<p>My point about the "hype" is that it is disingenuous for the colleges to claim they are now "helping" more upper middle class families to make college more affordable for them -- they have made college less affordable overall by raising their tuitions. What they have done is simply create a larger pool of students who qualify for need based aid. This is more of a soak-the-rich approach toward college tuition than a "help the upper middle class" approach. It does not in fact help the upper middle class because there are always going to be people in a certain income range who do not qualify for financial aid because of various nuances in their income situation -- such as blended families, high home equity, etc. So while more families with $150K+ incomes may qualify, there are also many with that income and lower who do not qualify. </p>
<p>Chedva -- if you want to get financial aid for your daughter, and think you might qualify, it is important that you talk to the financial aid people and find out in advance how things are weighed. Every college has its own policies, and if the school does not promise to meet 100% need then you may be out of luck in any case -- but if you feel that the assets & income reflected for your family on paper is out of touch with reality, colleges will often reconsider if you give them the facts on which to base reconsideration.</p>
<p>Some of the 100% need schools CAP HOME EQUITY at - eek.. I've forgotten... Is it 2.4X income minus remaining mortgage amount? It used to be something like that.... I know Rice caps home equity, though I don't know what the formula is, but (at year 4 of paying for college) and with income just below $100,000 , we feel like our EFC is fair and doable - so we are happy middle-income campers! :)</p>
<p>Yes, some do -- but if the cap is based on a multiplier, then as the income rises the cap also rises -- so with your 2.4x formula, a $100K earning family would have a $240K cap on home equity -- whereas a family earning $110K would have a cap of $264K -- since 5.6% of the equity counts toward EFC, the additional $24K of EFC would be reflected in +$1.3K toward their EFC - combine that with the approximate $4500 hit they take for the increased income, and you've got the family that earns $10K more with the same house (let's assume $300K total in equity) with a $5800 increase in EFC. So those caps become less & less valuable as income increases.</p>
<p>Thanks for the link. Relevant information for my family. It would be interesting to know how many well endowed schools are taking this approach to FA for middle income households.</p>
<p>"College officials define middle class as families who make $100,000 and more per year."</p>
<p>And pigs fly.</p>
<p>"At upper ranges, income is assessed for financial aid at 9 times the rate of assets -- $10,000 of increased income will result in about $4500 in increased EFC, whereas $10K of increased assets will only impact EFC by about $500."</p>
<p>And, on average, someone with $200,000 in income has between 4 and 6 times the assets of someone with $100,000 in income. </p>
<p>The folks at the colleges do this for living - they KNOW what they are doing. </p>
<p>"The EFC formulas have not changes. When my son applied to college in 2001, a family with an EFC of $35K would not have qualified for need-based grant aid at Harvard or anywhere else -- now that number falls far short of the total COA, so naturally the family will get a grant."</p>
<p>And across the spectrum among prestige colleges (and with individual exceptions), within the past 15 years, the percentage of students attending who receive financial aid has not changed (it has, in fact, gone down a little bit). What this tells you is that once you get past the hype, these schools are less economically diverse than they were 15 years ago.</p>
<p>Can't say I blame 'em. The colleges' first responsibility is to make sure they can pay the bills.</p>
<p>momneedsadvice - I feel this every day - many of the families in our rather affluent area receive a shocking amount of financial aid because they own businesses and somehow manage to draw small salaries or have huge expenses on their tax returns, drive brand new leased cars through their businesses, own second homes, take cruises and ski vacations, and Mom even stays home and is on her way to the gym while I am on my way to work. I feel pretty stupid at times.</p>
<p>Rileydog- Don't forget the tennis, horses and weekly manicures! Meanwhile, my nails are still black in spots from the 10 hours of driveway sealing H and I did last weekend to save $200 on labor!</p>
<p>I think one of the reasons that the middle class feels the financial aid pinch the most is that while the EFC formulas look like they take taxes into consideration, they really don't. A family with income of $120,000 (which sounds quite nice) may not qualify for any aid at most schools that are not heavily endowed. So their 120k after a very conservative 20% tax bite (FICA, Medicare, Fed'l and State) becomes $96,000 net. If they fork over $45k for college, that leaves $51,000. Pre-tax (at same 20% rate), that $51000 equals $63750 which would probably give them a very nice fin aid package. So for families with two wage earners, it might actually be better to drop one of the jobs while kids are in college when you think of all the nondeductible expenses involved in earning that wage. Maybe I'm way off the mark here, and I realize that sending one's kids to private colleges is a choice, but it just seems like there's an awful lot of families in that "we're not poor but there's no way we can spend $45000 per year" category.</p>
<p>sewbusy, I am truly impressed! I have been trying to get a sealcoating estimate all week, but I suspect the companies are sew busy ( :) ) right now trying to finish jobs before the weather gets cold they can't even get back to me. Material is so expensive I am not sure I can save any money by doing it myself. </p>
<p>Financial aid? My income has gone from something to nothing. I wonder if we will qualify for FA next year?</p>
<p>Sewbusy...I see you saying something I have seen here before when you mention that someone with a take home pay of $96,000 AFTER taxes is expected to fork over $45000/year of it to a college (and more if they have more than one in school). But I don't think anyone in middle income can or would be expected to fork over the entire price tag of college out of that one year's salary. That is impossible. We are middle income. Our kids attend schools that cost approx. $50,000/year. Our price tag is not $50,000/year as they receive aid. But even the part we are expected to pay could NEVER be paid out of this year's income. Impossible. </p>
<p>I don't think one can weigh whether the price is affordable out of one year's income because the answer would be "no" for anyone in the middle income bracket. It will require either savings before that point and/or parent loans (or some have their students take loans) that are paid off over time....kinda like a mortgage or car. So, I don't think colleges necessarily expect you to come up with that figure in one year's salary. It may mean that some can't or won't take out loans. But with the loans, the monthly or yearly payments after FA, can be somewhat affordable and are not like forking over $45K per kid per year in one year. At least that is how I see it. When people say they can't afford the cost out of pocket to pay for college, that's right...unless you are pretty well off, you would not have that amount to spare out of one year's salary. But it IS possible to spread it out. And colleges, at least my kids' colleges, do provide both loans and grants in the middle income bracket.</p>
<p>When I moved to Long Island, I was amazed at the number of people spending hundreds in cash at the mall and grocery stores. I quickly realized there is a huge underground economy that deals in untaxed cash income. Any small businessman will gladly give major discounts for services or good bought with cash. Those of us with salary incomes just plain lose.</p>
<p>I'm sure you old-timers are tired of my examples, so I'll apologize in advance... but it HAS been possible for us to pay our EFC out-of-pocket, with no loans so far. We are paid-up for daughter's college through May (she's currently a senior), and we have three more years to go with my son. They both attend a 100% -need-met school, which is reasonable with financial aid. Basic techniques: pay off all debts before college, including cars. Cut way back on spending, or, in our case, maintain a certain fairly frugal lifestyle. Basically, all my income goes to college, and we live on my husband's income. Our only expenses are a mortgage/utilities/gas/car maintenance/one $15 haircut every three months/food/ dog food and my tap dancing classes. If need be, we could cut back further, but I have become exceedingly lazy in the food department, and we are eating many more prepared meals and meals out than we used to.<br>
If we have a major expense (roof or AC needing replacement / needing new car), we may have to go to loans or home equity, but I'm hoping all will hold out until May of 2011! So, for those of you who don't like to borrow money, it MAY be possible to pay for school out of current income, if you keep your living expenses low. :)</p>
<p>Anxiousmom, I am laughing! I had to do a double take of your post...I was reading along about your expenses and there was the dog food and then I read the LAP dancing classes....and I thought, wow! I had to go back again!</p>
<p>We've managed to pay out of current income as well, and I expect that what we pay is less than what some folks lay out annually for dog food. ;) (And I am SURE that what some folks lay out monthly for dog food is more than our mortgage payment.) (I haven't had a haircut from a barber, outside my little village in India, in more than 20 years.) My wife's car just got rear-ended. Broke a clamp on on one of the back panels. After we "bought it back", the payout from the insurance company was $1,600, which is more than we paid for the car four years ago.</p>
<p>But we don't expect lightning to strike twice with our second one. Sigh.</p>
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And now I'm laughing, too! I had a brief image of me trying to earn some cash-on-the-side at the local "Gentleman's Club", and that was definitely laughable! ;)
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anxiousmom- presuming housing and COL in your area is considerably less than ours in the NE.......yes?
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Probably yes, but rising rapidly. In the spirit of full disclosure (y'all know WAY too much about my financial situation by now ;) ), we pay about $1750 a month for mortgage/home insurance/property taxes/homeowner's association. Property taxes are outrageously high due to lack of state income tax. Tiny bungalows in the center of the city are now $390,000, 2000 sq.ft houses $600,000; McMansions way, way out in the treeless suburbs can run you as low as $175,000; 650 sq.foot condos near downtown run $300,000 (plus $400 a month condo fees :eek: ) Prices are only going up as you Easterners keep moving here, where it's warm, and the Californians are busy buying up our bargain houses. :)</p>
<p>Sewbusy, the problem with your argument in post #28 is that your numbers don't reflect the EFC calculation -- I ran those through a quick EFC calculator, assuming $120K income, $24K taxes, $120K liquid assets, 2 parent family, 1 kid in college, and came up with an EFC of around $30K. Based on income alone, the $120K family will now qualify for need-based aid at any of the elite, 100% need schools -- the thing that probably knocks most of them out of the running is much higher assets than the amount I assumed. </p>
<p>But lets assume that the family had liquid assets of $300K. Even with that amount, FAFSA EFC is under $41K -- and what is significant is that I have just hypothesized an amount of assets that is enough to pay for 4 years of college with $100K to spare-- so this is a family that clearly has enough money in the bank & enough earnings to pay for college, but they still probably qualify for need-based aid in the form of loans or work study, though at that level it is unlikely their child would receive grant aid.</p>
<p>Everyone has mentioned having 1 in college. What changes once the 2nd child applies? We make in the $160-180,000 range. Any hope for us? Do the elite schools care where you are sending #1 and what you are paying there? Even with our salary, isn't $86,000 in college tuition a little much??</p>
<p>I'll vouch that Harvard is right on with its comments on financial aid. However, I have two in school at exactly the same time. We would have received zip if I only had one. (Of course that would have been cheaper in the long run.)</p>
<p>My advice (though unfortunately this won't help most of you now): Tell your kids to have their children very close together. The conventional wisdom when I was growing up was to space your kids three to four years apart so you wouldn't be paying two tuitions at once. Today, the more you have in college at one time, the better off you are.</p>
<p>If you will have two in college at the same time, take a deep breath. You have the potential of having at least some lower-stress years, due to a lower EFC and a cleaner bathroom at home.</p>
<p>Every year we receive forms from each college that have to be sent to the other child's institution, verifying enrollment, so we can keep our aid.</p>
<p>It wasn't just Harvard that offered us good financial aid. (And no - I'm not talking about anything that looks even remotely like a free ride ... I'm talking about financial aid that is fair. We have loans too, as well as old cars, do it yourself homeowner projects, etc.) Every need-blind school that meets 100% of need which my kids applied to (read: don't apply to NYU or the like if you need aid) offered a package. Some were better than others, but most were willing to discuss comparable offers. And we are not self-employed.</p>
<p>Disclaimer: I didn't plan to have twins. The Financial Aid Gods must have been smiling down on me.</p>