Tuesday, May 06, 2008

What is Middle Income?

In the last few months there have been many references to financial aid for students from "middle income" families where the income ranges from $100,000 to $200,000. I find these references to be abuses of the English language and the facts. Students in this family income range are wealthy or affluent or rich--but they certainly are not "middle income".

Here are the facts. For decades I have calculated and reported on the family income distributions of high school graduates in the 18 to 24 age range using data from Table 14 of the Census Bureau's annual report on school enrollments:
http://www.census.gov/population/www/socdemo/school.html
The most recent data for 2005 may be divided into four quartiles of family income as follows:
Bottom quartile: $0 to $36,539
Second quartile: $36,540 to $64,108
Third quartile: $64,109 to $98,433
Top quartile: $98,434 and up
These are for 18 to 24 year old high school graduates who are dependent family members. Exactly one-quarter of the total fall into each family income quartile range. If one were to include the family incomes of 18 to 24 year old high school dropouts these family income ranges would be lower.

Using the 2004 National Postsecondary Student Aid Study we have also calculated family income quartile ranges for all 18 to 24 year olds:
Bottom quartile: $0 to $34,288
Second quartile: $34,289 to $62,240
Third quartile: $62,241 to $95,006
Top quartile: $95,007 and over

There are other data sets that confirm these ranges. Most policy analysts refer to middle income broadly as the two middle quartiles, from about $35,000 to $95,000, then might say something about lower middle income and upper middle income. None that I have ever heard or read would consider students from families with incomes of more than $100,000 to be "middle income."

By any conceivable measure students from families with incomes of more than $100,000 are doing extraordinarily well in the education pipeline. They have the highest high school graduation rates (92.5%), college continuation rates for those that graduate from high school (87.0%), and bachelor's degree completion rate by age 24 for those who start college (90.1%). As a result they earn bachelor's degrees by age 24 at far higher rates (72.6%) than do students born into lower income families (27.9% in the third quartile, 16.6% in the second quartile, 12.3% in the bottom quartile).

I realize that many high school and collegiate members of NACAC work almost entirely with students from the top quartile of family income, over $100,000 per year. While these are undoubtedly talented students, they are also students with inherited privileges and educational opportunities not available to students born into families with fewer resources. They have little or no measurable financial need to pay for college. However students from the bottom three quartiles of family income faced $31.9 billion in unmet financial need, or $56.4 billion in work/loan burden in 2004 based on our calculations from the NPSAS study. To fuss over financial aid awards for these rich kids while the staggering gaps in aid for those from lower income families who need it keep growing should be a professional embarrassment to the NACAC organization and its members.

6 Comments:

At 4:56 PM, Anonymous Lee McClain said...

This is sobering stuff indeed--thanks for laying out the statistics in such clear terms. I wrote about your entry and some of these stats over on McClain's College Reading Blog because I think that poverty-related reading problems contribute to the low college graduation rate among poorer kids.

 
At 1:27 PM, Anonymous Nancy Caine said...

I think there is a lot of confusion out there about middle income versus middle class when it comes to college admissions and aid. I think most parents in that $100K and above realm, still see themselves as middle class and confuse the terms. Financial aid offices according to collegues in the business are constanly trying to clarify for those folks the differences, often quoting stats similar to yours. Thank you for bringing up the issue.

 
At 11:52 AM, Anonymous Anonymous said...

Saying that peoople who make between $100,000-200,000 are wealthy, affluent, or rich is absurd, especially those around $100,000. How can you compare someone who makes $100,000 to those who make several hundred thousand dollars or a millionaire? They are barely out of the middle class range according to your standards. My family makes a little over 100,000 and we do not live an affluent lifestyle. We can go out to eat more than we used to be able to, but we are not flying around all over the world, driving fancy cars., etc. We are definitely not poor; but we are not rich!

 
At 5:40 PM, Anonymous Anonymous said...

To address Anonymous...

You don't have to fly a private jet or drive a fancy car to be considered affluent. These results are derived from studies which look at the different incomes of people in the country, lifestyles you might not recognize everyday. Perhaps making $100,000 means that you can buy organic produce at the store. This may not seem like a luxury but the fact that you have that option, and can afford produce at all, sets you apart from many people in this country. It is the little stuff like that, not necessarily the private jets, that many wealthy people overlook when trying to assess their personal wealth. It has also been found that people will always perceive themselves to be less wealthy than they really are because we are more aware of what we don't have than what we do (often just human nature).

 
At 2:53 PM, Anonymous Anonymous said...

I agree that labeling families with $100K incomes and above as "middle class" might not be entirely accurate, but that doesn't mean they should be denied financial aid. Colleges seem to be stressing aid options for these so called "middle class" families because these families believe that financial aid is only for the poor, so they send their kids to cheaper colleges that they can afford. $50,000 a year for college is an incredible amount of money, even for families that make $100K and above. My family is in this "middle class" realm yet my parents couldn't afford to send me to some very good schools that I got into because it was too much money. College is expensive for everybody.

 
At 2:16 PM, Anonymous Gene Garrett USA Retired said...

Any child in this country who has completed High School should be allowed to go to college. This country has a deficit of young folks. Along with that problem, we do a poor job of parenting and educating the ones we do have in that as many as half in some groups do not complete HS at all. Every year for a few decades we have had to find folks with technical degrees outside of the borders of this country. The principle reason lawmkers don't close the borders of this country to illegals is that we need them as much or perhaps more than they need us. It's time folks to expand your ability to care beyond yourselve and start having children and bring them into a society that celebrates their arrival, jointly affords the costs of their raising and provides them with the education and opportunity I was given at 18 years of age in 1968. Or become the Self Centered, narrow minded shadow of what America used to be.

 

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