<p>Ditto the “astounded” piece!</p>
<p>In my neck of the woods most teachers (any grade level/subject) with more than 12 years experience are earning 100K or more. Should mention most of teachers in district have MA 60 or PHD.</p>
<p>Teachers at private schools can make very low salaries even in high cost areas. Yes, there are teachers in my area, math/science teachers earning under $30K a year. </p>
<p>I can also tell you that I have a number of friends who took lower paying jobs due to tuition situations for private school and college. I have a friend here, who teaches where he does for that very reason. Doing the math, he has made a lot more in his years there than he would have at his other options. He also loves his job, it’s become more than just a job to him but an integral part of his life. Other times, people take such jobs because they have a SO who makes enough so that they can afford to take a low paying job that rates high on other aspects like schedule, location, flexibility, less stress, amenities that may make it a lot better than taking a public school position that pays more both right away and in future payback, but means a lot of stress in terms of commute, logistics, schedule, type of work, etc. Yes, my public school district has average pay levels at the 6 figure mark, but getting a job here is nigh impossible. </p>
<p>I want to add, that the stats on what families at any given college is not going to be accurate in that the info is not there for those who don’t provide it. Nowhere does anyone have to give out financial info to a college. Only when applying for fin aid is it needed. So only in that pool can one make presumptions. We have no idea what families make that did not apply for fin aid and have not released their financial info.</p>
<p>@cptofthehouse:
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<p>Well, I can’t argue with you there. I’m assuming that people (usually) act according to their financial best interests and will apply for financial aid when it’s there for the taking. I’m not denying that there are many people who lack complete understanding of the process, or who’d rather swallow the extra brick rather than surrender their tax returns to anyone. But, are they enough to be statistically significant? </p>
<p>The $200k a year family with just too much equity in their home to qualify for much FA does deserve our attention; but, until I can move the lampost, I’ll have to make due with where the light shines right now. </p>
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<p>Well, I was pretty much with you until that last sentence, but I don’t think the math works on that proposition.</p>
<p>Look, suppose you have a school with 2,000 students, half full-pays and half on need-based FA, the school meets 100% of need, and tuition is at a nice, round $50K. Suppose further that the average FA package is $25K. That means the school pulls in $50 million in tuition revenue from the full-pays, and $25 million in tuition revenue (net of FA, which is in our hypothetical basically just a tuition discount) from the students on FA. So that’s a total of $75 million in tuition revenue, net of FA.</p>
<p>Now suppose they cut their tuition in half, to $25K. Great deal for the full-pays; they’re now paying half as much. Not such a great deal for the school, because they’re now getting only half as much tuition revenue from the full-pays, $25 million instead of $50 million. But it’s even worse from the school’s perspective, because now everyone with an EFC of more than $25K.(but less than $50K, which meant they were previously on FA) is also going to be paying less. Granted, the students in this category won’t need FA, but ex hypothesis they were already paying more than $25K after FA because their EFC was above that mark (but less than $50K). So that’s another, what, maybe $15 million in net tuition revenue lost to the school? Meanwhile, those with EFC less than $25K, who on average paid relatively little in the past, are still paying relatively little; in fact, they’re still just paying their EFC which hasn’t changed, so the school gets no increased revenue from that group. Bottom line, the school now has tuition revenue of $35 million net of FA, down from $75 million before the price cut.</p>
<p>My figures are obviously arbitrary, COA is more complicated than just tuition, and there are a million little nuances you could add. But the basic mathematical relationships should be the same. There’s simply no way a college that meets full need can simply cut tuition and make up the difference in FA savings, unless it’s prepared to abandon its full need commitment–and really stick it to the lower-income students by slashing FA and raising their net cost in order to lower the cost for people at the top end of the income scale.</p>
<p>@bclintonk:
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<p>In your model tuition remains static and we know that in the real world that doesn’t work either - unless we look forward to a world where 90% of the kids on private college campuses are on FA, subsidized by a few super wealthy families. I don’t think Mom2and meant “lowering tuition” in the literal sense. I think she probably meant lowering the rate of increase. If a college like Amherst merely pegged annual tuition increases to the rate of inflation, families at the upper end of middle-class (asset rich yet strapped for cash) could conceivably avoid the bracket-creep inherent in the the high tuition tuition-high financial aid business model.</p>
<p>Yes, I clearly did not mean no financial aid or that tuition should be at a level that was affordable to all. I attended private college with financial aid before the steep rise in tuition. In 1990, tuition at Harvard for the college was $13,085. In 2013 dollars, that would be $23,322. But Harvard passed that tuition level in 2002. The tuition in 2013 is $38,891 (which is actually lower than most private colleges). (I picked Harvard randomly as the data were available). Some of the increases were likely for things like expensive science laboratory equipment and for technology (wiring the campus etc), If tuition were more affordable, there would still be financial aid, but fewer families would be eligible or would need it. </p>
<p>As to the initial question, how will this end? I really would not have imagined that I would be facing over $60K per year for my youngest (now in high school). What will today’s elementary students have to pay? What about cost for current preschoolers? What is the breaking point? If those with incomes at levels that would have not questioned the cost of private college 20 years ago now feel as if they can’t afford these prices, who can? Where is the breaking point? </p>
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Harvard tuition is among the top ~10% highest tuitions of the private, non-for-profit, 4+ year colleges listed in the IPEDS database (top 30 USNWR type private colleges tend to be far higher tuition than the national average). Like Stanford, Harvard increased FA during this period, so the inflation adjusted average cost change is quite different from the sticker price change. Harvard’s 1992 factbook lists a net cost of $22k. It also mentions 40M in grants at the undergraduate college. The net cost - grants / students = $16,300, which is $27,400 in 2012 dollars. The same cost - grants calculation with the 2012 factbook, gives $28,000. So this inflation adjusted average cost calculation increased by only $600 in the 20 year period between 1992 and 2012. With little change in average cost, there is little change in tuition revenue received by the university (after inflation), so there is not lots of extra tuition revenue for “expensive science laboratory equipment and for technology.” </p>
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<p>Yes, but focusing on the average cost net of FA can be quite misleading. It seems very likely that the real cost net of FA has actually gone down for people at some income levels, because Harvard’s FA is more generous farther up the income scale than it was in 1992. For those with EFC of 0, the net cost has remained the same. For full-pays–still about 40% of Harvard’s student body–the real increase is just the full sticker price increase, less inflation.</p>
<p>It’s in that sense that the full-pays feel like they’re subsidizing everyone else. The university claims everyone is subsidized, even the full-pays. But real costs for full-pays have skyrocketed, while for most other income groups the real cost net of FA has remained essentially flat or even declined. Harvard may be pulling in about as much tuition revenue as it did 20 years ago in real dollars, but the distribution of where those tuition dollars are coming from has changed: each full-pay is now paying a larger fractional share of the total. </p>
<p>@bclintonk:
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<p>I think you’re both missing the point: It’s not that Harvard and Stanford are being more generous “farther up the income scale” than they were in 1992; it’s that in order to protect its market share among certain groups - the high achieving kid from a suburban school just outside a big city with traditionally high COL - they have to exempt them from the same extravagant rises in tuition. That would be just plain self-interest, if the business model were not so wrong-headed.</p>
<p>Data, why raise tuition if the net income is that same, after inflation is considered? Why force the 40% to pay tuition cost increases well over inflation, if the college gains no benefit from that? I understand your calculations, but wonder about the conclusion. Is it because the grants come from a different source (endowment) and thus the operating budget of the school is based on tuition dollars in total, whether they come from parents or from the endowment?</p>
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Under the current improved FA policies, Harvard claims that 100% of students can graduate debt free, without loans. According to one of the earlier links, Harvard is among the 4 colleges with lowest average debt at graduation in the United States (not all colleges were included in the ranked list), so they meet this goal far better than most. Harvard claims the FA also makes Harvard less expensive than state schools for 90% of students in the United States. This makes Harvard more affordable for typical middle families in the United States than they were with the old FA policies. Being affordable to a larger portion of students in the United States and other countries (Harvard FA policies also apply to international students) probably also leads to increased applications, a lower acceptance rate, and better ranking in various lists. Other colleges like Yale, Princeton, and Stanford have implemented similar improved FA policies. If I remember correctly, Princeton was the first HYPSM school to have a no parental cost for under $60k income, no tuition for under $100k income, no loans required, type FA policy. If YPSM and other highly selective private colleges all have great FA, but Harvard does not, it does not reflect well on the school, and they may lose out on a lot of great potential students.</p>
<p>Some related quotes from the Harvard president are below:
"We want all students who might dream of a Harvard education to know that it is a realistic and affordable option, Education is fundamental to the future of individuals and the nation, and we are determined to do our part to restore its place as an engine of opportunity, rather than a source of financial stress. With no loans, no consideration of home equity, and a dramatic increase in grant aid, we are not tinkering at the margins, we are rebuilding the engine. This is a huge investment for Harvard, but there is no more important commitment we could make. Excellence and opportunity must go hand in hand.”</p>
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Some believe that was a contributing factor for the major changes that occurred in 2007/2008. At the time a member of the Senate financing committee was threatening to make not-for-profit universities spend at least 5% of their endowment each year, like is required for most non-profit, private foundations. However, this does not explain the trend for earlier years.</p>
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<p>Smart business practice. Why let the scion of a foreign leader attend HYP for cheap when you can charge him/her $60k?</p>
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<p>Not sure why is should be a “sense”; it is true. (At least the University of California has been transparent and public about it.)</p>
<p>Of course, market pricing is no different in many other industries – airlines, for example.</p>
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College tuition is not market priced like airfares. Tuition is means tested. </p>
<p>Airfares are not means tested. They are priced for traveler flexibility, i.e. whether or not you will commit the revenue (non-refundable ticket or refundable ticket).</p>
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<p>Both are examples of price discrimination, where the price is higher for those customers who are more likely to be able and willing to pay the higher price. The discounted seats are offered to those who would otherwise not purchase the service at all, leaving the airline with empty seats and the college with either empty seats or seats filled with what it considers less desirable (in terms of academic ability and such) students.</p>
<p>@data10:
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<p>I’m not quite sure how you can draw the conclusion that graduating debt-free represents a change from “old FA policies” as far as the upper-middle class is concerned. In your earlier graph you represented that over the space of 14 consecutive academic years the average Stanford parent (if, there is such a thing) could expect to pay ~$30,000 a year for tuition in constant, inflation-adjusted dollars. Presumably, that translates as out–of-pocket expense, including what the family had to take out in loans during some of those years. But, if the cost to the customer is constant, what difference does it make whether it comes in the form of a loan or a draw on savings? It’s all the same money as far as Stanford is concerned.</p>
<p>I think what’s really changed is what Stanford thinks certain families can afford without taking out loans. These same families often wind up taking out private loans anyway, at somewhat higher rates of interest than they would have paid if they had been part of an “official” FA package.</p>
<p>I know several families who took out loans to send their kids to Harvard, one with great hardship. Though the family income was within the free range for H, my one friend owned a number of rentals which were the source of almost all of the family income, and represented the retirement nest egg as well. H did not see it that way, and his son, though accepted did not get fin aid. Borrowing against his holdings was expensive and had to be repaid out of modest income. But it was still less than what PLUS rates were. Only those who go through programs where the loans and incomes have to be reported are on these lists.</p>
<p>The discounted seats are offered to those who would otherwise not purchase the service at all, leaving the airline with empty seats and the college with either empty seats or seats filled with what it considers less desirable (in terms of academic ability and such) students. </p>
<p>The problem with this statement is that it assumes that any child whose family has been found to have the means to pay full price according to the FAFSA is somehow a ‘less desirable’ student. WHy would you automatically assume that any child who is full pay has worse grades and less to contribute to an institution than one whose parents cannot afford the tuition? What a ridiculously class-based assumption – rich equals stupid? What a ridiculous generalization!</p>
<p>^^@Momzie, I think you’re reading too much into the sentence.</p>
<p>Actually, the elite colleges with acceptance rates in the single digits and teens (and over 50% yield) don’t have any empty seats so they don’t have to discount them at all. </p>