Fresh Perspectives on Higher Learning

Insights & Outlooks

Affordable Higher Education is Essential to Preserving the Black Middle Class

Affordability & Responsiveness, Today's Students
Affordable Higher Education is Essential to Preserving the Black Middle Class

Higher education has long been touted as a gateway to the middle class. This is especially critical for black Americans, as blacks still face economic adversity in not only achieving middle-income status, but also maintaining this status for future generations. In 2017, about 40 percent of black households qualify as middle class, with household incomes between $35,000-$100,000. About 37 percent of white children born to parents in the middle class move up the income distribution, compared to only 17 percent of black children. Forty-five percent of black children whose parents were middle class moved down the income distribution, compared to only 16 percent of white children.

But, federal policies have not kept pace to help black students achieve student success in postsecondary education. African American students are least likely to enroll, persist, and complete postsecondary education. White students (57.6 percent) continue to enroll in postsecondary education at higher rates than black students (14.1 percent). In 2015, about 22.5 percent of African American students completed four years of college compared to 36.2 percent of white students –  a gap of 13.7 percentage points.

Many current higher education policy conversations focus on low-income students who face barriers to access and completion. These are critical conversations, but the American economy cannot afford to let black students from the middle class fall by the wayside.

Our current federal student aid system assumes that the middle class can afford to pay for their child’s postsecondary education expenses without much federal financial aid. But we know this to not be true. Researchers argue that the current structure of federal student aid programs implies that the middle class is “too rich for Pell and too poor to afford college.” However, middle class families struggle to access and complete postsecondary education because many students may not qualify for federal Pell Grants and Federal Supplemental Educational Opportunity Grants. In turn, these students – and their families – often rely on institutional scholarships and federal student loans to help pay for postsecondary education and related expenses.

The Parent PLUS Loan Program: an option for access with open questions

The Parent PLUS loan program is a loan that a parent of a dependent undergraduate can acquire to help pay for their child’s postsecondary education. Historically, the Parent Plus Loan program has helped many students from low-income and middle-income families access postsecondary education. About 15 percent of Parent PLUS loan borrowers are black and 37 percent of those borrowers have an income between $30,001-$75,000; 16 percent have income between $75,001-$110,000.

While a tool for access, policymakers should examine the Parent PLUS loan program through a racial wealth gap lense. As noted above, black families are struggling not only to earn a place in the middle class, but to remain there through generations. Parent PLUS loans risk being detrimental to preserving the black middle class because parents are not receiving educational benefits and do not have the potential to earn more when taking out Parent PLUS loans, unlike undergraduate students who take out federal student loans to earn their degree. And, if the parents wealth is low, then the loan does not provide true access because it will erase the wealth of the parent when it is time to repay the loan. If Parent PLUS loan holders struggle to repay, then the racial wealth gap will continue to widen and can prevent black middle class families from investing in other economic opportunities. And we know that many Parent PLUS borrowers do struggle to repay; in 2015, about 7,339 Parent PLUS borrowers ages 65 and older were in default compared to 2,302 borrowers in 2005. About a third of all dollars in default are held by borrowers with balances over $50,000.

But, while we have limited data on outcomes of Parent PLUS loan borrowers, there are still many unknowns. Better data would help policymakers make evidence-based reforms to this program – data should be disaggregated by race and ethnicity and Parent PLUS loan data should be disaggregated from Graduate PLUS loan data. And, institutions of higher education should be clear when packaging aid to students, by listing Parent PLUS loans separate within a student’s financial aid award letter, since it is not aid directly given to the student.

Black Middle Class Families: Another Plank in the Equity Platform

Policymakers and higher education leaders can reduce equity gaps in postsecondary education by introducing policies that ensure greater numbers of black students from the middle class earn a postsecondary degree or credential. Knowing information about the programs we have is a good start.