Increasing Student Loan Debt Burdens Well-Off Families While Elite Colleges Scale Back Support

Students coming from families earning six-figure incomes are taking on more debt than previously thought.

The Wall Street Journal reports:

According to a Wall Street Journal analysis of recently released Federal Reserve data, households with annual incomes of $94,535 to $205,335 saw the biggest jump in the percentage with student-loan debt from 2007 to 2010, the latest figures available. That group also saw a sharp climb in the amount of debt owed on average.

In 2007, 19.5 percent of families from this income group had students taking out loans to pay for college. That figure jumped to 25.6 percent in 2010. They're also carrying an average of $32,869 of student loan debt, up from $26,639 in 2007. Upper-middle income families have seen a sharp increase in amount of student loan debt they are carrying over the past 8 years.

"I've been seeing these more realistic calculations and choices, rather than families just going for highest-ranked schools," Rhonda Ker, a private-college counselor in the Los Angeles area, told the WSJ, referring to upper-middle-income families.

Some of those elite highly-ranked schools are scaling back financial aid support too.

Bloomberg reports Cornell University and Massachusetts Institute of Technology are both adjusting how much students will be required to chip in:

Cornell, the Ivy League school based in Ithaca, New York, will force students whose families make more than $60,000 a year to seek other financing to pay for part of their studies starting in 2013. This fall, MIT is raising the amount low- income students contribute by 36 percent to $6,000 a year.

Cornell previously offered extended financial support for students from families earning less than $75,000 a year, in an attempt to help them avoid taking out loans. However, Bloomberg notes spending on financial support has jumped almost 20 percent a year on average since 2008 for Cornell.

Grants from colleges have slowly decreased in recent years compared to other forms of financial aid, according to NPR.

This scaling back couldn't come at a worse time for college kids. Federal loans constitute a majority of financial aid in the U.S., and student loans have topped $1 trillion nationally, outpacing all other forms of consumer debt. Meanwhile, fewer parents have been saving for their children's college education, sometimes choosing retirement savings instead. Many of of them are completely unaware of 529 savings plans.