It’s a regular trust, and valuing it at 20% per year would be appropriate, because college is what it’s for. We also have a 529 but have not counted it as his. I don’t know what you mean by the 5.6%. Do you mean the school would calculate that we could spend $5600 of a $100k 529? (Just random number, not what we have)
My understanding is that parent assets are assessed at 5.6% and student assets are assessed at 20%. So 100k parent assets would be expected to contribute 5.6k per year; 100k student assets would be expected to contribute 20k per year. There are some set asides based on age of parents, but they are pretty minor as I recall.
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Updating to say schools assess all parent assets at 5.6%, not just 529s.
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Huh. I wonder if I get it. Our real-life ability to pay 30k depends on using 10k out of the trust and the 529. So, when the school subtracts 10k, it’s like those resources are getting used/subtracted twice. That may be how our need comes out too low to match reality.
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That sounds like what we knew. And I guess they also add in some portion of our income when calculating what they believe we can pay. Our only other asset besides our primary dwelling is a rental investment that we owe almost the total amount on, because we just bought it. It has a value of about $20,000, I think.
The percentage of income assessed can shock people. It can range from 25-35%, it is not necessarily a small amount at all.
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That sounds crazy, but it’s also encouraging because if I do the math on that, plus the percentages above applied to our real assets, it results in a number we could stretch to pay. That depends on not valuing our primary dwelling, so that would not work for any other school.
p.s. And lo and behold, by adding back in our primary home, it explains the exact amount that Miami believes we can pay.
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Income is assessed very high, although I think the percentage varies based on level of income. You can get a sense of how much by “playing” with the net price calculators and entering 0 assets.
The net price calculators for USC are not working for me. They come up with us getting $0 aid, whatever I do. 
I guess the best thing to do is try to let it go and just see what happens. I am fascinated by this, though, and am having fun learning, so thank you for explaining things.
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try myintuition.org instead.
(And i just typed your income (that you posted) into USC NPC and got a FA package. Try using just income, and then on the next pass add assets).
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I sent you some DMs.
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When I had an error on the CSS one of the schools took care of correcting it for me. This was before my son had even been admitted.
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It is not that they WANT to give less aid it’s that they only have the funds to give a small amount of aid. California gives no need based aid to OOS students (and very little merit) and no one thinks that’s criminal.
Harvard could do this (have no cost to all students) but they don’t and people still line up to pay full price. No one is calling them criminal or unfair (well, a few athletes are saying the Ivies are unfair to athletes). Schools are businesses and have to run the accounts responsibly. Most state schools don’t have the endowments that (some) private schools do. If they did, they could just lower the cost for all students. If you think Texas should have free tuition for state residents (or for all) you should get the state legislature on this immediately. California used to be free for residents, till they could no longer afford it.
Different schools have different philosophies on how to award merit, need, talent, a combo and there really isn’t a lot we as consumers can do except ‘shop’ elsewhere. My daughters had to work with the offers they had and couldn’t get stuck on how they’d really rather go to another school (for both, they wanted california schools but we couldn’t afford them because of no aid). They needed to combine merit, need, talent and other aid to make the schools work. They were both happy at their ‘not my first choice’ schools.
I did everything I could to get the schools to gush money, but the schools that would even trickle money weren’t in California.
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No, they really aren’t businesses.
Your post comes across as bit confrontational. I did say ‘criminal’ a bit tongue in cheek to emphasize my point. I don’t think anyone should go to jail, but I do think it’s somewhat insane that schools sit on tens of billions of dollars of endowment and kids and families go into huge amounts of debt to go to some of these schools.
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Endowments aren’t discretionary funds and they are often (usually?) restricted. They are intended to ensure longterm stability and schools frequently can’t touch the principal.
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I understand that and I’m not advocating for them to be discretionary, per se.
There should be strong guidelines on how schools use it. Keep in mind, my original post was that so much could be done with JUST the interest these accounts accrue. No one is advocating schools spend money irresponsibly. It’s simply a matter of priorities and how funds are allocated.
I simply believe there is something inherently wrong with a system where schools sit on obscene amounts of money and families and students incur big debt. I also think society benefits greatly by a more educated populous. I see it as an investment.
Now, I get it that private schools are diff, but this system is unsustainable. There will be a bubble and it’s going to hurt lots of folks.
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It is definitely more nuanced, but in the grand scheme it is weird to think of all that money in the school while parents everywhere scrape together tuition (which is often a number as fictional as a dr. bill before adjusting for insurance). That said, I work for nonprofits and do understand there are rules about what can be done with each different kind of endowment (some discretionary, some not).
I do question a system in which public universities are not using available resources to make it possible for their own in-state students to attend. If they have money they can use for that, and they are not, then that I question. Again, it’s way more nuanced than that, but that’s my general feeling.
Consumers are at fault here.
They can just say no vs paying $40 or $60 or now $90k.
But they don’t. Or rather enough do. So why would a school change?
Many schools are in bad shape financially and are changing. But as long as the popular schools can get mom and dad to pay, why wouldn’t they ?
If schools let the endowments run low, how would they survive long term? Or grow and prosper ?
You are right - it’s ridiculous kids pay all this money when schools are sitting on endowments.
But the second part of that sentence has nothing to do with the first.
Yes it’s ridiculous kids are spending all this money.
They can go to community college, a public or a school with huge merit.
But they choose not to because they feel it’s beneath them.
That’s the students fault. Not the fault of the business…I mean college.
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[quote]Consumers are at fault here.
They can just say no vs paying $40 or $60 or now $90k.
But they don’t. Or rather enough do. So why would a school change?[/quote]
I have a diff view. I don’t blame the consumers. We have all been a part of a society that has pushed the idea of ‘you MUST have a college education’ for a couple of generations now. When me and my parents were college age, the cost was such that you could work and go to school at the same time and live pretty modestly while being able to pay off your school as you go. That simply isn’t the case anymore.
So what we’ve done is tell these most recently generations ‘You HAVE to go to college’, and oh by the way the cost has gone up generally about 170% in the last 40 years. All the while, real wages have been stagnant for that same amount of time so that part-time job you had to help pay for school isn’t even enough to live on, much less chip away at tuition.
This is not JUST the fault of the schools, but they bear a large amount of the blame. Just google the statistics of the administration burden many of these schools carry as opposed to 40 years ago.
I understand that private schools and ivy league are unique, but by this logic, this will make college incredibly elite for the future. It would exacerbate, IMO, the income divide in the nation long term.
Again, many of these schools have tens of billions of dollars. They could do incredible things with JUST the interest these endowments earn. And much of these schools growth is due to large donations from rich alum so they rarely touch the endowments for this type of thing.
[quote]You are right - it’s ridiculous kids pay all this money when schools are sitting on endowments.
But the second part of that sentence has nothing to do with the first.
Yes it’s ridiculous kids are spending all this money.
They can go to community college, a public or a school with huge merit.
But they choose not to because they feel it’s beneath them.
That’s the students fault. Not the fault of the business…I mean college.[/quote]
I don’t know any of these kids that think public schools are beneath them. IF there are kids and families out there that feel this way, by all means, go to private schools.
But I do think you missed something here when you mention public schools or even community college and that is the cost of those has gone up a crazy amount, too. And I will say again, it’s our generation that has forced the mentality upon these kids that they HAVE to to go college…they HAVE to achieve…they HAVE to get into this school.
I find it odd that we always want to blame the kids who are the ones that were thrust into this machine.
It’s like the old timers that complain about kids these days. There are plenty of articles out there about why the younger generations are not getting married at the same rates as before. Why are they not buying homes like before? Why is their mental health worse?
There are lots of variables but being able to see financial success like previous generations has to be a big part of it and college debt is certainly one of the big variables.
I don’t want to derail the thread and maybe we should start a diff discussion, but I do think these types of discussions are important to have.
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