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.