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Meet the “Dream Aspirers”: College-Grad Homeowners under Financial Stress

Wednesday, August 1, 2018
young couple gazing at home

By Ana Hernández Kent, Policy Analyst

People love to talk about the middle class. Is it growing? Is it shrinking? Are they doing better or worse?

Part of the difficulty with discussing the middle class is that there are so many different definitions. As researchers have noted, some are based on income, others on wealth or consumption, some on aspirations, job prestige or education — and still others on subjective perceptions. For example, chances are, if you’re reading this, you probably think you’re middle class (most people do). In fact, a June 2017 Gallup poll found that 62 percent of respondents identified as middle or upper-middle class.

Today, I focus on a group few would argue is not middle class: college-educated homeowners. But, is middle-class status really assured for this group? The answer might depend on to whom you talk.

Achieving the American Dream, Yet Feeling Financially Fragile

Take Ally, a college graduate and homeowner who feels financially insecure. She represents a small but sizeable minority who has achieved what many consider to be the American dream,Fitzgerald, S. T., & Leicht, K. T. (2014). Introductory Comments: “Does the American Middle Class Have a Future???” The Sociological Quarterly, 55(2), 233-235. but she still feels controlled by her finances, is worried about money and is financially fragile.

Meet the dream aspirers: Those who on the surface have “made it” but are still struggling financially.

People in Ally’s group — college-educated homeowners — represent only 24 percent of the population, based on the Federal Reserve’s 2017 Survey of Household Economics and Decisionmaking and my calculations.

As Americans, we’re sold the idea that if you work hard, make it through college and can afford to buy a house, you’re middle class. That’s not to say others can’t be in the middle class, too, but being a college-educated homeowner should practically be a guarantee.

Yet, recent research from the St. Louis Fed’s Center for Household Financial Stability suggests this is not the case. Millions in this group are dream aspirers and financially insecure, and this lack of security calls into question their middle class identity.Rank, M. R., Hirschl, T. A., & Foster, K. A. (2016). Chasing the American Dream: Understanding What Shapes Our Fortunes. New York, NY: Oxford University Press. For example, almost four in 10 college-grad homeowners spent their entire income or more in the past year. That doesn’t scream “middle class” to me.

One reason is that this type of spending makes it difficult to save for future expenses or plan ahead. Because an orientation toward future planning is a hallmark of middle-class status (as psychology researchers have noted), financial barriers to this process can make it more difficult to feel “middle class.” Instead, these dream aspirers are more focused on the present and are simply trying to stay afloat.

Comparing Racial Differences among Dream Aspirers

Differences are starker when comparing dream aspirers by race. Just over one in four whites (28 percent) is a college-educated homeowner. Blacks and Hispanics are only half (14.8 percent) and one-third (10.3 percent) as likely to belong to this group.

Additionally, these black and Hispanic college-educated homeowners are more likely to be dream aspirers than whites in this group.

  • Getting by: Whites are half as likely as blacks and 27 percent less likely than Hispanics to be struggling financially. (“Struggling financially” is defined as reporting that they are “finding it difficult to get by” or “just getting by” financially.)
  • Paying bills: Both Hispanics and blacks are more likely than whites to say they would be unable to pay all bills on time and in full this month. Hispanics are 1.7 times as likely to report this; blacks are over twice as likely.
  • Meeting emergency expenses: Hispanics are 1.6 times as likely as whites to be completely unable to meet a $400 emergency expense. Shockingly, blacks are more than three times as likely as whites to be completely unable to meet a $400 emergency expense!

Remember that these groups are all college-educated homeowners. These are the people who should be thriving, yet a surprising amount are clearly struggling.

To be sure, the average college-grad homeowner is doing better than the average family without these characteristics. This has been documented by the Center for Household Financial Stability, in our ongoing Demographics of Wealth essay series.

Nevertheless, with so many Americans financially stressed — and with large racial differences to boot — we can’t help but ask whether middle-class status is automatically achievable for college-graduate homeowners, or if, for those like Ally, it is an unlikely dream away.

Notes and References

1 Fitzgerald, S. T., & Leicht, K. T. (2014). Introductory Comments: “Does the American Middle Class Have a Future???” The Sociological Quarterly, 55(2), 233-235.

2 Rank, M. R., Hirschl, T. A., & Foster, K. A. (2016). Chasing the American Dream: Understanding What Shapes Our Fortunes. New York, NY: Oxford University Press.

Additional Resources

The St. Louis Fed launched the Center for Household Financial Stability to research and strengthen the balance sheets of struggling American families. Recent offerings include:

Ana Hernández Kent 

Ana Hernández Kent is a policy analyst with the St. Louis Fed's Center for Household Financial Stability.

Tagged ana hernández kentcollegehfscenter for household financial stabilityhousingdebtconsumermiddle classdream aspirers
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