When your household income is over $100,000, by all means, you shouldn’t be just “scraping by”. However, things are getting difficult when it comes to the middle class and college planning, as the family may make too much to qualify for scholarships and grants, and too little to pay for a higher education in full without having to “scrape by”. It has been said by many financial advisers and economic leaders that the middle class is diminishing, leaving the upper class and lower class increasing as a byproduct. Statistically, the sad truth of the matter is that the poverty level is growing quicker than that of the rich and famous. The actual number of middle-income households in the United States has been declining for decades. But, why? And how can college tuition and other expenses be afforded when household income is staggering?
The average middle-class family has a household income ranging from $40,000-$120,000 a year. Not too shabby you might think! But, in some parts of the country, a six-figure income is just not enough. The amount of money most families spend each month out ways their incoming revenues, thus credit cards get racked up, stress increases and more and more people are finding themselves in uncomfortable positions. When there are children involved, families must also consider college tuition in their financial planning, an additional burden for those unprepared.
Interestingly, when Robert Siegel of “The New Middle” asked what the middle class now meant in America, here is what he got:
“To me, the new middle means a full-time job with no cost of living pay raises for over five years.” Greg from Oklahoma City, OK.
“My definition of the new middle is being able to live on cash for the basics like food and gas between paychecks without having to use credit cards” Lisa Johnson Mitchell from Dallas, TX.
“My wife and I wonder how we can ever afford college tuition for our boys with the way the price of college goes up and up and up. We are saving for college, but the amount we can save versus what we’re going to need, there’s a huge gap there”. Wade Griffith Birmingham, AL.
“The new middle is a two-plus-income family with a side hustle” M.K. Ohaver, Dunbar, W. VA
“To me, the new middle is being able to afford some luxuries but also having to consider where in your budget you’ll borrow the money from in order to afford them” Angie Emor from Waukesha, WI.
“I think that when your staycation includes going to work on Monday, you might be living in the new middle to me” Jason Lematry, Tacoma, WA.
This is taken straight from the mouths of the average middle-class person, this consists of the bulk of the American citizens. The base of their problems often occur when they are making more than enough money, but don’t know where it is all going. Certified planners recommend what they call “budget cleanses”, which involve fine combing all bills and finding ways to cut back and reallocating the cash toward specific goals such as college tuition. Planners can make suggestions and help reallocated the proper funds to make room for additional savings or expenses that may be needed. They are well versed in the college planning lingo.
When it comes to college, it is extremely beneficial to consult with college planners who know the ins and outs of the market. They can help set up college savings plans such a Section 529 which are a tax-advantaged state-administered investment program that is authorized under Internal Revenue Code Section 529. Funds can be withdrawn federal income tax-free and in many states, families can receive special state incentives along with it as well.
In any case, or whatever your household income, college for your family is an option with the proper planning. Whether you’ve invested in a college prepaid savings plan from the day your child was born, or if you waited until senior year of high school or even after, it’s never too late to take on the responsibility of planning for your child’s higher education.
