What Does "Middle Class" Actually Mean?

Paying for College
1

One of the debates that has played out frequently over the years here at CC is what’s middle class, particularly in terms of financial aid. For example:

Member1: “My parents only make $150K, so if I don’t get an amazing aid package I’ll have to go to a community college.”

Member2: “$150K!!! If my family made that kind of money, we’d have enough saved to pay for college with cash! Maybe you should sell the Mercedes to pay for freshman year!”

Member1: “We live in the SF Bay Area. We can’t afford a nice house, and our car is a 6-year old Toyota.”

And, it goes on from there…

In fact, a University of Michigan student provoked a lot of debate on her campus when she wrote an editoral asserting that her family’s $250K annual income was middle class… in Palo Alto. She makes some other interesting regional comparisons here: https://www.michigandaily.com/opinion/02jesse-klein-relative-wealth16

Business Insider has attempted to calculate what “middle class” means on a state by state basis:
http://www.businessinsider.com/middle-class-in-every-us-state-2015-4

And, the differences between states are large:

Maryland: $48K - $145K
New Jersey: $47K - $140K
Arkansas: $27K - $81K
Mississipi: $25K - $76K

Of course, these are state averages. Individual metro areas can be outliers, usually at the high end. So, New York’s range is $57K to $115K, but the individual ranges for Manhattan, Buffalo, and Troy, for example, will be very different.

Want to compare your metro area or county and find out if you qualify as middle class? Check CNN Money’s Middle Class Calculator:
http://money.cnn.com/interactive/economy/are-you-middle-class/
Their formula is a bit different but is more granular geographically.

One other point worth noting is that even if you buy the general concept of geography-based middle class, the range in each location is huge. The Business Insider data has the upper end of middle class as roughly 3x the lower end. Surely these end points would represent very different lifestyles regardless of locale.

So, are you middle class?

2

Defining the middle class is much more complicated than it used to be, IMO. This is partly because many in the top 1% of earners have pulled so far ahead of everyone else. Some $250,000 earners may technically be within the upper class, but legitimately may “feel” middle class due to any number of circumstances.

3

That’s why after doing all these calculations for colleges this year I used to say we were middle class (income $120-150k) but now I just say we are “in the middle”, so being too rich to get need based aid but too poor to fund college strictly out of a paycheck. And I’m not counting assets which is a whole other story.

4

Good point, @midwestdad3 - we form our self-perceptions by comparing ourselves to others. If I’ve got a new Buick, I might feel “poor” if my neighbors are all driving new Jaguars and BMWs.

The “in the middle” problem isn’t new, @rdtsmith, people have been complaining about it since the early days of CC. The problem has been exacerbated, though, by the rapid increases in cost of attendance. I’ve seen some stats, too, that suggest that even students from low-SES families (who might get a very generous or “full” aid package) still can’t afford to enroll due to uncovered costs.

5

Impossible to quantify, especially since net worth isn’t factored in anywhere. As an example:

Family 1: Earn $120,000 a year in Florida. Net worth is $160,000

Family 2: Earn $47,000 a year in Florida. Net worth is $875,000

Which family is middle class? 1,2,neither, both?

6

Related thread from the Parents Cafe.

Really defining by state is difficult. There is a huge difference between income in Fairfield County CT, and Windham County. Likewise, a big difference between Buffalo and midtown Manhattan.

http://talk.collegeconfidential.com/parent-cafe/1761272-finally-middle-class-defined-by-state-p1.html

7

$46,257—$72,688 for our county. That’s absurd, considering the cost of housing here. Maybe if you were single!

8

We make $250k, but it takes hubby and me three jobs and a staggering amount of overtime to get there. I always think most people don’t want to work the same amount of hours. However, we are overwhelmed with gratitude for the opportunity and ability to work so hard and provide so well for our kids.

9

Harris County, Texas, where Houston is: middle class is $41-67K. Affordable housing is plentiful, and there is lots of cheap and free entertainment, and a low cost of living compared to other large metropolitan areas. You can buy a very nice house in a nice safe neighborhood for $150K (but you may have a long commute to work). While a family could live on income in this $41-67K range, I would not consider 41K middle class!

10

Many colleges do not have good enough financial aid to make themselves truly affordable (i.e. without loans greater than federal direct loans) to those from lower income/wealth families. This includes many states’ (e.g. PA, IL) public universities for their in-state students. In some states, even the community colleges are expensive.

Students from low income/wealth families tend to need higher academic credentials that would get them admitted to the good financial aid schools that tend to be highly selective or earn big merit scholarships at less selective schools. A 3.0 HS GPA / 23 ACT / 1610 SAT student from a high income/wealth family may have many choices, but such a student from a low income/wealth family may find many of the same choices to be unaffordable.

11

@moscott, I’d like the name and phone number of Family 2’s financial planner!

12

Middle class range here is 46933-140800
Median is 70400

in my city

13

Middle class in California starts above $125K, since if you are under you can go to Stanford for free.

14

Poor: less than $75k
Middle Class: $75-$500k
Upper Class: $500k or more

15

@seal16‌ no…the Stanford thing is for families nationwide.

I would think the threshold in CA is $80,000…families with AGI below that qualify for the Calgrant.

16

What about choosing to live a very modest middle-class lifestyle now so that when retired, you will STILL be middle class? For example, if the threshhold for middle-class in your community is $70k, everything above that goes into college and retirement savings.

This is what FAFSA seems to assume - BIG savings for retirement pre-college and foregoing retirement savings during your children’s college years. Unfortunately, we will have college students for a total of 16 years, so that is a very stupid plan.

I agree middle class becomes difficult to define. Some people live with a middle-class level of funds and save the remainder of their upper-class income. Some people are middle class and borrow/take credit to spend at an upper-class rate. The websites are based on total household income, but disposable income for a household having 2 parents and no kids is a whole bunch different than a family with 5 kiddos!

17

How many kids are we talking about?

140K and a family of four is still middle class in my state.

As for Family 2, the difficulty is when someone inherits a house, for example, but cannot take out a mortgage because of their income - they could not pay it back in any appreciable way. I have a relative who inherited a house worth about that, but she could not pay off the lawyer and real estate agent because she did not have any liquid funds due to her low salary. It took over a year to sell a house which was in a prime location because of the paperwork and shenanigans related to not having cash available just real estate.

I also know people who own a 120K house clear but barely pay taxes on it.

As for the “5 kiddos” comment - think about this. We know some wealthy people who have twins or even triplets. If they have a 80,000 EFC with one child in college, and they have two at the same time, the overall EFC becomes 96,000 for two in college. With college costs near 65K each, that means 130K - 96K = 34K in savings because they had twins.

While Joe Schmoe who had one child at a time gets their full EFC because their children have a few years between them. It’s a boon if Jane Doe happened to have twins, but if rich Sally Smith has twins, she benefits too (unless she is super mega rich) :slight_smile:

18

Sorry, folks, can’t join in the discussion because I am rich. In my county, middle income is 35,430-55,413. Shhhh…don’t tell Harvard and the like they might be giving a whole lot of aid to the wealthy!

19

There must be a big difference in income depending on the city in my county. I live in California and it says for my county that middle class is $43,620-$69,271. I’m pretty sure we make $100,000 or more, and I also think we are middle class (family of 7). Hmmm…if only they did it by city instead of county.

20

Seconding what @dsi411 said, my family makes around $110,000, but we live in an extremely expensive community in the Bay Area; what the website says for our county is much lower than the “middle class” where I live. My friends’ parents earn far more than my family, and they’re not even the “rich” ones, for the most part. My family is most definitely middle class.