Wealth and income independently shape children’s educational outcomes.
Media Contact:
Matt LoJacono
Public Relations Manager, Sanford School of Public Policy
matt.lojacono@duke.edu
703-740-7871