Views
7 months ago

The Consequences of Insufficient Household Income

This new Consequences of Insufficient Household Income report provides a deeper level of understanding of the choices that ALICE and poverty-level families across the country make when they do not have enough income or assistance to afford basic necessities, and the consequences of those choices.

The

The cost of not attending college is greater for young adults today than it has been in the past. College graduates earned 51 percent more than those who only had a high school diploma in 2013, compared to 36 percent more in 1995 and only 15 percent more in 1965. College graduates in 2013 were much more likely to be employed, and unemployment among high school dropouts was more than three times higher than among those with a bachelor’s degree (Pew Research Center, 2014). HIGHER EDUCATION Fewer than half of low-income students attend college immediately after high school, while 80 percent of children from high-income families do. In 2013, only 14 percent of students of low socioeconomic status attained a bachelor’s or higher degree within eight years of graduating high school – and young adults with a bachelor’s degree earned 62 percent more than those with only a high school diploma ($48,500 vs. $30,000 per year) (National Center for Education Statistics, 2015). The obstacles to higher education for students in ALICE families include lack of an educational foundation to succeed in college as well as financial constraints. Without the minimum preparation in K–12, many lowincome students do not have the skills needed to do well in college, such as sufficient reading and writing abilities. Some of these can be mastered in college, but that takes time away from requirements to earn a college degree, costing more in time and money. Strategy 9: Forgo or Don’t Complete College Many students in ALICE families do not have the resources either to afford college tuition or to forgo earnings while attending college. Though many students have part-time jobs in college (40 percent of full- 34 UNITED WAY ALICE REPORT – THE CONSEQUENCES OF INSUFFICIENT HOUSEHOLD INCOME

time students and 76 percent of part-time students in 2013), they often cannot earn enough to support themselves, meet their family obligations, and pay tuition. Working can also negatively impact grades and delay graduation, prolonging the period of little or no income while adding to tuition costs (National Center for Education Statistics, 2016; Carnevale, Smith, Melton, & Price, 2015). Consequences An increasingly competitive labor market: Young adults entering today’s labor force without a college degree face increasing levels of financial hardship. Twenty-two percent of 25- to 32-yearolds with only a high school degree were in poverty in 2012, compared to 6 percent of collegeeducated young adults. This difference is much greater than it was for previous generations. Among Generation Xers, 15 percent of young adults with only a high school diploma were in poverty compared to 3 percent of college graduates; among Baby Boomers in 1979, only 7 percent of those with only a high school diploma were in poverty compared to 3 percent of college graduates. Additionally, the difference in annual income between young adult college graduates and those with only a high school diploma has increased from around $7,500 in 1965 to $17,500 in 2012, accounting for inflation (Pew Research Center, 2014). Strategy 10: Take on Student Loan Debt Tuition debt has increased over time, and many students now incur ongoing loans. Student debt is often a reason young adults become ALICE. Seven in 10 students (68 percent) who graduated from public and nonprofit colleges in 2015 had student loan debt, and owed an average of $30,100 (Project on Student Debt, 2016). When students drop out of college, they are often saddled with loans, yet they miss out on earning a degree that would lead to a higher income and the ability to repay those loans. Consequences Higher loan default rates: More Americans than ever before are attending college, but more are also dropping out and defaulting on their loans. In 2015, 59 percent of adults had completed some college, but less than half of them had received a bachelor’s degree. Students who did not receive a degree or who received an associate’s degree are more likely to have debt that they cannot repay. Students earning an associate’s degree at a public two-year institution were three times as likely to default on student loan repayments as students studying at four-year private, nonprofit institutions. Nationally, 58 percent of borrowers whose student loans came due in 2005 hadn’t received a degree, according to the Institute for Higher Education Policy. Of those without a degree, 59 percent were delinquent on their loans or had already defaulted, compared with 38 percent of college graduates (Cunningham & Kienzl, 2011; Ryan & Bauman, March 2016). Less money for current expenses or savings: Money spent on debt means that less money is available to save for future expenses such as buying a home or retirement, and less is available should an emergency arise in the present. That lack of savings creates a vicious cycle of financial instability for ALICE families, and increases the risk of higher costs for health care and social services over the longer term (Belsky, Goodman, & Drew, 2005; National Low Income Housing Coalition, 2016). UNITED WAY ALICE REPORT – THE CONSEQUENCES OF INSUFFICIENT HOUSEHOLD INCOME 35

Median Household Income - Town of Ludlow
The Toronto Residents' Panel on Household Income ... - Cities Centre
Expenditure of Low Income Households in the ACT - ACT Council of ...
The Clean Energy Future package, households on low incomes and ...
Housing Assistance for Low Income Households (.pdf, 647 KB)
ALICE: Asset Limited, Income Constrained, Employed
Federal Tax Policies and Low-Income Rural Households - Economic ...
Dynamics of Poverty and Food Insufficiency - Economic Research ...
Transportation Spending by Low-Income California Households ...
household-income-standards-full
1 SUMMARY INCOME ELIGIBILITY Persons in Household ...
Household Income and Expenditure Survey Analysis Report
Inter Household Private Income Transfers and Poverty - Tanzania ...
The Great Recession and the Distribution of Household Income
The Great Recession and the Distribution of Household Income
Affordable credit for low-income households - Joseph Rowntree ...
community and household-level income & asset status baseline
Income, Wealth, and the Economic Well-Being of Farm Household ...
How do Poor Households Smooth Their Income and Consumption?
Low-Income Households' Expenditures on Fruits and Vegetables
Decoupled Payments: Household Income Transfers - Economic ...
Income, Wealth, and the Economic Well-Being of Farm Household
housing policy and the location of low-income households
Composition of Farm Household Income and Wealth - Economic ...
including details of payments to low income households - Australian ...
Low-income households and communities of concern burdened ...
Environmental and Housing Problems of Low-Income Households ...
Subtitle Raising living standards of low-income households