FinAid Logo The SmartStudent Guide to Financial Aid
Site MapAbout FinAid
Saving for College
Military Aid
Other Types of Aid
Financial Aid Applications
Answering Your Questions
Beyond Financial Aid

Return to
Middle Income

Financial aid administrators, educators and public policy advocates often talk about middle, upper and lower income families, but strangely enough there is no official definition of these categories. Even the US Census Bureau doesn't have an official definition of middle income, although they tend to use the middle quintile, which is families with annual incomes between about $40,000 and $65,000. In some cases they've expanded it to include the fourth quintile, yielding a range of $40,000 to $95,000. Sometimes the range includes the second, middle and fourth quintiles, yielding an income band of $25,000 to $99,000. A lot depends on who is doing the asking and what point they are trying to make.

Nobody seems to use the middle tertile, which would yield a clean split into lower, middle and upper income strata.

Some people would argue that middle income should be defined by standard of living, so that someone who lives in an area with a high cost of living (e.g., Boston, San Jose, etc.) could be middle income even at $165,000, even though that income would put them in the top 5% of wage earners nationwide. Although there could be some geographic adjustments to the definition, it should not extend to the granularity of middle income within a gated community. ("Keeping up with the Joneses is just so difficult on $250,000 a year.")

Some people refer to the six tax brackets as poor, lower income, middle income, upper income, rich, and wealthy. The middle income bracket in that sense ranges from about $30,000 to $70,000 for single and $60,000 to $120,000 for married. But tax brackets are completely arbitrary, and have very little to do with the difference between lower, middle and upper income families.

Low income has often been defined in terms of the US Department of Health and Human Services' poverty line. Common definitions include 125%, 150% and 200% of the poverty line for a family of four. This would yield lower bounds on middle income of about $24,000, $28,700 and $38,300, respectively.

Another common definition for low income is half the median family income for a family of four. The US Department of Housing and Urban Development used this as the definition of "Very Low Income" in FY 1999 - FY 2005 Excel file with 4-Person Very Low Income and Median Family Income Estimates. Moderate income is sometimes defined as 120% of the median family income.

Recently the US Census Bureau has started defining moderate income as 80% of the median family income for a given metropolitan area, low income at 50%, and very low income at 30%.

The National Center for Education Statistics defined middle income to range from $35,000 and $69,999 in 1994, based on the 1996 NPSAS database. The lower end of the range corresponded roughly to the implicit income cutoff for Pell Grant eligibility. (Based on a maximum Pell Grant in 2005-06 of $4,050, the current cutoff would be approximately $47,500. The maximum income at which a family of four with one in college would qualify for maximum Pell Grant is $25,500.) The upper boundary was based on the income level at which most undergraduates would be able to afford to attend a public research institution without needing subsidized loans. These definitions are necessarily circular in nature. See Middle Income Undergraduates: Where They Enroll and How They Pay for Their Education, NCES 2001155, July 2001.

A few years ago there was a survey that asked consumers whether they considered themselves to be in the middle class. Of families with incomes between $20,000 and $40,000, 50% said yes. Of families with incomes between $40,000 and $60,000, 38% said yes. Of families with incomes above $110,000, 16.8% said yes. But this survey was asking about middle class, not middle income.

Overall, the middle quintile of incomes seems like a reasonable definition of middle income. It seems to correspond fairly well to twice the poverty line.



Home | Loans | Scholarships | Savings | Military Aid | Other Types of Aid | Financial Aid Applications
Answering Your Questions | Calculators | Beyond Financial Aid | Site Map | About FinAid®
Copyright © 2020 by FinAid Page, LLC. All rights reserved.
Mark Kantrowitz, Founder