Dear colleges, You have priced the middle/upper of the middle class out, so...

Parents Forum
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<p>I need to tell you that it is really annoying to read on web-site after web-site reassuring that finances should never be an impediment to attending your school. You have plenty of need aid. In fact, you may dispense with merit aid to funnel more to need aid.</p>

<p>This model of using astronomical sticker prices that are discounted according to outdated standards of what someone determines as the cost to live may allow some students with lower middle class incomes to attend. Good. But please don't believe that anyone can just fork out half of their income. Also, don't think that it's possible to have saved that gigantic a sum of money with the your increases every year far surpassing inflation and even health care increases. You also shut the door on students whose parents refuse to pay.</p>

<p>Your criteria is how much money the student's parent have and make. That one student may go on to be an investment banker and the other a teacher is not relevant in this model. You also don't consider whether both parents work (and earn more money) or whether one has chosen to stay home. </p>

<p>For those institutions that use the high-price, lots of need aid model, please take a look at the make-up of your student body. I suspect you will find your students are comprised of the rich and the poor along with middle class students that are soon to be in deep debt.</p>

<p>So please, don't boast that finances are not an impediment, because they most certainly are.</p>

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<p>I agree with you, but judging by the posts on this site we might be in minority …</p>

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<p>I think you are right. Anyone who has benefited from this system or has enough money and philosophically agrees will be boosters.</p>

<p>But it is so frustrating to try and pick through the best schools and find some where we have the possibility of sending dd and which partly meet her criteria. This after I thought I (and she) did everything right.</p>

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<p>I agree completely. Overall salaries have been stagnant over the past decade and even declining now in this deep recession, yet college costs have far surpassed inflation. </p>

<p>It doesn’t take much for a two income family to quickly find themselves priced out of many schools. And yet, the frustrating part is that one doesn’t even know what the actual price will be until the acceptance and aid package arrives. The entire situation is very difficult and leads to tons of disappointed kids each year.</p>

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<p>“please don’t believe that anyone can just fork out half of their income”</p>

<p>My parents did. They paid sixteen years of private college tuition and ten years of private medical/law school tuition for their four children without a dime of fin aid. They bought a townhouse in a (then) cheap neighborhood in 1967 when they had one infant and never traded up. They could have retired years ago if it weren’t for their belief that giving their kids the best education was the primary reason they were on the planet, and that it wasn’t anyone else’s job to pay for it. There are “anyones” out there who do it.</p>

<p>If private schools are printing misleading marketing info, that’s wrong, although it’s always the responsibility of an adult consumer to read the fine print. Most schools use publicly available criteria to determine the EFC and acknowledge, if you ask, that they don’t meet the EFC for X% of their students.</p>

<p>“For those institutions that use the high-price, lots of need aid model, please take a look at the make-up of your student body. I suspect you will find your students are comprised of the rich and the poor along with middle class students that are soon to be in deep debt.”</p>

<p>I’m not sure what model you prefer. You seem to suggest that you think merit aid is better. What makes you think the rich kids won’t outcompete the middle class for merit aid? A lot of them do that right now.</p>

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<p>I think you’re right about the class makeup in these schools. I agree it’s crazy, but I don’t know alternatives. I believe that for these high-priced schools, the cost of education (teachers, administrators, new gyms, mortgages, insurance…) is actually even MORE than the $50K COA. </p>

<p>We are among the few middle-income people who can, barely, meet our EFC. It’s only because we’re congenitally cheap. We wear our clothes until they fall apart, we’ve never owned a new car (when I married my husband, he was driving the car his parents brought home when he was five), we’ve lived in the same house for 18 years with no cash-out-refinances, and we eat out about monthly. All this is not because we can’t afford it, but because we can’t spend it. That’s the lifestyle you have to live in order to meet your EFC, apparently. And the kid will still be $20-30K in debt when he graduates.</p>

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<p>I’ve stated this on other threads too and will like to reiterate that the model for financial aid should be fair to all families involved.</p>

<p>This can be done by following this simple rule:

  • Any college participating in need based financial aid have to provide two information.
    ** An AGI (Adujusted Gross Income) below which a family don’t contribute anything towards the full cost.
    ** N - A % number that is the max of AGI any family have to contribute per child irrespective of the income towards the full cost.</p>

<p>Different colleges can waive any contribution based on family circumstances; but asking families with same AGI to contribute different amounts towards the same education should not be allowed.</p>

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<p>Hanna- Your parents are very admirable. I doubt if under the same circumstances - because of high costs- your parents could do the same today. It’s one thing to spend half your income on four kids’ education. It’s another to do it for one kid (at a time). I won’t be retiring soon either- maybe never.</p>

<p>There are other way better models in my opinion.</p>

<p>First, lower tuition for everyone. Need aid for only the poorest. Then students could actually earn their way through school. (That could only be done at a CC today). </p>

<p>Second, 10% of your income per child (a la Harvard).</p>

<p>Third, lots of merit aid. This would be in the best interest of colleges, I think. There are lots of ways to creatively apply merit aid. Best essays, best portfolios, principal nominations, top students from inner city high schools, students having overcome most obstacles, future teachers, etc. I could write pages. It wouldn’t have to be (just) SAT scores. It could be done to not favor the most wealthy kids.</p>

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<p>Two things that I would wish for:</p>

<ol>
<li><p>Colleges be much more explicit about who can reasonably expect institutional need-based aid. This will never happen because they want to hand it out however they want from year to year.</p></li>
<li><p>Scholarships be more clear and explicit whether they are need-based, partially need-based, or merit-based. It is a lot of work for kids to fill out these scholarship applications. If they aren’t going to be selected because of parental income, just say so.</p></li>
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<p>I think there is an issue that I have seen in many posts on CC when people say that they can’t afford to pay college tuition out of their current income. Well, of course, unless you are rich or have a huge savings account, most people in the middle could not pay $50,000/year for just one of their children to attend college, out of their current salary. But those who are in the middle class, they should be able to take out parent loans and pay it out over time, in addition to SOME money from current income. I understand not having the total sum of money outright but that is not the only option to fund a college education.</p>

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<p>I’m not sure how these suggestions could be implemented without drastically cutting services, including need-based aid, at the colleges. If tuition is lowered for everyone, the rich kids who now subsidize everybody else’s tuition would be paying in a lot less. Second, if you transfer the remaining funds from need-based to merit aid, you’ll lose many of the poor and working-class kids. Finally, there’s no way to keep a lot of the new merit aid from going to rich kids (who will excel at creating portfolios just as they do at the SAT) and poor kids (who will have overcome the most).</p>

<p>So, bottom line, you’re proposing slashing the college’s income. Would you still be so eager to send your kids to the desirable private school if they were tripled up in dorms, had bigger class sizes, etc. in order to cut costs?</p>

<p>It’s only been 8 years since my parents stopped paying law school tuition. It goes up every year, of course, but it was plenty expensive in the '90s.</p>

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<p>EFC doesn’t take into account high property taxes, or excessive medical costs - or any other itemized expenses right? I have only done the quick calc on college board. Where we live (NJ) our prop tax is about $14K/yr. Our EFC is very high but alot of that income goes directly into tax, not luxury yachts or living beyond our means… </p>

<p>Hanna - try to have a little empathy for the people who struggle here…we all want what is best for our kids and want good education but with the recession, stock accts that shrunk in half, layoffs…blablabla…we aren’t perfect but that doesn’t mean we didn’t try to save. Your parents were dilligent and also lucky.</p>

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<p>I have lots of empathy for people doing their best to do the best for their children. However, I also see a lot of people who are put out because they want to receive an $80,000 service for $20,000, and there must be something wrong with the system if no one gives it to them.</p>

<p>If we’re talking about public schools that are priced out of range, that’s a whole different ball of wax, but I don’t think we are. We’re talking about private schools that are, by definition, a luxury. </p>

<p>There are some threads along the lines of, “We’re sad that Dream School is too expensive, but we will make the best of it at Second Tier.” I have lots of empathy for that – and my guess is that the kids are going to thrive at Second Tier. But I also see a lot of, “The system is broken because Student A received a gift from this private organization and my child did not.” That sounds a whole lot like entitlement, and I think it’s out of place when it comes to private schools.</p>

<p>My solution would be to ratchet tuition at the top schools way, way higher – up to the actual cost of running the school, which is currently in the $80k range or more – and offer even more drastic need-based discounts. The rich kids will still keep coming, and the school can use the additional funds to lower the EFCs of middle and lower-class students.</p>

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<p>But was there ever a golden age for these types of colleges, where there was a happy mix of low, middle and high income students, because way-back-when tuition was reasonable?</p>

<p>It seems to me that these places were always places for the elite, especially the economically elite. And there were some lower income students that were supported by scholarship, but the majority of students came from wealthy families. I think that is true today as well.</p>

<p>I matriculated to an Ivy League college in the early 80s. I graduated with lots of loans. My family was middle class. </p>

<p>And a generation before that, and certainly generations before that, I assume that these schools were predominantly places for students from elite families and they were less interested in attracting an economically and ethnically diverse student body. It wasn’t until the 1970s that many of these places even admitted women.</p>

<p>I think that one thing that has changed is that now, more and more students are actually considering going to college and many more students from many types of backgrounds think they can be accepted to these schools. So the expectations of the general population has changed (encouraged by the schools themselves).</p>

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<p>Public or private, it doesn’t matter, the best schools in the U.S. are out of the price range of most middle and upper middle class students. Yet they claim to be affordable for everyone. There is little difference in price between Berkeley and CMU, for example (OOS). One thing that is most wrong with this system is that private will claim to be affordable for everyone. But my original point is that that is certainly not the case.</p>

<p>If the outcome is that only the poor, the rich and those willing to take on massive debt have access to the best schools in the country, that’s wrong.</p>

<p>Income to the colleges does not have to be slashed under any of my proposals. It’s not like a small amount funds families with low EFCs. Something like half (at least) of the student body in top schools receive subsidies.</p>

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<p>Hanna - what is wrong is the fact that to keep the non tax status of a not for profit endowment, 5% of the principle is supposed to be distributed per year. Virtually all colleges and universities violate this IRS rule. Further, if a college or university accepts federal garnt money for whatever reason - is it really a private institution? I believe it is no longer private and therefore the public has the right to transparency of the admission decisions and the financial aid decisions! Universities raise tuition fees faster than the rate of even healthcare inflation simply because they can. It is what the traffic will bear.</p>

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<p>"Income to the colleges does not have to be slashed under any of my proposals. "</p>

<p>You proposed dropping tuition significantly. Using Harvard as an example, lowering the full freight cost by just 20%, for only the half of the student body who currently pay full freight, would be an annual loss of over $30 million. If you want to lower tuition enough to allow students to “earn their way through school” – let’s say very optimistically that that means a COA around $20k per year – that’s over $100 million a year less than they’re currently taking in. (Taking only the current full-freight students into account.)</p>

<p>How do you propose that colleges make up this shortfall? Or did you mean to suggest a smaller tuition cut?</p>

<p>“It’s not like a small amount funds families with low EFCs. Something like half (at least) of the student body in top schools receive subsidies.”</p>

<p>It sounds like you’re counting money the college doesn’t spend on fin aid as money it doesn’t spend at all. That’s not the case. Lowering tuition would not lower operating costs.</p>

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<p>Believe me, I am caught in the same squeeze. I was just chatting about how one couldn’t use the list of schools our HS students are attending as any guage of the quality of the school…because most of us don’t qualify for need based aid, but can’t pay $50,000+ per year out of pocket…so we send our kids where we can afford. A surprising number attend the two good local privates as commuters.</p>

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<p>While I agree that many/most private top-tier schools may well be out of the price range for middle and upper middle class students, I have a hard time believing that UPPER middle class students have a hard time affording THEIR in-state publics. What’s your definition of UPPER middle class? What’s your definition of a reasonable EFC for an UPPER middle class student?</p>

<p>I have an easier time seeing how an in-state public might be tough for a more run-of-the-mill “middle” middle class student to afford in <em>some</em> states. And yes, in plenty of states a lower middle class student might not be able to afford an in-state public.</p>

<p>Now—whether those upper middle class students want to attend their own in-state flagship is an entirely different question.</p>

<p>And I don’t see <em>why</em> anybody should think that State A should automatically ensure that their state school’s OOS COA should necessarily be affordable to middle or upper middle income students from other states. Some states do; some don’t. It’s the state’s choice.</p>

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<p>OP- the financial aid system is complex in application but very simple in its philosophy- allow as many kids as possible to attend your university given finite dollars.</p>

<p>The system only looks at income- past income (what you’ve saved), current (the checks you can write) and future (loans, as Soozie points out). They are only interested in the parents and your kid; nobody is asking Aunt Maude to come up with 10K even if she could easily afford it and is willing to pay it. Your child has either worked and saved, or will work during school, or will work in the future, and out of those earnings will contribute to the total.</p>

<p>Of course I would rather have my kids school distribute more money my way to lessen my burden. They are not financial planners who have the capacity, skill, or interest to help every single family with their own particulars. But broadly put, a kid whose parents have less will get more, and a kid whose parents have a lot will get less or none. Seems fair to me.</p>

<p>Among the kids who were classmates of my children at college were kids who ran the gamut from exceedingly wealthy to highly disadvantaged backgrounds. There were kids who took ROTC scholarships and are now serving in Iraq or on aircraft carriers in the Gulf to pay back their commitment. There were kids who worked crazy jobs and crazy hours during college to keep their loans to an absolute minimum. There were kids who did the first two years at a commuter college and then transferred to keep the total costs down, and kids who did two years a private college and then transferred to state U when they ran out of money. In our neighborhood there are kids at the Service Academies (free) and kids who went to college really far away because they represented “geographic diversity” and someone was willing to pay them to move across the country.</p>

<p>Private institutions by and large get to determine the basis upon which they distribute their funds as long as they are not violating any laws in how they do it. If you don’t like it, or don’t agree with their philosophy, you have a simple solution- don’t apply there.</p>

<p>I know many families who live large who never saved a penny for college and are angry and resentful at the financial aid system. I know many families of modest means who saved aggressively for college and they are equally angry that their savings are being “taxed” so that people with much greater incomes can keep their McMansions with the nice ski equipment in the garage. And there are people at both extremes who have decided not to worry about other people- adults generally make the financial decisions in their own homes and although it is hard to tell your child that you can’t afford option A, that’s life. Surely your kid hasn’t reached the age of 18 without realizing that some people have more money and some have less.</p>

<p>I don’t think bringing the kids future career plans into the mix is the responsibility of the financial aid office. If your son plans to be a nursery school teacher, you may remind him from time to time that taking out lots of loans will be a significant hardship. But again, surely an 18 year old has observed that nursery school teachers make less money than orthopedic surgeons. People make career decisions for all sorts of reasons, and debt obligation is for sure part of that calculus. </p>

<p>The system isn’t perfect, and for an individual family, depending on their life circumstances, may be horribly broken. But by and large, the private U’s have developed a pretty robust way of making sure that the Rockefellers and the Carnegies and their progeny are not the only people in the US who get to attend a private university.</p>

<p>I don’t live in Michigan. When my son was applying to engineering schools, we were a little surprised at how expensive U Michigan was for out of state. But- to be fair- it’s not rational for me to expect the citizens and taxpayers of Michigan to subsidize my kid. You want your kid to get a 100% subsidy from the taxpayers? Go to West Point, get a degree for free, and then pay back all the nice citizens who paid your tuition by heading off to Baghdad.</p>