The World War II GI Bill was the largest education subsidy in US history. Although formally race-blind, the program's decentralized administration left implementation to local officials and segregated institutions, with sharply different consequences for Black and white veterans. We quantify the GI Bill's impact on Black and white Americans' economic outcomes across two generations, using a regression discontinuity around WWII service eligibility cutoffs and a new data linkage from veterans in the 1940 and 1950 censuses to their sons' neighborhood outcomes between 1990 and 2025. The GI Bill widened racial inequality, doubling white veterans' college completion while steering Black veterans into vocational programs with no earnings returns. The disparities persisted across generations, increasing the white-Black gap in sons' adult-neighborhood outcomes, including a 5-percentage-point (47 percent) widening of the racial college gap. Unequal returns to the same eligibility account for the intergenerational gap, with no contribution from prewar differences in socioeconomic status or geography, illustrating that race-blind subsidies channeled through discriminatory institutions can widen rather than close racial gaps.