<p>I think the title says it all. How does the current economy affect FA students and non-FA students? I read in TIME that Suze Orman predicts that the economy won't even start to get better until 2015. (So obviously, this isn't a two year problem.) So is this a good thing, or a bad thing for primaily FA students applying?</p>
<p><a href=“http://talk.collegeconfidential.com/prep-school-parents/642081-changes-fa-policy-due-economy.html[/url]”>http://talk.collegeconfidential.com/prep-school-parents/642081-changes-fa-policy-due-economy.html</a></p>
<p><a href=“http://talk.collegeconfidential.com/prep-school-admissions/573003-financial-market-impact-endowments-financial-aid-applications-etc.html[/url]”>http://talk.collegeconfidential.com/prep-school-admissions/573003-financial-market-impact-endowments-financial-aid-applications-etc.html</a></p>
<p>My comment is admittedly speculative, as are many comments on cc. Now is the time to save money for college, because the relative advantage conferred on full pays will only increase. Also, if the dollar is eventually devalued, then those earning foreign currencies will have an advantage with respect to the affordability of private schools. I am concerned that through the mechanism of currency degradation the the elite lac’s and ivies will become the province of wealthy asian families.</p>
<p>Per keynote address by Massachusetts Senate President Therese Murray on 4/4/09 to MASS municipal officials, state revenues (tax) is dropping at $1/2 billion per month*. State officials do not expect revenue to return to FY2008 levels until 2012 at the earliest. </p>
<p>Drop in revenues is largely due to evaporation of capital gains (which parents used to stack up savings to pay for college), and decrease in corporate tax (falling corp revenues translates into jobs, bonuses and the income streams needed to pay tuition.) </p>
<p>While federal stimulus money helped close the $gap at the UMASS system for the year ending this June, reducing the proposed fee increase, no stimulus money is left for next year. Obama is stating that the economy is on the upswing, setting expectations of no more fed money. $gap for the next fiscal year looms.</p>
<p>*TO ILLUSTRATE SCALE, TOTAL MASS BUDGET IS $29B, OF WHICH LAST YEAR $19B CAME FROM TAX REVENUES. A DROP OF $1/2B PER MONTH AGAINST A HOPED FOR TOTAL OF $19B IS A SCARY THING. ALSO FOR REFERENCE, THE FY2009 BUDGET GAP IN CALIFORNIA $54B (I.E. MASS TOTAL STATE BUDGET COULD FIT IN CALIFORNIA’S BUDGET GAP TWICE.)</p>
<p>Toadstool, how does the above relate to financing a private secondary education? Please elaborate.</p>
<p>Sorry, Forgot to include thesis statement.</p>
<p>A large number of full pay students aren’t rich; they are middle class kids whose parents paid for private school with capital gains and small business earnings. That group has seen their funding source evaporate. </p>
<p>MASS tax revenue facts show the extent of the decrease in incomes. $5M/month decline in tax revenue equals $10B in vanished discretionary/potential tuition money in Massachusetts alone.</p>
<p>Since Boarding school is a discretionary expense, and the discretionary money is gone, you may see a hollowing out of the private school demographic mix. The deeply subsidized FA students and the very rich will remain. The 75% or barely 100% full pays are an endangered species. </p>
<p>Bottom line: The discressionary money that would have gone to pay for boarding school is gone, and won’t be back soon.</p>
<p>so there will be more spots for deeply subsidized FA students?</p>
<p>Not likely. Any available FA will more likely be allocated to current students(including those accepted this spring) whose financial circumstances have deteriorated. Because the financial aid yield was so high this year, those that sought to appeal their decisions were not accommodated, even if they had legitimate reasons. The schools had too many accepting their aid offers. Some schools may even decide to “keep” the money because they are way over their financial aid budget, thus lowering their deficit.</p>
<p>i don’t understand why there would be a higher than anticipated acceptance by fa students. Unless the schools were overly generous, which doesn’t make much sense either. Can somebody explain this to me?</p>
<p>If it is true, the schools must be flipping out because families on fa are probably less likely to make the 5 and 10k gifts to the annual parents fund that all the schools have.</p>
<p>Catg- I don’t know either, but have also heard first hand from admissions people that this is what happened this year. My guess is that the economy is also affecting the public schools, and parents of bright children realize the importance of a good high school education.</p>
<p>Sorry for the confusion catg. The typical (e.g. expected) FA yield at a top school is 70%, but this year it’s 90%. The schools are way over their FA budget!</p>
<p>I’m not confused by what you said, only why it would be happening. any thoughts?</p>
<p>Clearly, the financial aid admissions folks underestimated the impact of the economy. They figured if they offered fewer FA students admission, say 35% vs. 40% and 70% accepted the offer, they would have sufficient cushion with the FA budget. Of course, with demand from current students higher than expected and 90% of new FA students killed their budget.</p>
<p>I love numbers, so here’s an illustration of above:
Accepted 35% with expected 70% yield is 24.5 students per 100.
Accepted 35% with actual 90% yield is 31.5 students per 100.
That’s 7 more students per 100 than expected! </p>
<p>Assuming $35K per student and 1/3 of the school is new each year, a school with 600 students would be $490K (7<em>$35K</em>1/3<em>600/100) over budget. A school with 1100 students would $900K (7</em>$35K<em>1/3</em>1100/100) over budget.</p>
<p>Please bear with me. I understand the numbers. i just don’t understand why a student admitted with aid would be more likely to accept in a tougher economy than an average year. Outside of a full ride, there is still expense involved and they are signing up for 4 years of possibly “living on the edge.” maybe i am just dense.</p>
<p>Maybe students received fewer acceptances with large amounts of fa and therefore the schools with larger endowments who extended the same number of acceptances as in prior years had more students accept the offers.</p>
<p>that is an interesting idea.</p>
<p>A student accepted with aid to a boarding school is likely to be a bright student, who has extracurricular interests. The cuts to public school budgets have only begun. The programs which bright students need are the most likely to be cut.</p>
<p>Academics, sports, music, art… It isn’t a choice between “living on the edge” to attend private vs. attending a “good public.” The links below could go on for pages. Advanced academic programs, sports teams, music, fine arts, foreign languages, are the first to go, it seems. Class sizes increase, so teacher have even less time to give thoughtful feedback to promising students. “Good public” high schools are under siege, giving families reason to stretch further to give their children an education.</p>
<p>[Mass</a>. Academy Faces Closure Due To Budget Cuts - wbztv.com](<a href=“CBS Boston - Breaking News, Sports, Weather, I-Team Investigations”>CBS Boston - Breaking News, Sports, Weather, I-Team Investigations)</p>
<p>[school</a> “budget cuts” - Google News](<a href=“http://news.google.com/news?client=safari&rls=en-us&q=school%20"budget%20cuts"&oe=UTF-8&um=1&ie=UTF-8&sa=N&hl=en&tab=wn]school”>http://news.google.com/news?client=safari&rls=en-us&q=school%20"budget%20cuts"&oe=UTF-8&um=1&ie=UTF-8&sa=N&hl=en&tab=wn)</p>
<p>[Sports</a>, gifted program cuts eyed in East Greenwich - Projo 7 to 7 News Blog | Rhode Island news | The Providence Journal](<a href=“http://newsblog.projo.com/2009/04/sports-gifted-p.html]Sports”>http://newsblog.projo.com/2009/04/sports-gifted-p.html)</p>
<p>[AP</a> courses fall victim to budget cuts | turnto10.com](<a href=“http://www.turnto10.com/jar/news/local/education/article/local_school_cuts_31_courses/11132/]AP”>http://www.turnto10.com/jar/news/local/education/article/local_school_cuts_31_courses/11132/)</p>
<p>[Schools</a> face big funding cut for AP, IB | Gainesville.com | The Gainesville Sun | Gainesville, FL](<a href=“http://www.gainesville.com/article/20090324/ARTICLES/903241010/1002/NEWS01?Title=Schools-face-big-funding-cut-for-AP-IB-]Schools”>http://www.gainesville.com/article/20090324/ARTICLES/903241010/1002/NEWS01?Title=Schools-face-big-funding-cut-for-AP-IB-)</p>
<p>[Brewster</a> school spending plan cuts sports and music programs, staff positions | lohud.com | The Journal News](<a href=“http://www.lohud.com/article/20090323/NEWS04/903230332/1231/NEWS0403]Brewster”>http://www.lohud.com/article/20090323/NEWS04/903230332/1231/NEWS0403)</p>
<p>[MailTribune.com:</a> Ashland schools face 4-day-week option to cut operating expenses](<a href=“http://www.mailtribune.com/apps/pbcs.dll/article?AID=/20090410/NEWS/904100340]MailTribune.com:”>http://www.mailtribune.com/apps/pbcs.dll/article?AID=/20090410/NEWS/904100340)</p>
<p>[Siuslaw</a> News](<a href=“http://www.thesiuslawnews.com/V2_news_articles.php?heading=0&page=72&story_id=2050]Siuslaw”>http://www.thesiuslawnews.com/V2_news_articles.php?heading=0&page=72&story_id=2050)</p>
<p>[On</a> his knees, band director pleading to stop SPPS music cuts | Twin Cities Daily Planet | Minneapolis - St. Paul](<a href=“http://www.tcdailyplanet.net/article/2009/04/06/his-knees-band-director-pleading-stop-spps-music-cuts.html]On”>http://www.tcdailyplanet.net/article/2009/04/06/his-knees-band-director-pleading-stop-spps-music-cuts.html)</p>
<p>[Windham</a> School Board Proposes Music, Art Cuts - Education News Story - WMTW Portland](<a href=“http://www.wmtw.com/education/19071463/detail.html]Windham”>Portland, Maine News and Weather - WMTW Channel 8)</p>
<p>[Bridgewater-Raynham</a> to lay off 70 teachers under budget proposal - Raynham, MA - Raynham Call](<a href=“http://www.wickedlocal.com/raynham/news/education/x1586324824/Bridgewater-Raynham-to-lay-off-70-teachers-under-budget-proposal]Bridgewater-Raynham”>http://www.wickedlocal.com/raynham/news/education/x1586324824/Bridgewater-Raynham-to-lay-off-70-teachers-under-budget-proposal)</p>
<p>The “dumbing” down of America. 
It’s been happening for many years, but this is really going to grind the country down.
How are the Elite Ivys going to be able to get the best and the brightest if the public school system is to overcrowded and underwhelming?
Maybe the BS school kid will have a leg up like they used to?</p>
<p>emdee - Thank you for stating succinctly what was implied in my analyses. </p>
<p>Not only were there 12.5% less financial aid offers (40% to 35%), because of the the economy, people were more willing to take the best offer. Historically, the wealthier schools have been the most generous. They maintained (actually increased slightly) the size of their offers, but underestimated the demand in this economic environment. People took the money, even when a school was not necessarily their top choice.</p>
<p>Although, we are not financial aid recipients, I find schools and financial aid fascinating. This is especially true in this economy. My first job out college was in investment banking writing bond covenants for educational institutions raising money for projects. After grad school I worked for a strategy consulting firm and led a study on financial aid for a famous ivy league college. It’s been 15 years since I “retired”, but it’s all very interesting to me.</p>