Millions of students and families across the country will be forced to scramble for a little extra money in the coming years as they try to pay for college.
But one of the biggest costs to these families could be a massive hike in the cost of their next education.
According to new data from the U.S. Department of Education, families that received financial aid from the federal government between 2000 and 2022 saw their median net worth fall by more than $1,000.
Families with more than one child and a spouse earning less than $50.00 per week paid the most, with a median net income drop of $1.4 million.
While the exact impact of this change on those in the middle of the income spectrum will be difficult to discern, the numbers are significant.
“Many families who were previously on the bottom end of the socioeconomic spectrum are now at the top end,” said Katherine Tavenner, executive director of the Center for Economic and Policy Research, in a statement.
“While the numbers will be small, the cost will be significant.
For the average family, the difference is staggering.”
Tavenners analysis also showed that median net incomes for families earning less are expected to decline by nearly $200,000 in 2022, with the average income loss being nearly $3,000, or nearly 30 percent.
The average net income for families with four children, however, is expected to rise by more, increasing by more $600,000 by 2022.
In the short term, some families will benefit.
“[Families] will save money through the savings that will come from the tax credit that was recently extended,” Tavennners said.
“In the long term, families who do not qualify for the credit will pay higher prices for higher education.”
While some of the largest gains will be for families in the top 5 percent of earners, the average net earnings for those in that middle income range are expected increase by $2,500, or 25 percent.
“It is clear that the tax credits and tuition assistance programs are going to have an impact on the cost to many families, as it is on many people who are currently struggling to make ends meet,” Tarnner added.
Some of the benefits that will be gained in the long run for families will be in education.
According to the Department of Labor, the median net earnings of households with two or more children in 2022 will be up $1 for every $1 earned by a family earning less.
The net earnings increases for families who have more than two children will be nearly $6,000 per year, or more than three times the increase for families making less than one million dollars.
The Department of Transportation said that, as of 2022, median net pay for drivers in the U, the most populous country on Earth, was $38,818, compared to $38.8 for those without a vehicle.
If the tax cuts do become permanent, the costs to families will continue to increase.
While a small number of people will benefit, Tavens analysis also shows that the overall cost of education will increase by about $1 billion over the next five years.
For families with two children, the estimated increase is $5,500 per year.
For families with more children, tuition increases will be $7,400 per year in 2022.
For parents who earn more than the average, the price increases will rise by $1 million, or roughly 30 percent over the course of the next decade.