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College Financing and the Plight of the Middle Class

By Sandy Baum

Indebted: How Families Make College Work at Any Cost by Caitlin Zaloom. Princeton, NJ: Princeton University Press, 2019.

The national dialogue about student debt is fraught with emotions, anecdotes, and misleading generalizations that stoke panic and sometimes distract from the serious problems facing some students. Too often this dialogue leads to questions about whether high school graduates from all backgrounds can benefit from a college education. Unfortunately, Indebted fails to shed light on the underlying issues and potential strategies for addressing these urgent problems.

Caitlin Zaloom, associate professor of social and cultural analysis at New York University, argues that the “student finance complex”—“the thicket of policies and programs that link government, banks, and universities together”—creates a web of moral and financial quandaries for middle-class families that lead to oppressive long-term obligations for both students and their parents. The author interviewed 160 middle-class families, defined as those too wealthy to receive federal need-based aid but not wealthy enough to be able to pay for college out of pocket. All had accrued debt for tuition and other expenses at four-year colleges and universities. Zaloom uses these conversations to make sweeping generalizations about middle-class American families and higher education.

These families represent only a small slice of middle-class America; that does not make their stories less important, but the author does not attempt to put these families into a meaningful context. About half of all US undergraduate students are considered “independent”—either over the age of twenty-three or in other circumstances (including military service, marriage, and parenthood) that make their parents’ income irrelevant in determining their financial need. Among the group of undergraduates that best fits Zaloom’s parameters—dependent students in the second-highest quartile, with annual family incomes from about $65,000 to $115,000—more than one-third live at home with their parents while attending college. Less than a quarter live on college campuses. Based on national data from 2015–16, about 70 percent of these middle-class students earning bachelor’s degrees graduate with debt; the median borrowed is about $26,000. (Among the 40 percent of this group who earn certificates or associate's degrees, about 40 percent borrow a median of $10,000).

The top priority of the parents Zaloom interviewed was to send their children to their “dream schools.” They were more interested in seeing their children follow their passions and find personal fulfillment than in ensuring that they could get jobs after graduating. Many of the parents in Zaloom’s sample sent their children to New York University. It is one of the most expensive institutions in the country, and it has financial aid policies that create debt burdens far outstripping those at most other private colleges with high tuition and fees. National surveys suggest that while learning more and being able to appreciate ideas are important to many students, being able to get a better job and earn more money dominate the list of motives for going to college. Omitting from her study parents who did not send their children to four-year colleges and those who did not borrow money to finance their education calls into question the author’s generalizations about the middle class.

Zaloom offers important and valid criticisms of the structural inequities in our society and of the decline over time in the opportunities available to children who come from middle-class families. Had she provided a more careful analysis of these circumstances and of the factors contributing to them, along with promising strategies for reversing them, she would have made a real contribution.

The author’s inaccurate descriptions of higher education financing weaken her focus on the system as the root of the problem. For example, throughout the book, Zaloom is sharply critical of students being required to repay their loans immediately after they graduate in what she calls the “first, most vulnerable decade of graduates’ lives.” In fact, about a third of borrowers and half of outstanding federal student loans are now enrolled in income-driven repayment plans. Borrowers are not required to make payments until their incomes reach a certain threshold, and then their payments due are limited to an affordable share of income. Zaloom ignores this reality in her critique, complaining that the United States has learned nothing from other countries that allow repayment to be linked to incomes. Finally, in the concluding chapter, Zaloom acknowledges that we do have such a policy. She is right to argue that our system is not as good as those in some other countries and that it is in serious need of reform. But it is unacceptable for her to pretend that income-driven repayment plans don’t exist and to base a sizeable portion of her critique on that pretense.

Similarly, the misperception that loans have replaced grants as the primary mechanism for helping students pay for college pervades Indebted. In fact, since 2008–09, grants have increased more rapidly than loans, and undergraduates now receive nearly twice as much of their funding from grant aid as from borrowing.

Zaloom tends to describe differing perspectives as clear-cut, binary extremes: “Most commentators either decry the large quantity of student debt young adults carry or defend the American college finance system.” However, most analysts critical of the simple story of a student debt “crisis,” including me, argue for a variety of remedies: more generous state funding for higher education, more generous federal need-based grants, institutional aid based on need rather than “merit,” and a better-designed student loan repayment system that protects borrowers whose education does not yield an adequate return on investment. The role of loans is to solve cash flow problems. Zaloom wrongly accuses analysts supporting this function of suggesting that this is the only appropriate role for government. In fact, providing loans to middle-class students and families whose projected long-term incomes support paying for education is a strategy for reducing inequality of opportunities and targeting direct grants at the lower-income students who need them most.

Similarly, Zaloom judges the concept of “human capital” as implying that the primary goal of education is increased earnings rather than personal and intellectual development. But this is not an either-or choice. Data indicating that people with college degrees have a wider range of occupational choices than those without a college education and that most (not all) four-year college graduates earn more than most (not all) high school graduates in no way diminish the more personal and subjective outcomes of education—or the benefits to society of a better-educated citizenry and a more highly skilled workforce. Education is not just a private benefit, nor is it a fully public good benefiting all members of society equally. I benefit if others go to college, but I benefit more from my own education than others do.

Zaloom devotes a chapter to the financial aid application process, arguing that the system sends a strong moral message that parents should be in stable first marriages. Again, the argument is based on misinformation. Zaloom complains that even when students do not live with two parents, they have to report both incomes and that the system wants divorced parents to be open and honest with each other. In fact, in cases of divorce, the federal student aid system (by contrast with practices at some institutions) asks for information only from the parent with whom the student lives most of the time. As one of the anecdotes in the book reveals, some families are eligible for a disproportionate amount of aid because the system does not ask them to supply information about the second parent.

The financial aid system is flawed in many ways. But building an argument against it based on inaccurate descriptions weakens the author’s case. Most fundamentally, Zaloom argues that expecting parents to contribute to their children’s education creates a host of moral dilemmas for middle-class families: “By basing aid evaluations on family income and wealth—tying students to their parents’ histories—the student finance complex feeds off families.”

But would Zaloom be happier if colleges did not provide more assistance to middle-class students than to those from affluent families? At NYU, Zaloom’s middle-income students get an average of about $15,000 a year more in grant aid than those from more affluent families do (and less aid than those from lower-income families). No matter what happens to state funding for higher education—or for that matter to proposals for “free” public college tuition—NYU is not going to be free for all students. Should parents’ resources be irrelevant?

Black students borrow more than members of other racial and ethnic groups pursuing similar educational paths and face the greatest difficulties repaying their loans after they leave school. As Zaloom emphasizes, the circumstances of Black student borrowers grow out of the history of racism, but the book falls short in evaluating the policy implications of this reality. The author has harsh words for the Obama administration’s efforts to restrict access to federal loans for parents with poor credit history because of the impact of those restrictions on Black families. The author seems to suggest that we should not require Black borrowers to repay their loans because of their social history: “The current federal approach to parent lending acts in keeping with the norms of private banking and shuts out those whose creditworthiness has been compromised by the injuries of racism.”

Neither allowing parents and students to accrue debt that is likely to put them in impossible long-term financial situations nor forgiving their debt because of their ancestry is a sensible public policy. Clearly, more generous grant aid for low- and moderate-income students and families is a better approach. We must work intensely to provide opportunities, working conditions, income structures, and tax and benefit programs that move toward eliminating the lasting financial impact of our nation’s history. But education debt is the only issue Zaloom addresses, and she does not hint at broader solutions.

Indebted argues that the problem of paying for college today involves such profound moral, emotional, and economic commitments that it has redefined the experience of being middle class. But the stagnation of middle-class earnings, the explosion in the cost of housing and medical care, the failure of our nation to build a secure social safety net, and dramatic increases in income inequality are all central factors contributing to middle-class angst. The tensions created by the increasing financial hurdles to higher education are significant, but would Zaloom prefer a world in which parents wash their hands of financial responsibility for their children as soon as they graduate from high school?

Zaloom fails to propose constructive solutions for addressing the untenable middle-class circumstances she describes. The author acknowledges what many advocates for “free” college ignore: that even if they don’t have to pay tuition, students may need to rely on borrowing to cover living expenses while they are in school. She does not want to abolish loans, but she wants a more “generous and generative system.”

The only two solutions she offers are to make the student loan repayment system more sensitive to borrowers’ ability to pay and to increase state funding for higher education. These are both good ideas and staples of policy conversations. However, they are neither routes to fundamental change in the system nor creative solutions.

Too many parents are not in a position to help, and our society should make sure that their children are not denied opportunities. But parents who want the most expensive options for their children—and who, like many of those in Zaloom’s sample, have incomes that are greater than those of most Americans—will have to continue to make hard choices. We should focus on public policies that improve the socioeconomic environment in which families make choices about higher education and provide better information about and support for those choices.

Sandy Baum is a nonresident senior fellow in the Center on Education Data and Policy at the Urban Institute. She is the author of Student Debt: Rhetoric and Realities of Higher Education Financing and coauthor of Making College Work: Pathways to Success for Disadvantaged Students. Her email address is

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