If you think the struggle to pay for college is a problem of the poor, then think again.  As discussed in a recent Wall Street Journal article, "Rising college costs and a sagging economy are taking the biggest toll on a surprising group: upper-middle-income families." Between 2007 and 2010, this upper-middle-income group (defined as households with incomes ranging from $94,535 to $205,335 per year) experienced the greatest rise in the percentage of families taking on education loan debt, as well as in the average amount of debt outstanding.

Turning to Student Loans in Record Numbers

Converging phenomena of exponential tuition increases and financial market implosions have resulted in a perfect storm of economic conditions for relatively well-off families, perhaps confident of their ability to pay for college a few years back.  The recent housing market crisis, and related stock market collapse, resulted in an average loss of 19% of the net worth of upper-middle-income families between 2007 and 2010.  With a fifth of their assets gone, and the cost of college doubled since 1985 (even accounting for inflation), these higher-income families have turned in record numbers to the financial resource most easily accessible and heavily marketed to them: education loans.

Lower-income households, certainly not immune to economic conditions, have increased their student loan borrowing as well, but to a smaller extent.  Students from low-income families, on average, tend to attend lower-cost schools and receive greater need-based assistance than their higher-income counterparts, so are less dependent on education loans to pay tuition.  Low-income students typically have 36% of their college costs met with grant and scholarship aid, according to student loan lender Sallie Mae, while only 21% of the costs of upper-income students are typically covered with financial assistance, increasing the financial stress of relatively well-off families.

Mounting Financial Stresses Equal Distraction at Work

Though financial stress is nothing new, upper-middle-income employees faced with skyrocketing tuition bills and plummeting asset values in recent years are now confronting an unexpected economic reality.  This economic reality is taking a toll in the workplace, according to a 2011 PricewaterhouseCoopers study, with 29% of U.S. workers reporting that personal financial issues have been a distraction at work.  As noted above, financial struggles are certainly not a monopoly of the poor, and financial distractions are actually more prevalent among higher-income employees, with 37% of workers earning over $100,000 reporting the same reduction in productivity.

Employers Can Take Action

As a College Coach finance educator, I work with employees at all income levels to help alleviate the stresses of saving and paying for college.  Conversations with lower-income employees tend to focus on the intricacies of financial aid applications and maximizing need-based assistance, while conversations with upper-income employees more often relate to tax-advantaged college savings, maximizing merit aid through value-conscious college selection, negotiating scholarship assistance, and, when necessary, responsible borrowing.

As financial worries work their way up the income ladder, employers must recognize that well-compensated employees are not immune to financial struggle, especially the struggle to pay for college.  Compensation alone is inadequate to address employee disengagement, and must be complemented with benefits programs to address employees' stresses, financial and otherwise, to achieve maximum productivity and true employee well-being.