As price tags for private colleges are increasing to $70,000 pus per year, at what point will families decide it is just not worth the excessive price for an undergraduate education. Even if a family could afford this price, is there a point where it becomes so excessive that families will say no?
Presumably, you mean for families at the threshold of no-financial-aid at such schools, like perhaps $270,000 per year as discussed in another thread. The plutocrat class would probably see $70,000 per year as pocket change, while the vast majority would either see a much lower price due to financial aid, or write off such a school immediately as obviously unaffordable if it offered no financial aid.
Well, the data supports it is not worth it.
https://www.forbes.com/sites/ricksmith/2014/11/24/your-elite-school-is-not-worth-the-cost-studies-say/#4349728826fe
That said, if you can afford it, carry on. Taking on large debt for it, I suspect is a poor idea. The financial aid can work out to be a wash with state schools for some families and that may be the case for us for some schools. Our state option is expensive. I don’t think you can always assume everyone has a cheap, decent quality option as a back up.
No!
For certain programs the cost can be justified for those without financial need.
Exactly. HYP et al could charge $100/yr and easily fill their class.
Yup. My kid attended an Ivy for less than the cost of UC Berkeley at instate rates.
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If you HAVE to spend $70,000 a year – if you have no OTHER options – it means your child either applied stupidly, or isn’t academically strong enough to get into the state U which is half the price or less.
In other words, no one NEEDS to spend that much on an undergraduate degree.
^ Yep, and the kids who can get in to Ivies/equivalents typically can get full-ride/tuition scholarships at the average-flagship level (some can get big scholarships at schools higher up the totem pole as well).
And there are good schools overseas with programs taught in English at much cheaper prices too.
And lower down the totem pole, many privates discount a lot for many of their students.
You actually have to think hard to find a situation where some family has to pay $70K/year for college.
Maybe an expat or international family (so aren’t in-state anywhere) who’s kid isn’t good enough to get in to cheaper schools overseas or pull merit discounts and/or is targeting a specific major?
I would say that majority of undergrad degrees are not worth $70k. So how come the prices become so out of line with their value? I think it has much to do trillion dollar student loan industry—when everyone can get a low interest subsidized loan to cover the price tag it is bound to have a ripple effect on all college tuition. People tend to get price insensitive when they don’t have to pay the bills today and get a deal at the same time for an artificially low interest loan. And if some buyers are not as price sensitive that just drives up prices for everybody.
@jzducol, do you realize that the amount a student can borrow for undergrad is fairly limited?
IMO, rising inequality (a much richer 1-5%) is more responsible for the big increased in private list prices.
There are people who spend $62,000 on a Mercedes for their high school junior son. For families such as these I think $70,000/year college isn’t a big deal.
https://www.nytimes.com/2018/03/09/nyregion/high-school-student-parking.html
^ @PurpleTitan Are you saying that richer has gotten richer and therefore they become dumber and more willing to pay $70k that does not deliver value?
The point is that if the price is distorted in one segment of high education it tends to effect others. People don’t compare college options in isolation.
@jzducol, the richer have become richer. They don’t have to have become dumber. In fact, their kids have to be smart enough to get in to top privates. But then yes, as their demand for top privates has not decreased over generations and they can afford to spend more, that pushes up the list price.
BTW, I’m suffering a bit of whiplash. Weren’t you advising in another thread that a kid choose to be full-pay at MIT than accept a full-ride named scholarship to UMich? You don’t think that your type of thinking pushes up the price of privates?
In that thread, you seemed to think that $280K more for MIT (over paying nothing for UMich even with the perks of the named scholarship(!)) was good value, yet right above in this thread, you’re calling rich people who pay $70K for a private school dumb.
@PurpleTitan I just said that “majority” of $70k($50k for tuition)/yr college undergrad are not worth it. There are some that are good value even at $70k ($50k tuition), such as MIT. In fact, a school like Princeton spends more than $90k on each kid while charging only $50k for tuition. Talking about a good value!
Just like ten years ago when government subsidized $3 trillion subprime and caused inflated housing prices across the board, the current $1.3 trillion subprime student loan in high education also seemed to have a similar effect. When U of Phoenix is charging $30k, some private college down the road can demand $40k and so on and so forth.
@jzducol, you honestly think Harvard sets it’s list price based off of U of Phoenix’s list price?
Unlike houses, degrees can not be traded/flipped, so even if your description of the housing crisis causes is correct (I think it’s flawed), your analogy makes no sense.
And so MIT, to you, is worth $280K more than UMich (which, at the market rates that OOS students are willing to pay, already comes in at $250K or so), which makes MIT, to you, worth $530K. If you put that type of valuation on MIT, then what privates aren’t worth $70K a year?
It was worth it for me because my wife would have killed me if I didn’t fork up the money to allow my kid to go to an expensive top college? lol My life vs. $70K? I decided to preserve my life.
For families fortunate enough to be in a position where they can pay full freight without loans, jeopardizing retirement etc. they may reasonably choose to send their child to the best fit college they can regardless of price. Of course as the cost of college continues to rise there will be fewer and fewer families in that position.
Lots of the same comments on this thread…bout the high costs.
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What are you talking about? SUBSIDIZED federally funded loans are very limited in amount. Freshmen can only take $3500 in subsidized loans. That’s it. And that amount doesn’t increase by much for each of the four years.
The only price tag SUBSIDIZED loans would cover would be instate tuition at a community college for a commuter…that’s it.
Many of the colleges charging $70k per year are some of the most affordable colleges in the United States due to generous FA, and most students claiming FA. FA has increased as sticker price has increased, so the inflation adjusted average cost to parents often remains similar. It’s kind of like saying federal taxes are unrealistically high because wealthy person X pays $70k per year in federal taxes, and most families couldn’t afford that. It’s true that few families could afford $70k per year in taxes, but only those with high incomes are getting charged such high taxes. For example using Harvard’s NPC calc, a table showing cost to parents at various income levels is below. I am assuming typical assets, 2 kids, and 1 kid in college.
$65k income – $0 cost to parents
$100k income – $5k cost to parents
$125k income – $10k cost to parents
$150k income – $15k cost to parents
$175k income – $27k cost to parents
$200k income – $39k cost to parents
$225k income – $49k cost to parents
$250k income – $60k cost to parents
$275k income – $70k cost to parents
The cost to parents above looks like a good deal for typical lower and middle income families (especially those making under $150k/yr), often costing less than state school or community college alternatives. It’s more an issue for whether the cost is worth it to wealthy families or those with unusual assets (primary home and retirement accounts do not count towards assets in above calc) or financial situations. As others have noted, many wealthy families with $275k+ incomes aren’t going to be especially concerned about how much they could save by sending their kid to a state school or community college instead of Harvard. The extra cost for Harvard is worth it to them, even though statistically their child is likely to get a better ROI elsewhere (unless they go in to one of the few fields focused on college name, such as IB).