August 20, 2012 | by Jen Slemp | in Commentary

Stop the Presses! College Debt is now Affecting the Upper-Middle Class

An article on the cover of Thursday’s Wall Street Journal headlined with: College Debt Hits Well-Off. I had to think about it for a moment, mostly because I expected to see something more like “college debt hits record highs.” But it means what it says—college debt is now impacting the upper-middle class financially more than before.

The article focuses on families making between approximately $95,000 and $205,000 in annual income. This population experienced an increase in student loan debt from 2007 to 2010. The data came from the College Board while the analysis was provided by WSJ using data from the Federal Reserve Survey of Consumer Finance.

For the group that WSJ defines as upper-middle class households, the percentage of student loan debt increased at a higher rate than for the group that encompasses all households. Additionally, there are now a higher percentage of upper-middle class households with student loan debt vs. all households.

Upper-middle class households % of student debt
All households % of student debt




The article attributes some of the disparity to the supposition that lower income families tend to send their children to “lower-cost schools,” and quoting data from Sallie Mae, advises that lower-income families receive 36% in educational grants and scholarships vs. 21% for higher-income families. A parent is quoted as saying that upper-middle class families are getting “squeezed” in between lower-income families who get more subsidies and the “truly affluent” who can afford any university.

This is an issue that is definitely affecting the entire country and beyond. As I write this from my home in New York, I wonder, who are the families that will remain unaffected by rising costs in tuition—who are the “truly affluent”? According to a NY Times article that outlines where the 1% live across our country (One Percent, Many Variations, 1/15/12), the region in the United States that requires the lowest income to belong to the 1% is Jamestown, NY, located in western New York state, near Buffalo. While Stamford, CT, less than 45 minutes north of Manhattan and historically a NYC commuter town, requires the highest income in the country to be part of the 1%. Here is a link to an interactive that can help you determine what percent you fall into -

For the other 99%, it is disconcerting that The College Board notes the sticker price of college has more than doubled since 1985. And WSJ reports that more than 3 million households currently owe at least $50,000 in student debt. So will this increase in student loan debt contribute to an overall trend in the market toward choosing more affordable colleges, even among affluent families who previously went for prestige over affordability? Given how much harder it is to get into state universities than when I was applying to colleges, I imagine a trend where students are choosing lower tuition colleges will impact the entire spectrum of college enrollment choices (from how admissions officers make decisions to where students ultimately get admitted to college). The article also touches on the hypothesis that some upper-middle class families might be asking their children to take on higher student debt to pay for school. Will that build strength and character in our students or will that simply weigh them down with quicksands of debt-load and depression?