On paper, Luigi Galvan’s family looks better off than most. Together his parents earn about $120,000 per year — more than twice the current median household income in the U.S.



That kind of paycheck may be plenty to support a standard family of four, but Galvan, 17, is one of seven children, including a younger brother who is disabled and requires expensive medical treatment. When he was accepted at the University of California, Berkeley earlier this year, his parents knew they would need help affording the $32,000/year it would cost him to attend.



Photo: Luigi Galvan More

The federal government thought otherwise. Despite his family’s unique circumstances, Galvan’s family earned too much for him to be eligible for federal grants. He’s not alone. State and federal funding for higher education has plummeted since the Great Recession and the gap between tuition costs and family incomes has only widened. Middle-income families often find themselves disproportionately affected. They aren’t poor enough to qualify for federal grants and scholarships and they aren’t wealthy enough to foot their children’s education bill on their own. The government doesn’t cut off financial aid eligibility at a certain income level but in 2008, 96% of households that received the Pell Grant had an adjusted-gross income of $50,000 or less.



“These parents are making enough to make ends meet and maybe put something into their retirement fund,” says Sue Tirukonda, a certified college aid planner in Wichita, Kan. “But they look at those numbers and they say there’s no way I will be able to afford my mortgage if I were to devote that much money to paying for college.”

When they can’t afford tuition, middle-income families — including the Galvans and the Graves family, highlighted in the video above — are increasingly leaning on debt. A recent study found that college students from middle-income families were more likely to end up with student debt than those from lower- and higher-income backgrounds.

At least one state is working to solve this discrepancy. This fall, California will become the first state to dole out scholarships specifically aiming to help out middle-income families.

The California Middle Class Scholarship will offer funding to families who earn less than $150,000 a year (including investment income and other assets) if their child enrolls at a University of California or California State University (CSU) campus. Awards max out at 40% of the cost of tuition and vary based on how many families apply. To be eligible, students need to fill out a Free Federal Application for Financial Aid Jan. 2 - March 2, 2015.



Galvan was among the first students in the state to apply this year and he will find out in August how much he and his family have been awarded.

“This scholarship is something that does at least somewhat acknowledge the fact that families in the upper $100,000 area of annual income aren't always able to pay as much as colleges expect them to,” says Galvan, who lives in Antioch, Calif. “More aid helps me focus more on my education rather than worrying about what I'll have to pay off for while I'm here.”

The state’s student aid commission, which is charged with administering the scholarship rewards, estimates more than 150,000 families will qualify.



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