In Defense of Merit Aid

^^Ah, to be young again…

@otoribashi,

Before commenting on the specific things in your diatribe, let’s first remember that there are few places where it is considered socially acceptable to charge people a different amount for the same product based upon what the family earns. In the normal world, a person pays the same amount for an iPhone, a computer, a car, a bike, or piece of furniture regardless of whether she is poor or rich. But for college, it is considered acceptable to do so (and I agree with this).

Next, remember that the “rich” are already paying considerably more in taxes than the poor, both in percentage, and certainly in absolute terms. So when it comes to public colleges specifically, the rich are already subsiding the rest of the population.

So in a very real sense, they are getting hit twice, first by paying a great deal of taxes, and second by paying more than others for the same service.

The simple reality is that the ACT and SAT tests are not particularly hard. If a student cannot get a great score with nothing more than a $20 test guide, then spending thousands of dollars on test prep is unlikely to make a meaningful difference. I practice what I preach. I am full pay everywhere, so I can afford test prep, but my D received nothing more than a study guide, and she made NMF.

Almost all families earning $160K pays a significant amount in taxes. They will have nothing close to $95K remaining.

Money is fungible, and except for specifically allocated funds, it is all just one big pot.

There are places like Alabama that offer full tuition to outstanding students. Couple that with part-time student work and a $5500 student loan, and most families can afford it.

Hey my kid only got a $20 test guide too. But prior to that, she had a fabulous school system with teachers who care and didn’t have to dodge bullets or worry about eating enough or ingesting lead paint for the first 17 years of her life. She also had parents who helped her all along the way through school, from providing a safe and quiet place to study at home to active involvement in her school - things low income kids often do not have.

It’s about a lot more than the final year of HS and test prep.

A few years ago I ran the Harvard NPC calculator for various income levels between $60,000 and $180,000 or so when the subsidies phased out. Between the increase in marginal income taxes and the marginal increase in tuition, the combination of the Federal government and Harvard would generously allow a parent to keep less than 10 percent of the marginal income increase when income went from $90,000 to $160,000. I guess they were leaving that small amount to pay for state and local income taxes. :(|)

For those who early on in this thread asked – “Does merit aid even need a defense? Who is even saying it is a bad idea?” You have your answer!

Two points to make.

  1. Yes, there are students of middle and upper-middle class families going to $65K+/yr universities full pay, but they are mostly doing that through debt that will follow the students and parents for decades. That’s why you see parents like @Mom2aphysicsgeek so thrilled that some of their kids can use a merit scholarship to get a better education more matched to their ability; because the family is too wise to take on that kind of debt for 4 kids.

  2. @austinmshauri says : “Then they’d be joining the majority of low income families…Why is it that these threads always lament the challenges faced by middle income families? My guess is that if they can’t afford an LAC without merit, they can still attend a residential college somewhere. Low income kids rarely have that option” This floors me. High-performing low income students ALWAYS have that option, not rarely! What you have just said, probably without intending to, is that a narrow band of low-cost colleges is all that should be available to the middle income families and they should be happy with that. Low income students should be free to go anywhere (since most top schools will give them full aid), but students from middle income families should be happy to be locked out of all but a few choices. Choice is apparently only important for rich and poor students, not for them.

Nobody is saying to remove or reduce any of the need-based aid that is out there. There are already a lot more need-based dollars available than academic merit $$s. Low income families who get into top universities are already assured that they can afford it. Students from middle and upper-middle income families who get in are virtually assured that they CANNOT without substantial loans. They have sadly come to terms with that and increasingly don’t even apply to those top schools regardless of performance. There is currently a limited band of 2nd tier universities that allow a small number of high-performing middle-income students to attend without crushing debt. This is why some of us are so passionate to defend that small band of opportunities left open to our hard-working sons and daughters.

You misunderstand me, @NashvilletoTexas. If I wanted to say the middle class deserved only a narrow band of colleges I’d have no qualms about saying so. However, that’s not what I said. What I did say is that the majority of low income students don’t have the stats to get merit aid reserved for the top 2% of scorers. I fully support both merit and need based aid, but they’re different. The poster I was responding to was advocating tying need based aid at her flagship to high test scores. If the only need based aid is tied to high merit, it’s not a need based award; it’s a merit grant. I think most colleges need both.

There are roughly 80 colleges that promise to meet full need for students, if they can get in (and some are not need-blind so it’s harder for poor kids to get in). None of them are easy to get into for anyone, especially most low income kids. http://www.thecollegesolution.com/list-of-colleges-that-meet-100-of-financial-need/

There are 1600+ public colleges in the US (though of course in-state options vary), so if someone is saying those are the ones that are affordable without aid, there are far, far more of them.

I think that without merit assistance (and families willing to pay the balance) most of those colleges wouldn’t even exist. But you must acknowledge that low income kids are locked out of THOSE schools , and also locked out of most public colleges and Us as well. Their options are basically commutable community colleges (not gonna happen in rural areas) or to defy the overwhelming odds and become super high achievers who are counseled early enough to get into one of the 80 colleges that will help them pay for it.

Merit aid needs no defense; it benefits the student and institution; more so the latter.

How so? I teach at a directional state school. Many if not most of my students are from underprivileged backgrounds. Hardly locked out.

We have known students from underprivileged backgrounds as our high school is very diverse. Many times they do not have support or understanding of financial aid. Some have started at regional schools. Some have started at state schools. What breaks my heart is when we find out they couldn’t afford the next semester and had to move back home, now with loans and no job. When an opportunity arises, I’ve tried to help explain other options such as commute from home or starting online. Several students don’t have cars, or computers.

I am in support of merit aid, it helps families and institutions. We are one of those families searching for merit aid. And IMHO there are plenty of options for merit aid, families may have to be willing to compromise, whether on location, size, ranking, etc. That is still a better position than most underprivileged. I am thankful for whatever opportunities and options come our way.

@sylvan8798 I suppose I didn’t consider a directional state u in the " limited band of 2nd tier universities" enticing top students with merit aid.

Though imo a directional that isn’t commutable is going to be a challenge for a low income kid to afford with Pell and loan and work. Room and board are often over $20k a year just alone, or the student needs to rent an apartment or room, etc. And also pay tuition.

Directionals in my state are $20k, instate, before books and other expenses.

Over half of my students are from the other side of the state. Just a guess but I don’t think they commute. And many of them are barely able to succeed at directional U, let alone band of 2nd tier universities.

Even directionals here in MI run over 20k when you include R&B.
Hardly doable for low income kids if they’re not within commuting distance- and there are HUGE stretches of the state that are nowhere near commuting distance to a directional.

I completely agree and respect your opinion. For my family, my husband only recently had his salary skyrocket so there is no way that our current high income reflects our past 17 years of having children to save for!

I agree with poster who said merit aid needs no defending. The cost of a college education is staggering to most families. Schools need merit aid to fill seats and raise their profile to attract more top students. If that overpriced school wants to raise their profile with my kids high stats then they can give her a merit scholarship. Fair trade.

Here are some numbers for reference:

http://www.tax-rates.org/income-tax-calculator/ says that a married couple with 2 kids in California with wage/salary income of $160,000 and standard deduction and exemptions only pays a total of $43,555.22 in income and payroll taxes, leaving $116,444.78 in after-tax income.

https://college.harvard.edu/financial-aid/net-price-calculator suggests that the first kid of that family to go to college will find a net price of $24,600 after financial aid if s/he gets into Harvard. However, at a less generous school like USC (see http://financialaid.usc.edu/undergraduates/prospective/net-price-calculator.html ), the net price would be $52,293, although USC also offers merit scholarships. Note: both Harvard and USC claim to “meet full need”, so this is an example of how “meet full need” may not actually say too much about what the financial aid offer will be like.

@Zinhead Can we PLEASE stop using Harvard NPC as the benchmark for FA of all colleges? Harvard could easily afford to let every single student go there for free without making a dent in the endowment. And they have a sub 5% admit rate. The other 2000+ colleges in this country do not have that. Therefore, families in the upper middle income range will not get FA. A family earning 160K in expensive parts of the country cannot afford to pay 250K for each kid to go to college.

Agree that the ‘meet full need’ is smoke and mirrors at almost all schools. Its based on their need. That’s what parents don’t understand early in the process, they think it will all be fine because the school says meets full need and it doesn’t. As @ucbalumnus showed above, the net price between Harvard and USC (and probably many other schools) for ‘meets full need’ schools is extremely different.

Parents of kids who won’t qualify for FA and can’t afford full pay - have your kid visit lots of safeties and very few reaches. The safeties will probably give you merit.

Gotta pull ssi out of there too. It isn’t technically a tax but it isn’t optional either. Figure a 60% net, which about splits the difference between 90 & 115 for a 160 baseline.

That ought to be able to absorb 30k without shuddering to a halt. 60k with planning seems doable too, unless the allure of big house and shiny wheels proved irresistible in which case they’re a new England market fish (scrod).

The calculation from http://www.tax-rates.org/income-tax-calculator/ includes payroll taxes (Social Security and Medicare) as well as income taxes. The hypothetical family with $160,000 income has the following taxes:

$24,252.50 federal income tax
$9,096.32 California income tax
$7,886.40 Social Security payroll tax

$2,320.00 Medicare payroll tax

$43,555.22 total income and payroll tax

This leaves $116,444.78 after paying the above taxes.

Uh, oh. Post in haste, repent in leisure. Thanks for the correction.