Economic segregation increased in the U.S. between 1970 and 1990. Three hypotheses suggest that economic segregation affects low-income children's educational attainment, but they provide different predictions about the direction of the effect. I combine census data with data from the Panel Study of Income Dynamics to show that an increase in economic segregation between census tracts in the same state hardly changes overall educational attainment but it exacerbates inequality between high-income and low-income children. With overall inequality held constant changes in economic inequality within census tracts have little effect on low-income children's educational attainment. But changes in inequality between census tracts reduce the educational attainment of low-income children. Substituting segregation between school districts for segregation between census tracts yields the same conclusions.