Consolidated: New financial aid policies Harvard and Yale

Parent Cafe
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<p>Actually, it depends. If we are talking about Harvard and the likes, they in fact give discount to everybody (the wealthy included). See the link tokenadult gave at page 15.</p>

<p>Say, if mammall’s D goes to Yale, she will get $101,787 worth of educational services (not including R&B etc). Mammall will pay $34,530 tuition. Thus, the family will get $67,257 discount, which is larger than all those merit scholarships the other kids are pursuing. So, yeah, there is a choice between getting a luxury item with large discount or a cheaper item with smaller discount - let’s say, USC with merit full-tuition discount of $35,810 (the overall cost for family will be less in the latter case). So, why all the resentment? Because those other kids are getting even larger discounts? Because those other other kids are getting the same discount from Yale although they “could pay easily”? I don’t get it, honestly.</p>

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<p>Sjmom, you’re thinking like a fiscally prudent person. (That’s good!) But there are many people living in the present, not saving, and living rather well on much less income than you’d think. I’m far from being a FA expert, but the formulas do weigh income more heavily than anything, it seems, while penalizing savers & rewarding spenders. The real experts include people with questionable ethics who will game the system, just as people nearing retirement move assests to their kids so they can hide the $$$ from nursing homes, and other such schemes. Eventually the loopholes are closed, but new ones are exploited all the time. HIding income is prevalent, like contractors using a barter system for work supplied, off-the-books services, etc. THere are plenty of ways to appear more worthy of need-based aid than reality. Often it is the wealthy who have sophisticated financial situations who can play these games & win.</p>

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<p>anotherNJmom:</p>

<p>To tell you the truth I rather see scorn in the repeating references to “people who do not work hard” and thus do not make as much money as you. Even Marx knew that one’s salary does not necessarily reflect how hard one works! Equating all the poorer families to those who spend lavishly does not sit right with me, too.</p>

<p>I can see why you like mammall’s “tax-like tuition” proposal; I can even understand why you think it would be “fair” or morally right to implement it (I don’t share your opinion, though). But - the fairness question aside - I am puzzled: why on Earth do you think that this proposal can work in real life? And what exactly is logical?</p>

<p>“The income tax model would work best.” Would it, really? Actually, the entire “tax-like tuition” proposal seems a bit, um, socialistic - and it’s quite surprising to see how you talk about capitalist society so often, implying that this “fair” scheme will fit well with its principles.</p>

<p>Errr… in a free market economy, things are usually done if there is some lind of motivation or incentive to do them. Universities give discounts to the poorer families because they want to attract the applicants from these families (otherwise, those kids just would not be able to go there - and it is NOT a matter of choice for them when the entire family income is less than the university’s sticker price). Now, if Harvard (and its peers?) feel that they have enough students from the poorest and the richest families, but they do not have enough applicants from the middle of the spectrum, they may change the FA policy so that this part of income spectrum will be covered, too. It can be argued (as it was in fact in this thread) that the “middle” is between $100,000 and $300,000, or between $200,000 and $500,000. But oh well, it’s just matter of opinion; Harvard may just shifh the definition of the middle in a few years. The principle stays the same. For now - Harvard obiously wants to attract more of those whose income falls between $60,000 and $180,000 (and I think those slightly wealthier will get some discounts, too… would be really strange if H just implemented the old formula starting at $181,000)</p>

<p>Here comes mammall and says that tuition should be accessed on a tax-like schedule. Welllll… how is it good for Harvard? Where’s there incentive? Why would they want to scare off all the millionaires’ children? Are you sure that the wealthiest families will rather send the kids to Harvard for $200,000 per year (or $500,000, or $1,000,000…) than to Brown, Columbia, Chicago or Swat and pay the regular sticker price? Oh, I doubt it. Especially because they probably will not see this solution as “fair” (if they are alumni - even more so). So - why do you think Harvard will want to get rid of all the kids of “truly wealthy hedge fund managers and Kennedys and Trumps”? Why would they want to frustrate their wealthiest alumni? You do know where all those endowment money come from, right? What will be the financial consequences for Harvard? What will be the consequences for Harvard’s image and brand name if Kennedys stop attending it? And - the last, but not the least - who will enforce all that madness and why would they want to do it? </p>

<p>OK, the United States is not a pure free market economy. The government could step in and make H (and maybe YPS…) announce this tax-like tuition schedule. Yes, the government has the power to enforce it - but do you really think it would? What for, what’s the incentive for government to change the system towards tax-like schedule?</p>

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<p>No, not really. SAT scores are income-related. GPAs are income-related. ECs are income-related. Developing talent/intellectual is income-related. The admissions process to highly selective schools is income-related…and so on.</p>

<p>For anecdotes, see mammall’s private school, where all of the wealthy are looking to send thieir kids to merit schools…how many non-wealthy (<$60k)have SAT scores 2300+?</p>

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<p>I think I can.</p>

<p>We are talking about the situation when all the “truly wealthy hedge fund managers and Kennedys and Trumps” will find themselves in the position where they have to choose between sending their kids to Harvard (etc) and pay literally millions for their education, or sending them to a (slightly) lower-tier institutions for the same price as everybody else. Do you thibk they will find it “fair”? What will the alumni think? What will be the financial consequences for Harvard? What will be the consequences for Harvard’s image and brand name if Kennedys stop attending it? And - the last, but not the least - who will enforce all that madness and why would they want to do it? </p>

<p>So. “Kennedys and Trumps” will not like this idea; government has no reason to introduce and enforce it; Harvard… I can’t imagine the reason why Harvard would want to commit a suicide in terms of both status and finances…</p>

<p>Yeah, I could see Harvard making itself tuition-free for everybody, just like Cooper Union or Olin College (I still don’t see any serious incentive for H, but at least there would be no harm…) I also think it would be a nice (utopian, of course) idea to introduce some kind of additional “higher education tax” and make all higher education free for everybody. Zero tuition across all the universities throughout the country, yay! That would be even more “fair” and at least it could work. In theory. If the American government feels like introducing a little bit more of socialism into the system. ;)</p>

<p>But the tuition structured “tax-like” specifically for Harvard and its peers? That looks illogical even on the theory level. IMO.</p>

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<p>Marmat,</p>

<p>The subsidy to refer to in post 242 is as much marketing fiction, part of a university’s fund raising efforts, as a reality, although I do agree that with endowments as large as Harvard’s (or Williams!) that some of the income must trickle down to mere students.</p>

<p>The fiction stems from the fact that the claims for high “costs” are based on math that would not pass muster in even an elementary accounting course. This is because there are many expenses at a college that are not related to undergraduate education, especially if one looks at the instructional component (and the cost of instruction is indeed the most relevant) but these costs are rarely broken out in such a way that one can even know what the undergraduate cost of instruction is. Indeed, I’ve never seen an honest number but I suspect one must exist somewhere (links, anyone)</p>

<p>So please don’t think these wealthy colleges are being so generous to everyone. They aren’t. :)</p>

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<p>bluebayou:
I don’t think SAT, GPA, EC are that income-related as ppl chose to believe. ‘statistics data’ after all is only ‘statistics’, it dose not show how much ‘emphasize’ a family put in ‘education’ at different income level.</p>

<p>My kid gose to local public school. There are quite few kids got >2300+ SAT, no 4.0 GPA this year. AFAIK quite few achieve this without their parents send them to private prep SAT class. However the school does provide FREE SAT prep class for low income family kids…</p>

<p>I have a friend of mine, who live in NY with well below average family income, both of her kids went to NY public school system. Both of them went to district eagal classes from 4(?)th to 8th grade. And both of them went to free elite summer program for talented kid in low income family funded by city or some charity. Then both of them went to a top notched NY public high school at NYC down town through ‘merit-selected’ process. …The kids earned it fare and square…Both got >2300+ SAT…my point is the cream always rise to the top, no matter where you go, private or public, poor or rich under the merit system. If you have the determination, make your kid’s education top priority even a poor family can do it.</p>

<p>I DO NOT “Equating all the poorer families to those who spend lavishly…”…I have out most respect for this friend. She dose not have the same education background or opportunity like me. But she has the determination to give her kids the best education she could. Even with well bellow average income, she managed to pay private music instrument lessons and other suplement weekend programs for both kids started at very young age… Yet the most extravant vacation for her family is a trip to Six flags, and that was many many years ago… Both parents have worked their $sss off to saving up and plan to pay their kids’ educations. While they could’ve game the system, took out social fares…Now with elder son in college persued a medical degree and young daughter going to go to college next year. She took up some min waged job at weekend or after day time job (had being there done that myself in my early years)…Now I have outmost respect for ppl like this. </p>

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No, we are not talking about them. At least not my intention when I join the disscussion. And if I understand mammall correctly (correct me if you will), her “tax-like” is that the FA proposed by Harvard for income $120k~$180k could be extended to the family with income >$180k as well, that is family contribute 10% (or in a increased % scale if your income >$180k) to the total cost. This will make family income > $450k phase out for FA automatically. I believe the “truly wealthy hedge fund managers and Kennedys and Trumps” erned well beyond this level…Now if their kids won some MERIT scholarship, all the power to them. Its their kids’ right and proud. I plaud to them, too. Cause they earned through their own effort, not lie on their parents money…</p>

<p>I join the disscussion to talk about the “double income professional family” easily exceed of $180k income line in the area I live. The rough calculation (ref my early post) shown after taxes, mortage, social scurities, a family with AGI $180k has about as much $50k left before the grocery, utilities, gas, etc. We proberbly has to drink the wind if we don’t have any saving. Yes, some of us do not have saving since they paid all saving to the down pay for a decent house. And they diddn’t make that kind money long enough.</p>

<p>mammall: I wish my kid would have this fighting spirit for those ‘merit’ scholarships. It would be the highest honor to win. But with all the peer pressue going on, and all these years he’ve got this far without any help from us (honestly now I know we could not give him any valid advices since we went through a totally different education system), as parent we don’t want to put any more pressure on him during already stressful college applicaion process…</p>

<p>I truely addmir those who pay ‘full freight’ cost, yet delibrate avoid to apply MERIT based scholarship…However for those already in ‘need-based’ FA program, I doubt a ‘merit-based’ scholarship would affect much on the total of FA in your package, AFAIK, they will deduct the same amount from your ‘need-based’ FA if you got the ‘merit-based’ schoolarship.</p>

<p>nmd,

Yes, they are. And for this I applaud for them. However, as I understand the addmission process is “need-blinded”, the admission officer don’t know if you are “rich” or “poor” when they read your application. It is only after you are admitted that they send your FA application to their FA office to process. I don’t see why the process would crowded out the “low income” bracket kids. As long as your ‘merit’ falling in H range, a kid from low income family not less worthy a kid from $120k~$180k family. Visevas. Why should a merit qualified kid from $120k~$180k or above family being ‘punished’ by their “well-off” parents’ income? I personally know a lot of parents falling in this income range had ‘push’ their kids to “free ride state flagship” program when their kids got addmitted to ‘need-based’ ivy or ivy alike schools, because those parents can’t see it justifiable, given the fact that they climbed the from bottom up. In one case, I heard the kid (and a only child) suicide after one year unhappy life at the state university.</p>

<p>A true beliver of “need/gender/race blind” college addmission policy.
A true beliver of “tax-like” struct FA.</p>

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<p>ANJMom, </p>

<p>How can the low income be crowded out? Think of it this way: Suddenly, far more upper middle income families realize that a Harvard education is suddenly cheaper than State U, or Emory with a partial merit scholarship (to use an example). Their kids have great stats. How many of these will Harvard turn away in order to make room for poorer kids with, perhaps less stellar stats? We don’t know, but it could easily happen. All of this can occur while staying need blind. In fact, in a strict sense, if they stay need blind, then the lower income kids will almost assuredly drop in percentage if more equally or better qualified wealthier kids apply.</p>

<p>In thinking about the situation, this may be part of Harvard’s intent. If too many low income students enroll (remember need blind and all!), then the place looses some of its allure. After all, how many I Banking contacts does a 60K kid have?</p>

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<p>NMD:</p>

<p>The same calculus must have been made when H launched its HFAI three years ago: not many $60k have Ibanking contacts. But around 25% of the entering cohort have family income below that amount. </p>

<p>Individually, low SES does not correlate closely with stats and GPA, but collectively, it does. There is indeed a strong possibility that higher SES applicants would crowd out lower SES ones. </p>

<p>We will have to see how H manages to preserve the proportion of students benefiting from HFAI while expanding its finaid coverage. We don’t even know at the moment how the expansion will work out. $22 million on top of the current $98 million finaid budget suggests that it will not be a vast expansion even though according to Harvard figures, 763 fall into the $120k-180k income range.</p>

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<p>[Talent</a> scouts — The Harvard University Gazette](<a href=“http://www.hno.harvard.edu/gazette/2007/12.06/99-admissions.html]Talent”>http://www.hno.harvard.edu/gazette/2007/12.06/99-admissions.html) </p>

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<p>Harvard’s goal is clear enough.</p>

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<p>newmassdad,</p>

<p>did you look at the link I was talking about? Which particular university’s fund raising effort are you referring to? There are thousands of institutions included in the tables at this website.</p>

<p>I guess I better provide the link once more (see also tokenadult, #211, page 15 of this thread)
[The</a> Education Trust](<a href=“http://www.■■■■■■■■■■■■■■■■■■/default.htm]The”>http://www.■■■■■■■■■■■■■■■■■■/default.htm) is a nonprofit; the numbers in their tables are very different for different institutions (in fact, they show that many of them do charge more than they spend on the students… but that is not the case for Harvard and some others). They use the same definition as IPEDS for “Student and Related Expenditures / FTE”:</p>

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<p>anotherNJmom:</p>

<p>mammall was pretty clear about what she meant proposing to structure financial aid like taxes - and there was NO phasing out at the income > $450k. She wants to get rid of “sticker price” or “full freight” notion altogether and charge more and more as the income rises. See for yourself:

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<p>So, you see, the “truly wealthy hedge fund managers and Kennedys and Trumps” were in the quotation marks for reason: that’s exactly what mammall was talking about. </p>

<p>As for your description of “tax-like”: that’s not mammall’s system, it is the same FA system we have today, but with a higher threshold. Actually, I am pretty sure that Harvard WILL “phase out” FA for those who make more than $180,000 (with higher %, just like you say).</p>

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Well, I live in the same or very similar area myself. But my friends are mostly working in academia, and no way their (yes, double-income) families make more than $180,000. And yes, they pay the same tax rate for their houses (if any), and some of them do take a train to NYC every day. And they could not even dream of putting $35K into their retirement funds (if any). I guess, they already “drink the wind”?..</p>

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<p>marmat103, </p>

<p>the ed trust data is interesting, but can it be relied on? NCHEMS formulas are a wonderful thing, of course, but only as good as the inputs. Most universities don’t publish this data, so I don’t know where the ed trust gets their data, and they’re not telling.</p>

<p>I can also tell you that some of the information is flawed. For example, the link in post 211 goes to a page that says U. Chicago spends over $60,000 per undergrad FTE. Chicago does not think so. In fact, they think they make a profit on undergrads. I used to work there.</p>

<p>Just to make sure I’m not having a toxic reaction to excess eggnog, throwing off my argument, I pulled some data from IPEDS. But then I noticed that IPEDS expense data covers ALL students, not just undergrads. If they have undergrad only instructional expense data, I could not find it. So that means the ED Trust folks must have some other magic source for their numbers. Either that or they made a simple math mistake: wrong numerator.</p>

<p>You may be comfortable drawing conclusions from secondary (heck, may tertiary!) data sources of questionable provenance. I’m not, even if the website does sound authoritative. But good discussion. Your post prompted me to delve into the data again to see if I was missing something. If so, I’m still missing it.</p>

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<p>Yes, they could well be, if they diddn’t save enough while they are able and falling into the situation I described…Glad now your academia friends can get some break with the new FA package model H proposed, if their kids get admitted to HYPSMC, and no doubt many of them will. They don’t have to face the ‘hard choice’. One of my academia friends who worked at academia with double income not as lucky back when his kid went to college, he has to pay the full freight to a private college.</p>

<p>btw, we don’t have much of retirment fund ourselves, we are late start. The bigest retirement assets in our family is primary resident house which still under mortgage.</p>

<p>ETA, thank nmd explained ‘crowd’ situation.</p>

<p>A beliver of ‘need/gender/race’ blind college admission policy. and the ‘tax-like’ FA modle.</p>

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<p>My dead horse that I thought had long expired is showing signs of life. Am I allowed to temper my modest proposal a bit? I don’t think the extremely wealthy should be saddled with infinitely high tuition. I was wrong in that. I don’t like class warfare in general. But I do think aNJm’s notion of 10% up to ~ $450K sounds appropriate. The income tax model is actually already in place at incomes < $180k. I just think it makes sense to adopt it further up the income ladder. I admit I’m biased. My family would benefit somewhat. Not hugely. Mostly I would feel better psychologically about writing the huge check I’m headed toward some time this summer.</p>

<p>As for the tired old debate on SAT correlation to SES. Well, talented hard-working people often climb to a high SES. And their kids get high SATs.</p>

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<p>I’m certainly a little late to this discussion. But here’s the absurd, worst case, example that maybe helps make the point that using a marginal rate (like federal income taxes) makes at least a little sense?? </p>

<p>Let’s just consider family A making $179,999 in 2007. Their EFC under the new proposal at Harvard is $17,999. </p>

<p>Family B is unfortunate enough to make $180,001. Their EFC is $45,000+!!! </p>

<p>Much like the tax debates, we can debate what the marginal rates should be. But seems to me that its pretty obvious that a single hard cutoff really doesn’t make a lot of sense.</p>

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<p>And I’m sure that Harvard has thought of that. It seems unlikely that the aid cutoff will be a hard line.</p>

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<p>That’s not what any of the verifiable information in the thread says. Harvard’s statement about financial aid eligibility under its PREVIOUS rules is that it is very possible a family with a higher income might be eligible for financial aid–it just all depends on the family’s circumstances. And, again, if Harvard education is being offered at a below-cost list price to every admitted student, what’s the big problem with paying list price? If you don’t value the educational experience there, it’s not mandatory to apply. If you do value the experience there, it’s worth some amount of money from somebody to attend.</p>

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Whose not? Maybe nmd? (just kidding)</p>

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True. And not to mention these family often put high priority on kids’ education. </p>

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However, I believe the case only apply to those family with more than one kids in college. What about single kid families? Goro’s cases still stand. (this might off the topic, but believe or not, the high college education cost was the majore reason we stop having more kids).</p>

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Yet, nmd’s post show otherwise for undergraduate education.</p>

<p>goru:
If you factor in the tax the differential in your two cases would be even big. Considering the tuition part in FA package is tax free in your first case (I think it is reasonable assume the FA comes as tuition part first, then other expenses). While in your second case it is after tax money out of parents’ pocket. Thoughts and calculation?</p>

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<p>Quote: That’s not what any of the verifiable information in the thread says.</p>

<p>Quote: And I’m sure that Harvard has thought of that. It seems unlikely that the aid cutoff will be a hard line.</p>

<p>These 2 statements get to the heart of what I had perceived to be the primary point of the discussion. First, there’s no verifiable information on how folks with incomes > $180k will be treated. As a result, some folks are not sure that Harvard has thought of this. So they’ve offered alternatives to a hard cutoff that seem more reasonable.</p>