Law Schools

Middle-Class Borrowers Get Screwed The Most By Student Loans

Reforms should be implemented to make financial aid more accessible to middle-class students.

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You might think that low-income individuals have it the worst when it comes to paying for college and graduate school.  Indeed, low-income students usually cannot rely on family for help when financing their educations, and this could lead low-income borrowers to amass crippling amounts of student debt.

However, as I have mentioned several times in this column and on my website Student Debt Diaries, low-income students oftentimes qualify for financial aid.  Of course, high-income students usually can rely on family members to pay for college, and some will receive assistance from family when paying for law school as well.  However, middle-class students usually cannot rely on financial aid or help from their parents when paying for law school, and as a result, they usually end up being screwed the most by student debt.

Financial aid programs can alleviate the student debt burdens of many low-income borrowers.  As I have previously discussed, I only paid for the cost of food to attend college, since I received generous financial aid that paid nearly the full cost of earning my undergraduate degree.  My brother also had a similar experience when attending college and medical school, and if you have genuine financial need, financial aid can lessen the amount of debt you borrow to attend college.

Receiving financial aid as an undergraduate also impacts one’s ability to borrow money for graduate school.  Since I did not need to borrow much money to attend college, I did not worry too much about where I would attend law school and how much money I would need to borrow to pay for my graduate education.  However, numerous middle-class students are not so lucky.

Many individuals might not have the financial need necessary to qualify for financial aid, but also might not have parents who can help them pay for part or the entire cost of attending school.  Indeed, I have a friend whose parents are teachers, and since they made a decent living, my friend did not qualify for financial aid.  However, he only received a modest amount of help from his parents to attend college.  My friend graduated college with nearly $150,000 more student debt than I had, and this impacted his decisions when applying to law schools.

In addition, as I have previously mentioned, certain law schools also have need-based financial aid programs.  Indeed, I received nearly forty percent off the cost of attending Georgetown Law because of my financial background.  Of course, many middle-class borrowers and even some high-income students do not receive help from their parents when paying for law school.  As such, it actually pays to be poor when it comes to law school debt, and middle-class borrowers have it way worse since they are less likely to qualify for law school financial aid.

In addition, low-income students receive other benefits that help alleviate the burdens of student debt.  My college and law school had programs in which low-income students could receive stipends for completing unpaid internships over the summer.  This was extremely beneficial, since internships can help lay the foundation for one’s career, and due to this stipend, I did not need to worry about finding a summer job that paid the most money.  Furthermore, my law school had lucrative work-study jobs, and these positions were usually filled by people who had financial need.  Some middle-class borrowers might not have been eligible for these benefits, and these programs helped me and other low-income borrowers manage our student loans.

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It is easy to see how not receiving financial assistance as an undergraduate or law student can have a monumental impact on one’s student debt burden.  Of course, such individuals who do not receive financial help will need to borrow more student debt.  However, it is also important to note that the “juice” on this debt will run while in school, and if such borrowers complete a legal education, they will be in school with this high-interest debt for years.  Indeed, this additional debt can increase by tens of thousands of dollars while in school due to capitalizing interest, making this debt much more difficult to manage upon entering the workforce.

It is clear that many middle-class borrowers fall through the cracks of financial aid programs, and reforms should be implemented to make such programs more equitable.  Financial aid should not just be based on the income of a student’s family, but how much a family will actually help that student pay for college or law school.  In this way, students will hopefully not find themselves in a situation in which their families have financial resources on paper but will not actually be able to help when it comes to paying for school.

Of course, it is a lot more difficult to take this approach, since it is hard to surmise how much a family will actually help their children with educational expenses.  I confess that I am not an expert on higher-education policy, and it might be impossible to implement this idea.  However, this approach is far more equitable to middle-class students.

In the end, I am kind of happy that I did not have parents who could help me pay for college and law school.  This situation allowed me to qualify for generous financial aid, which made it easier for me to eventually pay off my student loans.  However, many middle-class borrowers have a much more difficult time with student debt, and reforms should be implemented to make financial aid more accessible to middle-class students.

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Jordan Rothman is the founder of Student Debt Diaries, a personal finance website discussing how he paid off all $197,890.20 of his college and law school student loans over 46 months of his late 20s. You can reach him at Jordan@studentdebtdiaries.com.

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