Wealth, Race, and Higher Education: How Access to Parental Financial Support Shapes Basic Needs Security

A cyclical relationship exists between wealth and higher education. Students from high-wealth backgrounds are more likely to graduate from college, and a college degree provides these students with greater access to high-paying jobs and other wealth building opportunities. 

This dynamic is reinforced through intergenerational wealth transfers, such as  financial support from parents to cover their children’s college tuition and living expenses while enrolled. But not all families have equal access to the resources needed for this kind of support. As a result, wealth disparities perpetuate across generations. 

Because wealth patterns differ dramatically along racial and ethnic lines, American Indian or Alaska Native (AI/AN), Black, Hispanic or Latino, and Native Hawaiian or Pacific Islander (NHPI) students are far less likely to receive wealth transfers to support higher education. Even when they do, the amounts tend to be smaller. This inequity contributes to financial insecurity, which can jeopardize access to basic needs like food or housing and perpetuates the racial wealth gap. Financial insecurity also severely limits students’ ability to persist and complete their degrees and can reduce the expected economic return on a college education, blunting its value for students with the least support.  

This brief analyzes data from the 2020 National Postsecondary Student Aid Study (NPSAS) to examine the prevalence of wealth transfers to undergraduate students at four-year institutions, as well as how family income, food security, and housing security vary based on the level of parental financial support students receive. We use parental financial support as a measure of intergenerational wealth transfers based on students’ self-reported estimates of the amount of financial support received. Family income, drawn from Free Application for Federal Student Aid (FAFSA) data, includes both parent and student earnings. Although this analysis focuses on undergraduate students attending four-year colleges in the 2019-20 survey year, it is important to note that most students at two-year or less than two-year colleges receive no parental financial support, and those who do receive smaller amounts. See Additional Data and Methodology Notes for more details.  

Our findings show that while parental financial support for college is associated with higher family incomes, both the likelihood of receiving support and the amount received varies notably by race and ethnicity. These disparities in financial support are closely tied to differences in students’ basic needs security during college. Our companion brief in this series explores differences in students’ post-college outcomes, including access to wealth-building mechanisms like retirement accounts and homeownership.  

How Does Parental Support for College Vary by Race and Ethnicity? 

Understanding the cyclical relationship between higher education and the racial wealth gap begins with examining how wealth is distributed across different student populations. Using parental financial support as a measure of intergenerational wealth transfers reveals significant disparities in access to financial resources among students from different racial and ethnic groups.  

As shown in Figure 1, Asian American students attending four-year institutions are the most likely to receive financial support from their parents, followed by White and Hispanic or Latino students. But the disparities are even sharper when looking at the amount of support received. While 36 percent of Asian American students receive high or very high levels of support, only 10 percent of Black students, 12 percent of American Indian or Alaska Native (AI/AN) students, and 14 percent of Hispanic or Latino students do. Very high support is particularly uncommon among these groups—fewer than five percent of AI/AN, Black, and Hispanic or Latino students receive $25,000 or more in parental support. 

Figure 1: Parental Financial Support Among Four-Year College Students Varies by Race and Ethnicity

All Support Levels No Support$0 in support Some Support$1 - $9,999 in support High Support$10,000 - $24,999 in support Very High Support$25,000+ in support

All Races American Indian or Alaskan Native Asian American Black Hispanic or Latino Native Hawaiian or Pacific Islander White

No Support

Some Support

High Support

Very High Support

Notes: Includes undergraduate students attending four-year institutions in the 2019-2020 academic year. Students who select more than one race or ethnicity are included in multiple categories. Source: IHEP analysis of the National Postsecondary Student Aid Study, 2020, data output generated through the National Center for Education Statistics DataLab. Readers can view full data output using the “Quick Launch” tool with code qmqggr.

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These gaps reflect broader differences in the financial resources available to help students pay for college. Next, to better understand the roots of these disparities, we examine how income varies by parental support level and race.

How Does Family Income Relate to Parental Financial Support for College Across Racial and Ethnic Groups?

Analyzing family income alongside parental support levels provides insight into families’ capacity to contribute to college costs. As shown in Figure 2, across all racial and ethnic groups, average family income rises with increased parental support. However, even among students receiving similar amounts of support, large income disparities persist by race and ethnicity.  

Among students at four-year institutions, White students who receive very high support report average family incomes of $218,000—nearly $100,000 more than AI/AN students receiving the same level of financial support (about $125,000). This indicates that AI/AN families are contributing disproportionately large shares of their income to support their children’s education compared to their White counterparts.  

Among students who receive no parental financial support, income disparities are somewhat narrower, with average income ranging from $34,000 for Black students to over $50,000 for White students. Indeed, students from White families who receive no support have similar average incomes to Black and Hispanic or Latino students who receive some support (each around $50,000). These patterns highlight differences in ability and willingness to contribute, and may relate to how families prioritize and finance that support through savings, Parent PLUS loans, or other means.  

Overall, Black, Hispanic or Latino, and AI/AN students tend to come from families with much lower incomes than White or Asian American students receiving the same level of parental financial support. Among these groups, Black students generally report the lowest average family income across nearly all parental support levels. 

Figure 2: Average Family Income Increases as Parental Financial Support Increases Among Four-Year College Students Across All Racial and Ethnic Groups

All Support Levels No Support$0 in support Some Support$1 - $9,999 in support High Support$10,000 - $24,999 in support Very High Support$25,000+ in support

All Races American Indian or Alaskan Native Asian American Black Hispanic or Latino Native Hawaiian or Pacific Islander White

No Support

Some Support

High Support

Very High Support

Notes: Includes undergraduate students attending four-year institutions in the 2019-2020 academic year. Students who select more than one race or ethnicity are included in multiple categories. Source: IHEP analysis of the National Postsecondary Student Aid Study, 2020, data output generated through the National Center for Education Statistics DataLab. Readers can view full data output using the “Quick Launch” tool with code msvrlj.

How Does Parental Financial Support Relate to Students’ Food Insecurity? 

Parental financial support helps cover tuition and living expenses, making it easier for students to meet their basic needs while enrolled. Without that support, students may be more vulnerable to food insecurity. 

As shown in Figure 3, food insecurity is highest among AI/AN, Black, and Native Hawaiian or Pacific Islander (NHPI) students at four-year institutions—regardless of the level of parental support they receive. Nearly half of students in these groups who receive no financial support report marginal, high, or very high food insecurity. Even among students who receive some financial support, more than 40 percent still report some level of food insecurity.  

Reduced food insecurity associated with higher parental support varies by race and ethnic group. For White and Asian American students, food insecurity drops by about 20 percentage points between those receiving no support and those receiving very high support. For Hispanic or Latino and NHPI students, the drop is about 17 points. For Black students, the reduction is only 11 points, meaning that even with strong parental support, many still face food insecurity. In fact, 37 percent of Black students receiving very high parental support still report experiencing some level of food insecurity—comparable to rates for White and Asian American students who receive no parental support.  

Figure 3: Food Insecurity Generally Decreases as Financial Parental Support Increases, Across Racial and Ethnic Groups

All Support Levels No Support$0 in support Some Support$1 - $9,999 in support High Support$10,000 - $24,999 in support Very High Support$25,000+ in support

All Races American Indian or Alaskan Native Asian American Black Hispanic or Latino Native Hawaiian or Pacific Islander White

No Support (Marginal Food Insecurity / High or Very High Food Insecurity)

Some Support (Marginal Food Insecurity / High or Very High Food Insecurity)

High Support (Marginal Food Insecurity / High or Very High Food Insecurity)

Very High Support (Marginal Food Insecurity / High or Very High Food Insecurity)

Notes: Includes undergraduate students attending four-year institutions in the 2019-2020 academic year. Students who select more than one race or ethnicity are included in multiple categories. Responses reflect food insecurity within the thirty days before students were surveyed.
* Interpret data with caution. Estimate is unstable because the standard error represents between 30 percent and 50 percent of the estimate.
**Interpret data with caution. Estimate is unstable because the standard error represents more than 50 percent of the estimate. Source: IHEP analysis of the National Postsecondary Student Aid Study, 2020, data output generated through the National Center for Education Statistics DataLab. Readers can view full data output using the “Quick Launch” tool with code somoah.

How Does Parental Financial Support Relate to Students’ Housing Security?

Patterns in housing security often mirror those in food security. As shown in Figure 4, across all racial and ethnic groups, roughly one in ten students who receive no parental support report experiencing homelessness in the past 30 days. White students report the lowest levels of housing insecurity and see the steepest declines in homelessness as parental support increases, followed by Asian American students.  

For other racial and ethnic groups, increased parental support does not consistently lead to improved housing security. Among Black students, this rate remains nearly unchanged even for those with the highest levels of parental support—underscoring how deeply entrenched disparities in housing stability can be. 

Figure 4: Homelessness Varies by Race, Ethnicity, and Financial Support Among Four Year College Students

All Support Levels No Support$0 in support Some Support$1 - $9,999 in support High Support$10,000 - $24,999 in support Very High Support$25,000+ in support

All Races American Indian or Alaskan Native Asian American Black Hispanic or Latino Native Hawaiian or Pacific Islander White

No Support

Some Support

High Support

Very High Support

Notes: Includes undergraduate students attending four-year institutions in the 2019-2020 academic year. Students who select more than one race or ethnicity are included in multiple categories. Responses reflect homelessness within the thirty days before students were surveyed.
* Interpret data with caution. Estimate is unstable because the standard error represents between 30 percent and 50 percent of the estimate.
**Interpret data with caution. Estimate is unstable because the standard error represents more than 50 percent of the estimate. Source: IHEP analysis of the National Postsecondary Student Aid Study, 2020, data output generated through the National Center for Education Statistics DataLab. Readers can view full data output using the “Quick Launch” tool with code fhmwbl.

These gaps in food and housing security—even among some students with strong parental support—reflect systemic inequities that go beyond family contributions. Students should not have to depend on intergenerational wealth transfers to avoid hunger and homelessness and succeed in higher education. Without policy intervention, these disparities will continue to reinforce the racial wealth gap. 

What Can Policymakers Do to Expand College Affordability and Narrow Wealth Disparities?  

Higher education did not create the racial wealth gap, and it cannot close it alone. But college leaders and policymakers have an opportunity to disrupt how wealth inequality shapes higher education outcomes.  

This analysis demonstrates that access to parental financial support varies dramatically by race and ethnicity, and even among students who receive support, income disparities persist. These differences help explain the inequitable rates of food and housing security students face while in college. 

Policymakers can address these challenges by increasing college affordability, especially for students who do not have access to intergenerational wealth. Steps such as protecting and increasing the federal Pell Grant, funding first-dollar free college programs, and ensuring that financial aid covers non-tuition expenses would help reduce financial hardship for students, improve basic needs security, and increase attainment.  

More research is needed to understand how families fund financial support for their students’ college tuition and living expenses and how financial aid can be tailored to account for both income and wealth disparities. 

Read our companion brief to learn more about how differences in parental wealth shape students’ post-college outcomes, including access to retirement accounts and homeownership.  

Acknowledgements 

We would like to thank the individuals and organizations who helped develop this brief, including Mamie Voight, IHEP president; Diane Cheng, vice president of research and policy; Kelly Leon, vice president of communications & government affairs; Lauren Bell, communications manager; Sydney Carroll, communications intern, and Michael Tidwell, research intern. We also thank openbox9 for creative design and layout. 

All ideas, findings, and conclusions drawn by this report are the sole responsibility of the report’s authors. 

Additional Data and Methodology Notes  

All data for this brief are based on IHEP analysis of the National Postsecondary Student Aid Study (NPSAS:2020). This brief examines average family income across race and ethnicity for students receiving different levels of parental financial support. Family income includes both dependent and independent students. For independent students, total income includes their own earnings and those of their spouses; for dependent students, it includes their own earnings and those of their parents.  

Income figures are drawn from the FAFSA and include adjusted gross income, untaxed income, and allowable deductions (such as education tax credits and child support).  

We also analyze students’ self-reported rates of food and housing insecurity. Food security is assessed using the USDA’s U.S. Adult Food Security Survey Module, which captures students’ experiences over the past 30 days. Housing security is measured using the McKinney–Vento Homeless Assistance Act’s definition of homelessness and includes students who have experienced homelessness within the last 30 days. 

Race and ethnicity categories are based on binary variables. Students who identify with more than one race or ethnicity are counted in each relevant category rather than grouping all multiracial or multiethnic students in a “two or more races” category. This inclusive approach improves the precision of estimates for racial and ethnic groups, due to larger sample sizes, and better allows for the inclusion of underrepresented groups in research findings.  

When a data point has a standard error that exceeds 30 percent of its value, it is displayed in figures with an asterisk but not highlighted in the text.  

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