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We can’t afford to price middle-class families out of college

By Sara Goldrick-Rab

Nov 14, 2018

Paying for college is a headache for all but the wealthiest Americans. Between rising college prices (including the cost of rent), stagnant wages, and a labor market that asks more and more from workers, working your way through college is becoming a thing of the past — often making financial aid and student debt a necessary step on the path to a college degree.

Unfortunately, while the new economics of college affects nearly everyone, the financial aid system badly misses the mark when it comes to providing help. Driven by the belief that only low-income students truly need assistance paying for college, the federal financial aid system targets most aid to families in the bottom 25 percent of income. Some states and colleges supplement need-based aid with grants based on factors like test scores and grades, but those dollars tend to flow to the very wealthiest students who enjoy the greatest advantages in K-12 academic preparation and often receive extensive support from their parents during college.

As longtime higher education policy analyst Thomas Mortenson puts it, “Only students from the top quartile do not encounter unmet financial need.” Why is this? “Because,” Mortensen explains, “their expected family contributions vastly exceed costs of attendance, and because many colleges and universities give them financial aid anyway (what we call bribes).” As a result, the bottom 75 percent of college students face a massive gap between the price of college and what they can actually afford.

While some colleges compete to lure the wealthy, the middle class is finding college increasingly unaffordable. This unmet financial need among the middle class is a relatively recent phenomenon resulting from decades-long middle-class wage stagnation coupled with increases in the price of college. In short, middle-class families’ ability to contribute substantially to college has declined as prices have gone up. The federally calculated “expected family contribution” (essentially what the federal government calculates that a given family can afford to pay for college, given their other critical expenses) fell for all families in the bottom 75 percent between 1990 and 2016, while growing substantially for the top 25 percent.

The lower-middle class is now being priced out of community colleges… the rest of the middle class is being priced out of private institutions.

Remember the 90s? In 1990, the price of college aligned fairly well with middle-class students’ ability to pay. Alex P. Keaton’s family was far from the only ones who could afford to send someone to college. Lower-middle class students (those with family incomes lower than the top 50 percent of the income ladder, but higher than the lowest 25 percent) were short less than $500, while the rest of the middle class (those in between 50 and 75 percent on the family income ladder) had their need fully met with some room to spare. That extra room in the budget can be important, since the federal needs analysis tends to systematically understate the real price of college. That extra room pays for extracurriculars, study abroad, trips home during breaks, and more activities long considered standard in college.

By 2016, times had changed, and not for the better. The $500 gap faced by lower-middle class students in 1990 had grown to a gaping chasm: an average shortfall of $7,665 every year. The rest of the middle class also experienced growth in unmet need, so that by 2016 their resources barely matched prices. Within that group — those with annual income between $75,000 and $124,000 in 2016 terms — families with incomes less than $100,000 fell particularly short.

These changes occurred in all sectors of higher education, but two recent shifts are especially important. One, the lower-middle class is now being priced out of community colleges, long viewed as the one truly affordable option. Two, the rest of the middle class is being priced out of private institutions, where they have historically gravitated.

At community colleges, low-income students face unmet need of more than $8,000 per year, while the lower-middle class faces unmet need of almost $7,000 per year. The causes of this unmet need are different for these two groups. Prospective students with the lowest income struggle because their families often cannot contribute any funds at all toward college. And while they get the most federal aid, notably from Pell Grants, this financial support still falls short. Many lower-middle class families, on the other hand, fall into a trap — their families make far less than what college prices demand, but too much to qualify for a Pell Grant.

Ensuring that more Americans complete college with less debt — or better yet, with none — must become a national priority.

Higher up the ladder, sending a child to a private college or university is often a middle-class parent’s dream. These institutions have long been pricey. Today, even though they increasingly market themselves as affordable to all, they still tend to offer their biggest discounts to the wealthiest students. Unmet need for students in the bottom half of the income distribution was substantial at these institutions in 1990, and sadly, it still is today.

While college is expensive, it remains a worthy investment. College completion, especially without debt, pays a huge role in boosting lifetime income and productivity. Ensuring that more Americans complete college with less debt — or better yet, with none — must become a national priority. The alternative is a world in which only the best-off kids get a chance to go to school — wasting not only the futures of millions of children, but the future of our country as well.

The starting point, then, is to design a new approach to financing higher education that recognizes that the country cannot afford to price families out of college. The current system is divisive, using elaborate means-testing to create categories of students who “deserve” help and those who do not. Those layers of paperwork and bureaucracy alienate the families who are supposed to get financial aid, while also leaving families falsely deemed “non-needy” short.

It’s time to take the opposite approach, targeting support to specific colleges and universities rather than specific students. First, identify colleges and universities that can serve the country’s needs with high-quality accessible and affordable education. Next, use a combination of funding and accountability for those institutions to lower the price for all students in a sustainable way, working toward making it free in the public sector where more than three in four students enroll. Revisiting a more than 50-year-old financial aid system in this way, and updating it for the 21st century, will help restore the promise that college holds for the American dream.


Sara Goldrick-Rab is Professor of Higher Education Policy and Sociology at Temple University, Founding Director of the Hope Center for College, Community, and Justice, and author of Paying the Price: College Costs, Financial Aid, and the Betrayal of the American Dream.