Federal Aid Disadvantages Middle-Class Students
August 21, 2012 by Sam Rolley
The massive amount of student loan debt owed by U.S. citizens is, according to some economists, creating a financial bubble that is bound to burst with dire circumstances. Now, new research shows how student loan debt may be a way wealth is redistributed from one generation to the next.
Research presented to the American Sociological Association finds that college students from middle-class families are more likely to rack up massive sums of student loan debt than their peers from both lower- and higher-income backgrounds. The debt, in some cases, can lead to a life-long limitation on career advancement.
“Many middle-income families make too much money for their children to qualify for student aid packages,” said study author Jason N. Houle, a Robert Wood Johnson Health and Society Scholar at the University of Wisconsin-Madison. “While at the same time, they may not have the financial means to cover the high costs of college.”
The researchers note that nearly 41 percent of college students leave school with loan debt. They found that students whose families earned between $40,000 and $59,000 a year finished school with an average of over $6,000 more in student loan debt than their peers whose families earned less than $40,000 per year. Students whose families made between $60,000 and $99,000 annually averaged about $4,000 more in student loan debt than those whose families earned less than $40,000 per year.
As a growing number of low-income students receive Federal aid, colleges are also raising tuition prices which, in effect, require a higher debt burden from those ineligible for Federal aid.
Traditionally, Federal financial aid has been seen as a way to level the playing field for students who want to rise above their low-income upbringings and compete for the same jobs that students able to pay for college seek. But Houle’s research shows that it is being done to the detriment of middle-class students.
“We value the American Dream and believe that achieving a college degree is all you need to overcome the disadvantages of family backgrounds,” Houle said. “My study begins to challenge this idea. The fact that some young adults are starting their careers on an unequal footing just by virtue of how much money they owe, may ultimately affect their capacity to save money and their ability to take a low or un-paid but career-advancing opportunity.”
Read more on how government is devaluing college education here.