Affluent families take on more college debt

More upper-middle-class families are borrowing for college so their children can attend high-tuition prestige schools.

Kai Ryssdal: There's news of student loans today that we wanted to get to. The tendency is to think of huge piles of student debt as more of a lower-income problem. And it is.

But the Wall Street Journal crunched the numbers and found upper-middle-class families have seen the biggest jump in college debt. They owe almost $33,000, on average.

From the Marketplace Education Desk at WYPR in Baltimore, Amy Scott reports.

Amy Scott: Audrey Derwin is an accountant in Apple Valley, Minn., and a mother of two kids in college. The upper-middle-class family has borrowed about $80,000 to pay for it.

Audrey Derwin: We wanted them to go to where they wanted to go.

Scott: Regardless of the expense?

Derwin: Yeah. It was important that they felt comfortable with their choice.

According to the Journal, more than a quarter of families that earn between $95,000 and $205,000 had college debt in 2010. That’s up from about a fifth in 2007. Tamara Draut with the think tank Demos says upper-class households lost a lot of wealth in their homes and 401(k)s during those years. The good news, she says, is that when parents borrow the money, their kids aren’t starting their adult lives under a cloud of debt.

Tamara Draut: The majority of students entering college are leaving with student loan debt, and it’s students from lower-income and middle-income households that are much more likely to have to borrow to pay for their college education.

Draut says if even well-off families are objecting to the spiraling cost of tuition, colleges might have to respond. Tom Parker is dean of admission at Amherst College.

Tom Parker: I think we may be reaching that point with indebtedness, where the market just simply says, you know, we can’t do this.

A recent report from student loan company Sallie Mae found that more families are weighing price when sending their kids to college. Audrey Derwin says her son left an expensive private school for community college -- partly to save money.

I’m Amy Scott for Marketplace.

About the author

Amy Scott is Marketplace’s education correspondent covering the K-12 and higher education beats, as well as general business and economic stories.
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The bachelors degree in anything has become the new High School Diploma. I get tired hearing people compare what degree they have as if that actually means something...8 years ago, I witnessed a lot of foreign students cheating their way through engineering and technology degrees and came to the realization: Of course!!! That would explain why with poor english abilities they were able to make it through!!! It does not take a genius to figure out that the guy or gal who can barely read and right or tell their left from their right with the so-called "in-demand" degree can not functionally perform those jobs in any substantial way other then getting paid for essentially being a minority. Have you seen some of the moronic city, state and federal workers who originated from other countries? I once caught an African guy from Eritrea cheating and he came up to me in public and threatened to kill me. I wasn't even going to snitch on him, but he was afraid I would hurt his chances of becoming a citizen...I could not believe it and told himI didn't care and to never threaten me again after choking him to the ground. I heard later that he graduated with a degree in Mechanical Engineering and went to work for Seattle City Light right after graduation. Unbelievable.

How about asking why so few kids go to college on the GI Bill? It paid 100% of tuition, gives you a monthly living expense, covers your books and lab fees. Instead of taking out massive debt to "feel comfortable in their school choice" they can be adults instead.

What I have noted from other stories on "the high cost of college" is people complaining that their Masters in English only gets them a job teaching. That the PhD in Music does not get a job that pays enough to live off of. Or how bad things are for the Harvard educated, Masters holding librarian who is not making nearly as much as her Doctor father.

I would bet that people who study things that are marketable and not nitch employment degrees take on less debt and pay it off faster. Not everyone should go to College, even fewer should go to College with debt.

Well we now have it on record, from a senior college official.
Tom Parker of Amherst: "I think we may be reaching that point with indebtedness, where the market just simply says, you know, we can’t do this."

If these non-profit institutions insist on working "the market", then it's time for them to start paying taxes. This twenty-year inflation in education costs is a national scandal that has yet to be addressed by anyone in government. Here now is the admission that colleges are trying to squeeze every possible dime from us, like for-profit corporations.
Shame on all you Universities parading as sacred institutions while you suck us dry. Shame!

When I heard the mother Audrey Derwin say she and her husband wanted their kids to go to where they wanted to go to college, regardless of the expense because it was important that they felt 'comfortable' with their choice, I literally thought more spoiled brats, helicopter parents etc. Or how about kids who have some entitlement mindset? The very mindset that has helped get us into this economic mess. Add in the fact many kids in college that now have debt and no job, have majored in fun stuff and not productive professions that pay well and are professions America needs.

Get an education that will get you a job, plain and simple. What a joke, college for the experience.

Welcome to 'The Feel Good Nation of Whiners and Wimps'.

$80K so their kids feel comfortable with a decision?
That's the problem right there.

Comfortable with their choice? Well maybe if you already had the money saved for them, but you cannot predict the future. If the family has enough money that if both parents were disabled, there would be enough money to pay off the debt and still leave them with a decent means to live on then yes. But I don't think any family with an income of 95K should be borrowing 80K for kids school. Clue them into the real world and quit spoiling them.

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