<p>Thanks UCBChemEGrad for posting Birgeneau’s article. I thought this was interesting:</p>
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<p>It’s a balancing act: freeze/roll back tuition and fees, and you have less money available for need-based FA. But let those fees grow too much, and the differential between in-state UC and private college costs shrinks, drawing away full-freight customers, leaving less money for FA. I really liked Birgeneau’s suggestion of having Cal alumni pay in $1k each to help create an endowment fund to support need-based FA.</p>
<p>Cornell has announced an initiative, starting next year, that over two years will eliminate need-based loans for undergraduates from families with incomes
under $75,000, making it possible for new students to graduate debt-free. In the first year, 2008-09, the university will eliminate need-based loans going forward for students from families with incomes under $60,000, and cap them annually at $3,000 for students from families with incomes between $60,000 and $120,000. In 2009-10, the program will eliminate need-based loans for students from families with incomes up to $75,000, and cap annual loans at $3,000 for students from families with incomes between $75,000 and $120,000.</p>
The income in different braket pay different rate of tax. So overall the % pay to the tax are much higher for those families. Take federal tax as example, the low income family pay like 15% standard tax rate. after certain level you pay something like > 20% income tax. then after certain level you pay 33% income tax. In most states the state tax is structured like the way as federal tax. And if your work location is out of your living state, there are other taxes. And there is AMT. And finally there are a lot tax credit back, tax rebate, this and that local/federal tax relief program. All these rebate programs will be phase out when family income hit certain level…Believe or not at certain level, your paper erning (the tax return) is more, but your actual bring home money is less. Will you still be motivated go to work if half of your salary never goes to your bank acount, but at the same time you have to write check of $40k-$50k to college? I doubt, unless you truly love what you are doing.</p>
This is across the board categorically not true. Whether it is a fiction propagated by the proponents of more tax cuts for the wealthy or what I do not know. </p>
<p>ANJM, I would love to see even one example of how an individual would have a marginal rate above 100%, excluding one time extraordinary items.</p>
<p>The issue of tax rates is a complex one, ANJM, because to properly analyze it, one must look at all taxes, not just income taxes. While some groups of wage earners have low effective income tax rates, their full tax payments include Social Security, Sales taxes, property taxes (whether owners or renters, they pay!) as well as federal taxes. </p>
<p>Just looking at federal taxes, the group with the highest marginal tax rates is often the group paying a “28%” marginal rate. Because of various phase outs, many of these families have true marginal rates higher than 28%!</p>
<p>Regarding AMT, the curious thing is that it does not affect the truly wealthy, since their average tax rate is above AMT rates. This is because they have so much of their income subject to the top marginal rate. I would love to have such a problem, BTW.</p>
<p>I’m talking about the double income profesional families. Where both incomes were fully reported with a W2 form(?), straight forward tax report, no game. I’m not an accountant myself. But years ago, I heard my friend mentioned her brother, who worked as high tech profesional for a bank. He got raise that year, but his family income hit the boundary of one of tax braket, the increase part subject to a higher tax rate, then there are some tax benefits phase out at that leve of income. So his actual bring home money was less than his previouse year.</p>
<p>I’m no tax expert. Here is a simplified example, it may be not the one you asked. But relavent to the disscussion. Say a professional couple H earn $130k ish. W earn $70k ish. With combined income tax return the W’s part bring home money could be roughly $37k ish. Not enough to pay a college cost $50k. Then you deduce the $13k from the family first $130k (H’s income), which net at $117k. Now if W quit the job, the family will qualify for the FA HY proposed, their family contribute will be $13k, deduct from the $130k, you get net $117k…</p>
<p>If 1) Private institutions is eligible to ‘write off’ the income for the fund they give FAs. 2) The family/kid got the FA, don’t have to pay tax on the tuition part. I say its only fair that the parents who actually pay for their kids’ education out of pocket money get some tax cut benefit. Look at this way, for 1) it is now the parent provide the fund to the FA instead of college. for 2) the tuition part the parent paid to the college just like otherwise the poor family/kid got the tuition part from college are not subject to income tax.</p>
<p>In reality I feel you got punished for being smart and hard working to make yourselves to a ‘well off’ class. The ‘poors’ pay lower tax rate and get all kinds of tax rebate benefits. The real ‘riches’ (who own business of earn money off investment portfolios) get all kinds ‘write off’ in the legal tax games. The ‘well off’ middle/upper-middle class (oftem double income profesional families falling to this critirias) leave to apy highest % of their income tax. </p>
<p>HYP must feel the FA pressure for their ‘well off’ professional staffs with college bound kids.</p>
<p>anotherNJmom, my impression is that that’s just not possible. From wikipedia:</p>
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An individual pays tax at a given bracket only for each dollar within that bracket’s range. For example, a single taxpayer who earned $10,000 in 2007 would be taxed 10% of each dollar earned from the 1st dollar to the 7,825th dollar (10% </p>
<p>TP, I’m not talking about the tax rate increasing at certain income braket alone. You are right that alon won’t put over the edge. But did you count in some federal or state’s tax rebate programs that will phase out at certain income range? Say for example soem thing called education rebate or deduction? AFAI know years ago after $120k or so a family dosen’t qualify for any. And here in NJ, we have some thing called property tax rebate, also phase out after certain income level. My friend’s brother lives in NY, they may have different tax program runs different rebate program…Its possible at cerain point if this last $3k subject to a higher tax rate say %28 ~ %33 federal tax, add %8 social security and medicaid tax, add state tax at NY around %7, and if you work location is in NJ subject to certain non resident NJ tax as well (you pay non resident tax to NY if you live in NJ but work in NY as well. And the city’s commute tax if appliable). So it become $3k - $3k x 45% = $1650. If your total family income was pushed over edge by this last $3k increas, disqualify you for certain tax rebate program previouse year you would get say for $2k. Now you net family income actually reduce $350.</p>
<p>I’d appreciate people don’t take it ‘granted’ that so called ‘well off’ family deserve to pay more for every thing they’ve earned. In this new tech age, it is really not that difficult double income middle class profesional families make the gross income over $150k. Just to think the mid salary of teachers in our town’s school was $80k a few years before (I believe it is more now, havn’t checked for years)…You know the first reaction one of my coworkers after knowing my kid is accepted to an expansive ‘need-base’ college was “why are you still here? Guess now all your bring home money will go to that college…”… Now seriousely think about it, if I quit job, I would lost the company’s match for my retirement benefit and family medical insurance (it would cost far more if use my H’s company’s). So start from next year, I’m going to work for my retirement acount and the medical ensurance that my company provide, after paying my kid’s college cost, I’m not sure there is enough left in my net income to even cover my working expanse, which is roughly $7k yearly, $35 a day (commue to NY plus lunch) 40 weeks a year…What the mentality or moral those policy try to promot for the society? Discourage the smart hard working professional families? Yeah, may be not a bad idea to ‘retire’ early in my case, after so many years high pressure, hard working, hard saving, I’m getting really tired…but really I should’ve done this years ago, become a stay home mom, take good care of my kid and help out in school, so that my kid might have more achivements. Now it is kind pointless to stay home with no kid around any more.</p>
<p>And AnotherNJMom is completely correct. My own situation almost exactly. Those of us with lots of earned rather than dividend or interest or capital gain income get absolutely massacred by taxes. I just worked ours and it is truly stunning. And of course our kids will pay full freight for college with AFTER TAX dollars, essentially funding need-based aid for other students whose families will receive this largesse from us TAX FREE.</p>
<p>Yea. Lousy. And please no lectures on how “good” I have it. My rather talented hs senior is talking about forgetting research science or medicine and heading straight to wall street with her Ivy undergrad degree - she sees the endless grind her professional parents are caught in and can see how thankless it really is. We pay for everyone, ourselves last in line.</p>
<p>^I can see medicine and law as a fall back careers now. I don’t blame kids who are interested in Wall street jobs. I would be too if I were any younger. :)</p>
As am I. I guess that the difference between you and me, is that I don’t have a problem with that! For the past 4 years, and the next 3 years (I have a graduating senior in college, and a freshman in college) ALL the money I make will go to the college, excepting a tiny little bit that covers gas, etc. I will not be putting extra money into retirement, or remodeling my home, or taking vacations in Ireland, or any of that swell stuff. Instead, I will be paying to educate my kids with the best education for them. And, boy, will I feel wealthy when the youngest graduates and all that money then becomes available for all the fun stuff. I don’t see why you are so bitter. Your kid (like mine) could have taken the free-ride or another cheaper option for an education. Instead, we chose to have our kid attend a school that fit. We are lucky to be able to do this! :)</p>
<p>I don’t think she is bitter. I think “bitter” is a strong word. ANJM is only expressing her frustration. We are all working for health care and retirement accounts after what’s left of paying for college tuition and cost of living.
I agree we’re lucky to be able to do this, even paying tons of taxes every year. So what, at least we are employed, tons of people are out of work.</p>
<p>anxiousmom, I don’t know what it is called, you can call whatever you like. Its just like that after you paying all high end % tax, part of which goes to government education fund, then some of it funded as merit based Pell grant and other merit based grants, which our kid (or rather our family income) dose not qualify for. And I have to pay full tuition out of pocket with after tax money, while at the same time institution who gives money, not ‘well off’ family who receive the mone are able to write off the tax. Yet, people still think you are not paying enough tax? I full agree mammal said, we paid every thing, ourselves is last in the line.</p>
<p>Sorry - I posted in a hurry, and “bitter” was not the word I should have used. I can see that you are unhappy and frustrated with the situation. But my point stands; we do have “financial need” so get aid, but still, ALL my money goes to my kid’s college. We live on husband’s salary, without many frills. The nice thing, is that the kids will not be in college forever! (and I have no intention of paying for grad school… that’s on their dime.)</p>
<p>Pell grants are not now nor have they ever been based on merit. Pell grants are entirely based on income with the most money (~4300 depending on the cost of attendance) going to the neediest people, those with a “0” EFC. Even then, unless a student is attending a school with a low income initiative in place (many public universities have no such program in place) they are still going to graduate with loans as most schools do not meet 100% demonstrated need giving large amounts of grant aid. For schools that gap, these families are between a rock and a hard place because they don’t have the $ to fill the gap nor do they have the resources or collateral available to borrow.</p>
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<p>Riddle me this…</p>
<p>Would you be willing to give up your comfortable middle class / house in the burbs/ good schools lifestyle to get some of this merit pell grant money that you feel your child is being so unjustly deprived of? I am quite sure that there are a number of families of pell grant recipients would would be more than happy to trade lifestyles & paychecks with you and who would be more than happy if they had the income/assets to pay full freight for their children to attend college.</p>
<p>Probably, but this line of thinking always assumes that Pell grant recipient families didn’t “choose” their lot in life. Perhaps they did and are happy where they are, so your assumptions could be insulting (tho I’m sure not intentionally).</p>