If your annual bonus hovers around $1 million, $75k/year is not too much to pay.
All this is why families with average incomes are sending their kids to state schools and lower ranked privates in droves. I don’t think its necessarily a bad thing. Its just today’s reality.
Agree. But it seems that many on these forums have a hard time understanding that that is how a college can be need-blind for individual applicants and offer what it considers good financial aid to all admitted students while still meeting a target financial aid budget.
But note also that Barnard’s FA policy appears to be unfriendly to non-traditional students. It requires parental financial information even from those who would be considered “independent” for FAFSA purposes, according to https://barnard.edu/finaid/general-policies#married . Presumably, that helps skew the overall FA need lower.
The requirement for non-custodial parent information when parents are divorced is another way to skew the overall FA need lower, since divorced parents may be less cooperative, motivated by trying to hide financial information from each other.
UCB, I think colleges do the best they can for the kids of divorce although it is often a buzz saw. For every set of divorced parents hiding financial information from each other, my bet is you’ve got another set who are colluding to leverage their divorce for maximum gain when and wherever possible. I know divorced adults who chortle at having had the foresight to move assets off-shore so that they can craft a “side deal” with the other spouse, hide earnings from the IRS, AND impoverish themselves for financial aid.
It stinks to be the kid whose parents play by the rules (whether divorced or married, or never married) but once the marriage falls apart, the incentives to cheat become much bigger. And once there are second spouses and/or relationships in the picture, the incentives become HUGE. You can have six parents (bio parents plus the new spouses, plus their previous spouses) and nobody ends up on the hook for the amount of tuition that their true asset/income picture would require if someone can get everyone to cooperate. Kids get shuttled around, lots of resentment towards the step’s, but with a lot of children in the mix, there’s a lot of dough at stake. All you need is a high earning adult and a low earning adult to make that drama work to your advantage.
“For every” seems like a huge overstatement. Most people do not have easily manipulated income or assets that can be moved offshore or otherwise easily (not necessarily legally) hidden from taxation and college FA forms that use tax information (as opposed to W-2 income and perhaps some 1099 interest). Divorce does not appear to be more common among the upper income and wealth classes (celebrities, politicians, etc. notwithstanding). So it is likely that most divorced parents are not in a position to play the income and asset hiding games you see, even if they are cooperative (as opposed to spending money on lawyers to force their ex to spend money on lawyers).
Of those million making >$630k/yr, how many have kids in college? And how many have managed their monies well enough to pay $250- 300K without having to get their financial house in order? How many while having worked their way up to that salary range, have not been able to put sufficient funds into retirement funds, and how many who have a net worth of $IM could part with a quarter or more of it for a kid in college (and perhaps they have a few more in the academic pipeline). Its often complicated to see what a person can afford to pay. That said, I feel no guilt at feeling that the people who built their houses out of brick should necessarily take care of those who built theirs out of straw. Poor planning is their problem, and not someone else’s mess to clean up.
[QUOTE=""]
Of those million making >$630k/yr, how many have kids in college?
[/QUOTE]
Tens of thousands. Enough to fill all the available slots at the elite colleges. Demand is still very strong at the top schools. That is one reason why private colleges can continue to raise their prices at double the rate of inflation. Parents aren’t balking at paying $78K per year. Check out the parents forum on CC.
One would hope that someone making $630k every year or thereabouts would be able to live comfortably while saving and investing a large portion of that income. It is not like one has to live more lavishly than someone like Warren Buffett (even if one adjusts for higher cost of living areas than where Buffett lives, it is hard to see $630k per year as an income that would be hard to live comfortably on while still leaving a lot left over).
Yes, some people may have a $630k income windfall one year that is not a regular occurrence, and may be “unlucky” enough for that year to be one of those “sampled” for college FA purposes (though that would only be one year out of four that a student is in college). But such people presumably have lives and spending patterns set for much lower levels of income, and presumably would continue such in the future, rather than ratcheting up their spending in response to a one time windfall.
@ucbalumnus - but the policies you cite are common across the board for elite colleges. Almost all want the CSS profile; almost all want NCP information; and it’s common practice that they won’t change status to independent for students who enroll as dependents and get married during school. Seriously – if they did allow that change of status, there would plenty of first year college students entering marriages of convenience with fellow students for the financial aid gains* – so that is not a policy against nontraditional students (older students or students who are already married at the time of admission) — it’s just a very common policy that prevents students from changing their financial aid status while in school.
It’s the same as rules on residency for public universities. When I was in college, the rules were more lax – I came from Texas to California and was able to get California residency by my junior year. I moved off campus, stayed in California year-round, got a job, registered to vote, got a California driver’s license, registered a vehicle in California … and voilà, by the end of my sophomore year I had all the pieces in place to qualify. In those days out-of-state tutiion money wasn’t all that much and certainly wasn’t a major part of the university’s funding model. Also the “register to vote” piece was new, because I was in college already when the voting age was lowered from 21 to 18.
But that loophole was closed many years ago.
(* And yes, as a first year student, my daughter did float the idea of marrying her good friend, a Columbia GS student, for possible financial aid benefits. At the time, both my daughter and her friend were in long-distance romantic relationships with other students at different colleges, so their relationship was entirely platonic. And honestly, IF it would have changed my daughter’s financial aid status and eliminated the annual battle with the non-contributing, non-custodial parent… I don’t think that I would have objected to that plan. So good for Barnard for printing their policy clearly on their website.)
However, it looks like the Barnard policy treats those who are already FAFSA-independent due to age > 24 or military veteran status as dependent on parents for its own FA, and those already married beforehand still may be viewed as dependent. This certainly looks unfriendly to many non-traditional students who are not trying to game the system with “financial aid marriages” or whatever.
@ucbalumnus - Yes, in the ideal world, assuming the high income wagee earner worked up to that income slowly and lived within their means, they would hopefully have saved appropriately for retirement, college for their kids, etc (there is another of those retirement threads going again right now). But, there are unfortunately those who look like that Stanley Johnson guy in the old lending tree ad (“I’m in debt up to my eyeballs” - easily found on youtube) where they buy the expensive house, car, take expensive trips, join the club, you name it, and, like the guy. in NJ in the news a few years ago during one of the economic downturns, theminute they lose their jobs, they can’t cover their expenses and can’t pay their kid’s college tuition.
Also not sure how many people with that level income have college aged kids.
Colulmbia has similar policies–they just go about it a different way, by requiring non-traditional students to apply to Columbia GS, which does not promise to meet full need.
I think that if you dig into the weeds on this, you would find very few colleges that guarantee to meet full need for non-traditional students. The whole “meet full need” guarantee is premised on the assumption that there are parental incomes and assets that can be drawn upon. So that’s just one more element of the statistical projections the colleges are making when they claim to meet need for all students.
@jym626:
“Of those million making >$630k/yr, how many have kids in college?”
Probably the same fertility rate as overall, if not higher. 1% of HS grads is 35K each year.
“And how many have managed their monies well enough to pay $250- 300K without having to get their financial house in order?”
The vast majority, I daresay.
“How many while having worked their way up to that salary range, have not been able to put sufficient funds into retirement funds.”
A tiny minority would be my guess.
“Yes, in the ideal world, assuming the high income wagee earner worked up to that income slowly and lived within their means, they would hopefully have saved appropriately for retirement, college for their kids, etc (there is another of those retirement threads going again right now). But, there are unfortunately those who look like that Stanley Johnson guy in the old lending tree ad (“I’m in debt up to my eyeballs” - easily found on youtube) where they buy the expensive house, car, take expensive trips, join the club, you name it, and, like the guy. in NJ in the news a few years ago during one of the economic downturns, theminute they lose their jobs, they can’t cover their expenses and can’t pay their kid’s college tuition.”
That’s probably more true in the doughnut hole world of 200K-300K.
Most of the folks making 600K or more have done so for years and have saved a fair amount.
Why would the few who are in that very high income range have been earning that for years? Seems very counterintuitive.
Where did that stat come from that a million people make over $630K? Can’t find it. And they would be like the top 0.5% or smaller, not the top 1%. What I see with a quick look is that the top 1% income is $380K. So the # at 630K is much smaller.
@foobar1 - please cite your reference for the #s you posted in post 59 with % with reported income levels. and net worth
There are 126 million households in the US. So there should be 1.26 million households with top 1% incomes, and 630,000 households with top 0.5% incomes.
You need to differentiate between average income on an individual basis and on a household basis.
This article cites 2014 IRS data. A household income of $500K would put a family above 99.2% of American households. That was 3 years ago. It’s probably slightly higher today.
It’s a big country so top 1% as mentioned above represents a whole lot of people.
Was assuming the banter of >$630K income meant earned, not earned+unearned income, but will have to wait for the poster who gave those numbers to provide the citation. We don’t know what small percentage of a percent represents those with earned incomes >$630K.
@jym626:
“Why would the few who are in that very high income range have been earning that for years? Seems very counterintuitive.”
Most salaries are fairly stable. Even with bonuses, you typically can expect a range. For that matter, for small business owners, profits also tend to be at least somewhat steady. Why does that seem counterintuitive to you? It’s not like there are so many lottery winners in this country.