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Federal Aid Disadvantages Middle-Class Students

August 21, 2012 by  

Federal Aid Disadvantages Middle-Class Students
PHOTOS.COM

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.

Sam Rolley

Staff writer Sam Rolley began a career in journalism working for a small town newspaper while seeking a B.A. in English. After learning about many of the biases present in most modern newsrooms, Rolley became determined to find a position in journalism that would allow him to combat the unsavory image that the news industry has gained. He is dedicated to seeking the truth and exposing the lies disseminated by the mainstream media at the behest of their corporate masters, special interest groups and information gatekeepers.

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  • Robert Smith

    Newspeak: Debt is wealth.

    Sheesh.

    Rob

    • SJJolly

      Not spelled-out in the article is that your debt is someone else’s asset. Especially if you can’t dump the debt through bankrupcy, as is the case with education loans. Since those assuming the debt are predominately young, and those holding the loan notes (or equity in companies holding the loan notes) are middle-age or older, this represents a transfer of wealth between generations. Got it now?

    • Art

      Don’t worry Obummer will forgive the loans and make the taxpayer foot the bills

  • OOOOPPert EEEEpert

    It’s just another racket & now the sheepskin means nothing….can’t even get a job with it!!
    When is the govt. going to butt out of the markets???

    • SJJolly

      When is government going to “butt out of the markets???”? When those benefiting from government in the markets stop begging / bribing their Congresspersons to do them a little favor. Per the article subject, the favor of government education loans on one hand, and making such loans unclearable by bankrupcy on the other hand. IOW: never.

  • RivahMitch

    Houle is obviously angling toward the Kenyan Marxists’ next great step toward bankruptcy of making college education “free”. Another “redistribute the wealth” scheme… this time to academia. That he’s an academic and doesn’t see “higher ed” especially that including “remedial” courses and worthless courses as just a well-dressed con game is, of course, consistent with his own self-interest.

    • Nadzieja Batki

      College professors and administrators and support personnel and anyone else who makes a living off the location of the colleges will no give up their steady source of income so they need a steady supply of students. Voting for O the assumption is that taxpayers or the “rich” will be the ones who will foot the “free” colleges. College debt will supposedly be forgiven.
      This scenario cannot sustain itself as money always runs out. Eventually the populace will have to face the facts that majority of students in colleges would be better off in trade schools.But since the American populace got so used to a certain pattern that the transition will be hard as most of American jobs are gone or taken over by foreigners.

  • michelle

    exactly!!! 4/4 of our children went to college, but we only qualified for the little loan per year. The rest was on my part time jobs (so we would not have to dip into our already limited daily expense budget) and their loans. The now young adults are accepting the responsibility of repaying their loans and it will take quite some years, until and unless they can double up on payments.

  • FreedomFighter

    So government makes it so expensive/hard to get an education that unless they get to own you by giving you a loan, higher education for most vanishes.

    Another great Obama plan

    Laus Deo
    Semper Fi

    • SJJolly

      Ah, yes. A plan initiated well before BH Obama was even born! (Talk about a GREAT plotter!)

      • FreedomFighter

        He did take it over and make it his, didnt he?

        Somebody starts something with good intentions, then somebody else twists it.

        Laus Deo
        Semper Fi

  • Paul B.

    OF course there is collusion between DC and Universities. DC pays more, Academia raises prices, so DC pays more, so academia raise prices as they only care about those who DC helps, not those who are struggling to advance on their own.

    That is the mentality in DC. Enslave the poor, screw the middle class so they become dependent as well just to survive. then blame the rich because they are actually making it on their own. After the masses agree to screw the rich, they take what the rich have, eventually reducing everyone in our society, except the academia, the unions and the other well connected cronies to DC… including big business (at least the ones who cooperate, like unionizing, supporting the “right” political party, etc.).

    It is ALL designed to screw US, the citizens, the ones THEY supposedly should be working for. Are we so blind we can’t see it, or too lazy to do anything about it?!?!?!? I think a big part of it is that too many people have grown accustomed to the freebies and are afraid to be personally responsible and lose what they are getting for free.

    We have created this mess through good intentions and the guise of compassion, but legislation based on emotion are the quickest to create problems in reality.

  • Chester

    FF, this student loan deal has been around a good deal longer than Obama, and is one of only two debts that can NOT be eliminated by filing bankruptcy. The other is child support. Also, that was written so banks would agree to grant student loans in the first place, without a government guarantee. So, tell me who is getting rich off these college educations now, It for sure isn’t the students, or their parents. That is one reason Uncle stepped in to make student loans direct from the government. You are still under this lifetime obligation, but interest rates are pretty much set in stone, at least as long as the politicians can keep their fingers our of the pot. Bankers, on the other hand, can adjust the rates at any time and for any reason, or no reason at all.

    • FreedomFighter

      See my reply at original post…

      Laus Deo
      Semper Fi

  • http://dlee4144.wordpress.com dlee4144

    The average college graduate pays about $5800 more a year in federal taxes than the average high school graduate. Over 30 years, that totals about $172,000. If that’s divided by the 4 years it takes to get a college education, the government would break even if it paid every student $42,000 a year to attend school.
    This doesn’t even consider that with the degree, the person is less likely to ever need unemployment or welfare, that more students would complete high school if they could see a clear way to a really good job, and that they would be enriching the Social Security and Medicare funds. They would also be paying a larger amount in all other types of taxes.
    The best investment we could make to keep America strong is to not just forgive all student loans but to make all higher education, as long as the student is making decent grades, totally free, and increase the number of schools and teachers to make room for all who can profit from the education.
    We don’t, even at this time of high unemployment, have so much a lack of jobs as we have a lack of people who have the skills to perform the jobs that are available- in other words, a lack of education.

  • Randy131

    The USA’s Educational Sysytem is rated approximately 28th in the world today. The only way to restore our Educational Sysytem to it’s former prominence of #1 in the world is to get the government out of the educational process and return control to the parents of our children. To achieve this we need and must to let the Free Enterprise System enpower the entrepreneurship and freedom of the American people to institute better schools and more learning through and for our children, as it has also made the USA into the greatest nation on earth, until socialism and communism crept into our society, government, and Educational System. When Romney/Ryan win the Presidency, they can institute, through the Department of Education, a national voucher system, where states will receive federal funds in the form of vouchers for the parents of every student, to be given to the school of the parents choice, for their child to attend that school, and the federal government will only distribute these vouchers to states that also embrace a voucher system of their own, otherwise if a state refuses to do so, will not receive any money from the federal government in vouchers or any other way. This will cause competition between schools, being public, private, or religious, and inspire more entrepreneurship in new schools to serve the children in every state that accepts the voucher system. This competition will as always, make those schools of states who participate, better by striving to acquire more students through their reputation of the education they will provide. This will also break the strangle-hold the Teacher Unions (communist organizations) now have on our school systems (get them out of the poitical process) and stop them from robbing the wealth given to educate our children through ridiculous salaries, vacations, healthcare packages, and retirement plans, along with tenure provisions that keep teachers from being held accountable for failure, as all jobs are susceptible to. A secondary benefit to better educating our children is that these voucher systems will bring down greatly the cost of educating our children, because private and religious schools will own and maintain their own facilities, and not be a burden on the taxpayers, and that includes the huge cost of transportation now forced on our public schools. If parents choose religious schools for their children, then society as a whole will be better off, because they will also get a moral education lacking in today’s public schools, but in the beginning of the USA’s Educational System, since most schools were religious schools, especially the colleges and universities, most American children received a moral education too. This will also stop our ever increasing crime problem in the USA. A true win/win/win/win scenario.

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