May 19, 2023 - Economy

New data highlights the big gap between college grads and everyone else

Share of households denied credit in the last five years, by income quintile
Data: Third Way; Chart: Alice Feng/Axios

Americans without college degrees are more likely to be denied credit than those who finished college, finds a new report shared first with Axios from left-of-center think tank Third Way.

Why it matters: The report highlights the different economic worlds these two groups move in, and comes at a time when the White House and Democratic party are trying to regain a foothold among voters without college degrees — or, as the New York Times put it, "bridge the 'diploma divide'."

Zoom in: The report, an analysis of government data, doesn't dive into why those without degrees at all levels of income are more likely to be denied credit. But an older study also found that less educated adults were more likely to be rejected for mortgage loans, submit incomplete mortgage applications or withdraw those applications; they also were offered higher interest rates.

  • "There also might be some bias from financial institutions against those without a degree," said Zach Moller, director of Third Way's economic program.
  • Overall, college graduates do have more debt — mortgages, student loans — than those who didn't get a four-year degree.

By the numbers: Two-thirds of the working-age population in the U.S., or 109 million Americans, do not have a four-year degree  compared to 63 million who do.

  • College grads have double the yearly income, three times the retirement savings, and four times the net worth of working-age, non-college Americans.
  • 74% of college households invest in the stock market compared with 43% for non-grads.
  • One striking stat: Americans without college degrees are much more likely to begin their workday in the dark, starting sometime between 7pm and 7am.

Worth noting: The tight labor market has helped those without college degrees — more employers have eliminated degree requirements. Pay also has risen for the lowest wage earners over the past three years.

  • But these improvements aren't enough to close the gap, said Moller, who co-authored the report. The gaps in health insurance coverage, net worth and overall income "aren't things a tight labor market can overturn in a couple of years."

What's next: Third Way is planning deeper dives into this demographic, explains Moller. It's a blind spot in D.C.

  • "As a think tank we're full of people with college degrees," Moller said. The report points out that back in the 1960s, 1 out of every 4 members of Congress had no college degree; today it's 1 in 25.
  • The D.C. policymaking community is good at focusing on diversity, he said, but when it comes to college versus non-college, "we haven't checked our own biases."
Go deeper