For Many Middle-Income Families, Elite Colleges are no Longer within Reach

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(Courtesy of The Detroit Free Press)

Margaret Lugin, a University of Michigan sophomore, has to work several jobs. Her family is part of a middle-income bracket that has shrunk at U-M as tuition has jumped. "Sometimes it's hard to focus on schoolwork when I'm worrying about how I'll be able to afford college," she said

A smaller percentage of middle-income undergraduate students is attending the nation’s elite public universities, raising concerns among experts and college officials that years of rising costs and tuition increases are putting top-tier educations at top public schools beyond the reach of some families.

At the University of Michigan, the percentage of freshmen with family incomes of $40,000-$100,000 fell 13% from 2005 to 2009, a national survey tracking incoming freshmen found.

U-M says it’s working to reverse the trend and says there’s a misperception that the school is unaffordable. Officials say U-M has increased financial aid the past several years. “We’ve done everything possible to keep access for all students,” President Mary Sue Coleman said.

The national trend and other data indicate many middle-income families are trapped in a bind: They make too much to qualify for significant financial aid for their children, but not enough to pay increasing college costs at some public schools without more help.

Demographers say there are fewer middle-income families, which could help explain the trend. But cost increases also are a significant factor. Average in-state undergraduate tuition at Michigan public universities has increased 111% the past 10 years. Last year, U-M was one of the top 20 most costly four-year public schools in a federal ranking.

Michigan’s other public universities, including Oakland, Wayne and Michigan State, , saw slight dips in the income category.

As tuition and student debt soar, fewer from middle class can afford top schools

Even after working two jobs this summer, Margaret Lugin was still worried about covering bills at the University of Michigan.

She went to the School of Engineering to ask for help, and officials there found a $3,000 housing grant. She finally felt financially secure for this year.

But don’t get her started thinking about next year.

“Sometimes it’s hard to focus on schoolwork when I’m worrying about how I’ll be able to afford college,” said the sophomore from Brighton.

Lugin and her family are part of a middle-income bracket that has shrunk in recent years at U-M’s Ann Arbor campus and at other elite public universities in the U.S., according to a national survey of incoming freshmen and a federal database that examines financial aid forms.

“That’s a concern, because we are in an economy that really values a college degree, and not having it can be such a barrier to much of life,” said Matthew Reed, the program director for the Institute for College Access and Success. “It’s also important in a time when the president has called for the nation to increase the number of college graduates.”

Last academic year, about 29% of the incoming freshmen at U-M’s Ann Arbor campus came from families who make $40,000-$100,000 a year — a 13% decline from 2005, the survey found. The size of the undergraduate student body has increased over time, but middle-income students are making up a smaller percentage of the group.

The trend has developed as tuition rates and student debt across the nation skyrocketed.

A student walks past the University of Michigan union. The number of students from middle-income families at U-M has fallen 13% since 2005. The trend comes as tuition rates and student debt across the nation have skyrocketed. "We have done everything possible to keep access for all students," U-M President Mary Sue Coleman said.

U-M says it’s aware of the decline at its Ann Arbor campus and says it’s committed to making the school accessible across all income levels.

Other public colleges in Michigan that keep track of student financial data — including Wayne State, Oakland and Michigan State universities — also reported slight dips.

“We’ve had to look creatively for ways” to help students get enough financial aid, said Al Hermsen, WSU’s director of financial aid.

University officials say the tuition investment is worth it because the degrees lead to good-paying jobs.

“Whether they’re rich or poor, parents want their students to get a good education that leads to a good job,” said MSU President Lou Anna Simon. “There’s more and more data available. Parents can see a value there that permits them to see that the investment is worth it.”

But the trend has some worried that top-tier, taxpayer-funded universities are increasingly out-of-reach to middle-class students whose families might make too much for significant financial aid but not enough to afford all of the college expenses.

Experts point out that the nation’s middle class, overall, has shrunk, which could account for some of the percentage dip at top-tier public universities. They also point out that average in-state tuition continues to rise.

“There has been a real change in the overall distribution of income in the country. It’s becoming much more unequal,” said Sandy Baum, an economist and policy analyst for the College Board. “That’s making many families make difficult choices about college, especially as costs increase.”

At all public, four-year universities, the percentage of incoming freshmen from families who make between $40,000 and $100,000 has dropped 8%, while the percentage of incoming freshmen from families making more than $100,000 rose 10%, according to federal data.

One notable exception is the University of Virginia, where an aggressive financial aid strategy — including meeting 100% of demonstrated need for students and capping the loan indebtedness of middle-income students — has allowed the income category to grow, a university spokeswoman said.

‘Committed to being affordable’

U-M President Mary Sue Coleman said the decline in the percentage of students from middle-income families is a problem. But she said it’s one that has developed, in part, from a misperception by some families that U-M is financially out of reach.

She said it’s true that U-M’s Ann Arbor campus is more expensive than other state schools. But in times of financial stress, some families quickly dismiss the school before investigating financial aid and other options, she said.

She said that a typical in-state U-M student from a family with an income of less than $80,000 actually pays less out-of-pocket today than in 2004.

“We have done everything possible to keep access for all students,” she said. “We are committed to being affordable.”

An internal U-M admissions survey appears to support Coleman’s contention about the perception of being unaffordable.

The survey, conducted in 2008, showed high school students whose families made less than $75,000 a year were about half as likely as those whose families made more to apply to U-M. But once they applied, those in the lower-income category were as likely to be admitted and as likely to enroll.

U-M has been increasing the amount of money available for need-based grants each year. It’s part of the reason why the percentage of the student body with family incomes of less than $40,000 has been climbing at U-M’s Ann Arbor campus, school officials say.

Meanwhile, the number of students from families on the top end, with annual incomes of more than $100,000, has also been climbing.

Last year, U-M was ranked in the top 20 of college cost rankings published this summer by the U.S. Department of Education. The rankings include the total net cost of a year in school — not just the tuition.

Martha Pollack, U-M’s vice provost for academic and budgetary affairs, said the ranking each year uses stale numbers and by itself doesn’t illustrate U-M’s movement down the list, a trend that will continue, she said.

“U-M Ann Arbor is not among those with the highest tuition and fees, largest increases in tuition and fees over three years or largest increases in net price over three years,” she said.

Still, Denise Ilitch, the U-M Board of Regents chairwoman, was blunt in her assessment earlier this year of the impact of tuition increases, saying the increases at U-M were driving the middle class away.

She voted against a 6.9% tuition increase this year that the U-M administration said was needed to help offset a 15% cut to state aid. The tuition increase passed by a 6-2 vote.

Skyrocketing costs

One of the reasons for the shrinking middle class — at U-M and across the nation — is simple: It’s increasingly expensive to go to college, especially to an elite school, said parents, students and experts.

“It’s scary to open that tuition bill and see how much money I owe them,” said Eric Cole, a fourth-year student at U-M’s Ann Arbor campus. “It’s either work a ton to pay them off now, or get a lot of loans and have to pay them off later, but I think the degree is worth it, so you’ve got to do what you’ve got to do to get through.”

In-state undergraduate tuition at Michigan’s public universities increased as much as 7.1% this year, depending on the school, and on average has increased 111% over the past decade for in-state undergraduates, according to the Michigan House Fiscal Agency, a nonpartisan research arm of the state Legislature.

The total cost — including tuition, room, board, books and other expenses — is $24,131 for an in-state U-M undergraduate student this school year; $21,664 at Oakland University; $20,968 at Wayne State and $19,930 at Michigan State.

But even after financial aid packages are factored in, some middle-class families are finding it difficult in this economy to cover their share of the tuition expense, students, parents and experts say.

With about $65,000 coming into his house every year, Robert Mitchell is far from destitute. But he’s not worry-free financially, either, especially with a sophomore daughter at U-M and a daughter who is a high school junior approaching college-age. He needs to come up with about $8,000 from his pocket and several thousand more in loans to cover the bill at U-M.

“That’s a big chunk of money,” Mitchell said. “We’re really going to have to cut out some extras to make it — but we’re doing it because we think the education is tremendous and will really open some doors for her.”

After work study, need-based scholarships and a federal loan, a student from a family with income similar to the Mitchells that makes $70,000 a year, pays $8,308 a year to cover tuition at U-M Ann Arbor.

That compares with $346 for students who come from families that make less than $30,000 a year.

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