Pervasive Student Debt Penetrates Middle Class

College-bound students should think long term and borrow wisely.

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Higher education is often viewed as a path to the American dream. Yet the country's tremendous student debt load has begun to elicit responses about how college may not be for everyone, and how students who can't afford it just shouldn't go to college.

At the Student Loan Ranger, while we strongly believe students should be proactive and borrow wisely, we don't want students to forego college because they need to borrow. This would shut the door on too many opportunities. The burden of student debt is not limited to only the most financially disadvantaged—although, for many reasons, the poorest among us may be affected most deeply.

With college application season picking up, the Student Loan Ranger wants to highlight just how pervasive student debt really is, with the hopes of conveying an urgency to reverse its exponential growth and to encourage students to borrow wisely while forging a path for their future.

[Find out how much to borrow for college.]

In August, the Wall Street Journal published an article titled, "College Debt Hits Well-Off," citing statistics that showed upper-middle-income families were taking on increasing amounts of student debt. Upper middle income falls between the 80th and 95th percentiles, which means these families have annual incomes of $94,535 to $205,335. And, while it fell 19 percent from 2007, these households had a net worth of $369,320 in 2010. College is becoming less affordable for even them.

And it is becoming even less affordable for lower-middle-class families, according to a paper presented at the American Sociological Association's meeting in August. "Disparities in Debt: Parents' Socioeconomic Resources and Young Adult Student Loan Debt" presents findings that, among students surveyed in the 1997 National Longitudinal Study of Youth (which surveyed students in 1997 when they were ages 12-16 and then again in 2009 at ages 24-28), students from families with incomes from $40,000 to $59,000 borrowed $12,000 more than those whose families earned $100,000 to $149,000, and more than $17,000 more than those whose families earned more than $150,000. They also borrowed more than $6,000 more than low-income students whose families earned less than $40,000.

The Student Loan Ranger has written before about the declining investment in higher education and how it shifts costs to students. Higher-earning parents are also shifting costs to students, picking up less of the college tab than in the past, according to the Wall Street Journal.

[Read more about students paying more of the college costs.]

Susan Dynarski, professor of education and public policy at the University of Michigan, identified this decreased support from taxpayers and increased student borrowing as ways in which "[t]he boomers are the first generation shifting the cost of college to their kids." In 2012, students from families earning $100,000 or more paid a greater share of their costs than in 2009 (23 percent, up from 14 percent in 2009).

Parents contributed less. They paid 52 percent in 2012, compared to 61 percent in 2009. Students used loans, income, and savings. More than one third of students from families making $95,000 to $125,000 who entered college in 2011 had parents who didn't save for their education.

Even higher-income students must now borrow for education. And with financial aid policies increasingly shifting the costs to students, and debt and default levels rising, many students from lower-income backgrounds may be turned off by the prospects of borrowing. 

[Consider the benefits of student loans.]

Federal student aid was created to make postsecondary education accessible and affordable. President Lyndon B. Johnson emphasized the importance of this intent upon signing the Higher Education Act of 1965: "To thousands of young men and women, this act means the path of knowledge is open to all that have the determination to walk it … and not be turned away because his family is poor," he said.

He went on, "… And it is a truism that education is no longer a luxury. Education in this day and age is a necessity."

But the price of that path continues to rise and college must be made affordable if it is to remain accessible to all. (There's a growing education gap between low-income and affluent students.) In the meantime, college-searching students today need to think long term, and borrow wisely.

[Get more tips on paying for college.]

To learn more about borrowing wisely and relief for student loans, download our free student debt manual and attend a free student debt webinar. And follow us on Twitter (use #studentdebthelp) and Facebook for news updates and tips.

Radhika Singh Miller is a program manager for Educational Debt Relief and Outreach at Equal Justice Works. She has served on student loan committees in the Department of Education's negotiated rulemaking focusing on the College Cost Reduction and Access Act (CCRAA) and other debt relief initiatives. Radhika graduated from Loyola Law School Los Angeles. Prior to joining Equal Justice Works, she was a staff attorney at the Partnership for Civil Justice, focusing on constitutional and civil rights litigation and advocacy.