I don’t know the percentages, but plenty of families in the doughnut hole (where it really would be a strain or impossible to pay full tuition, but where need-based aid is unavailable) already take a pass on privates that don’t offer merit. The interesting question to me (as that number of families rises with ever-soaring tuitions) is whether the schools will ever mind (to the point of taking action) that they are increasingly losing out on a whole economic sector of highly qualified and otherwise interested students. I suspect they couldn’t care less because this climate creates more slots for the wealthiest students, who may turn into donors, who pay the bills today, and of whom there will never be a shortage. The schools’ reputations will probably suffer in the long run among a small number of observers and among doughnut-holers and perhaps certain employers because they will be seen as hospitable only to the wealthy and the relatively needy. And some of us already see them that way, but that is fine because the schools don’t owe anyone anything. But I also see the situation as the schools’ loss (of talent and diversity) both now and in the long run. I’m thinking in particular of some of the smaller and high-reputation schools, such as LACs in the northeast, where the gap in representation is more noticeable. (I am not overlooking the reality that many families that DO qualify for aid at these schools can’t afford them even with the aid, and the same arguments in some measure apply to them as well.)
But for every action there is a reaction- and in this case, the kids who are getting priced out of the privates who don’t offer merit are raising the perception (and then likely- the bar) at a whole range of terrific schools which ARE meeting their needs. Is that bad? no.
You’ve got kids at Case who couldn’t afford Penn or JHU Engineering. You’ve got kids at all the CUNY’s who got either nothing at NYU or something modest at Fordham but couldn’t swing it. There are kids at Binghamton who couldn’t afford their EFC at Wash U or Chicago, and kids blowing the cover off the ball at Wisconsin when their parents realized that absent getting paid to donate a kidney (illegal) they couldn’t afford for their kid to go out of state to Michigan.
This is a wonderful thing. And an “only in America” - that somehow people feel cheated that with 3,000 colleges in this country offering BA/BS degrees at a wide range of price points, folks can only focus on the “but we fit into the donut hole” type of colleges.
When I said financial or merit aid may not be available, I was referring to the families that fall into the doughnut hole. Looking at it from blossom’s perspective is a very positive way to view it. That is the great thing about our country…we do have so many other choices!
If you are even asking the question, you can’t afford it.
If your family drops that much to upgrade the car yearly, or
If your family needs a crew to operate the yacht, or
If you have saved $300K in your 529, or
If your trust fund will cover it, or
If you don’t even blink at the price,
Then it is worth it.
If you know you won’t have to pay that list price for whatever reason,
And you or your parents won’t be saddled with high loans to make it work,
And your major is one that requires you attend that particular program at that particular college
Then it might be worth it.
If you (the parents) are doing mental gymnastics trying to make it work, or
If you are thinking about pulling money out of your home equity, or
If you are thinking about pulling money out of your retirement savings, or
If this is dependant on you being able to continue working for X years to pull it off,
Or this thread is giving you flop sweat,
Then it is NOT worth it.
I keep seeing the expression “the doughnut hole” on this site, applied to a certain socioeconomic level. I never heard that term before. I get the general idea of what it means, but is there a more precise definition/ income range?
Grey- where the hole starts and ends depends on the school. At the mega generous schools like Princeton or Harvard the income/asset range where you won’t get any aid is going to be higher than at BC or Middlebury. And of course it also depends on family size- two parents and one child will get less aid at Harvard than two parents and 5 children (all things being equal). So the perpetual question is at what point are you priced out of aid (because you earn too much and have too much saved) but can’t comfortably afford to be full freight.
Varies by family of course. Age, health, job security, amount of consumer credit, rising housing market or stagnant one, high property tax area or low… all of these will impact someone’s sense of where the donut hole begins.
It will vary by family circumstances. Where you live. How many kids you have. What other demands exist on family resources (such as parents you are supporting, special health needs of a family member, etc). So no definitive range exists. And many on this site don’t think the donut hole (seems to me the name doesn’t really make sense) exists ever. Just families who spend too much on other things.
Probably income higher than $270,000 (where no-financial-aid starts at expensive private schools like Harvard) but not high enough to consider $70,000 per year to be pocket change. Really, this is a “problem” for at most 2-3% of the population.
Still, one would expect that, years before the kids reach college age, a family with that level of income could live like a family with a $120,000 income (above median almost everywhere, including expensive cost-of-living regions) and save substantial amounts of money each year for any future purpose, including the kids’ college costs.
@ucbalumnus I think the donut hole starts a lot lower when you take financial aid into account. If you make 120,000 and have an EFC of 25,000, and the school adds in a student loan of 5,500 and parent loan of 10,000, that is not pocket change either.
I think the rebellion against 70,000 tuition is already well under way. There are schools where the majority of students are getting merit aid, presumably because when admissions figures out the price the market will bear for their particular school, they need to offer more discounts to fill their class. There are also a number of state schools that have a large number of these “donut hole” families seeking their automatic in-state discount.
The donut family issue has been discussed multiple times on this board (which means that there isn’t resolution on the matter). No need to rehash all of that again here. But the statement above is very much of an oversimplification of any given family’s financial circumstances (at least in many cases). FAFSA/CSS involve 4 snapshots in any given student’s college degree (assuming 4 year graduation) but a family’s financial circumstances are the result of a lifetime (up to that point anyway). Though I agree with you that in the end, there isn’t much sympathy/concern for families earlier $x/y% over the average family income.
nm —
Donut hole starts much lower then 270k in income for families who save. Specially for those who makes mistake of saving close to one income for years.
@ucbalumnus,
“Still, one would expect that, years before the kids reach college age, a family with that level of income could live like a family with a $120,000 income (above median almost everywhere, including expensive cost-of-living regions) and save substantial amounts of money each year for any future purpose, including the kids’ college costs.”
If you assume a family has had a high income for years and never went through a financial crisis (divorce, lay off, failed business, medical emergency, etc.), sure.
Can we stop acting like the Dale-Krueger studies are the only ones in existence? Yes, they found the earnings difference disappeared after controlling for where the kids applied. However, there’s no logical reason for the Harvard rejects to be more successful than those who never applied, after controlling for other factors.
The 270k was in reference to Harvard. At most income levels, they expect parents to contribute 5% of non-retirement savings above $200k. For example, if a parent saved $250k, they’d be expected contribute 5% * $50k = $2,500 beyond a family without any savings. Needing to contribute 5% of savings above $200k is not what I’d consider to be a doughnut hole situation where parents cannot afford the college.
However, there are plenty of other unique financial situations that could be troublesome. For example, maybe the family is going through a challenging time with high legal bills, medical bills, credit card debt, or various other expenses and is living near paycheck to paycheck, in spite of having a high income level. Maybe the parents are separated, and one has a high income, but is unwilling to contribute. There are countless possibilities.
@roethlisburger:
“However, there’s no logical reason for the Harvard rejects to be more successful than those who never applied, after controlling for other factors.”
Actually, there should be. We know that Harvard rejects several intakes worth of super-high potential kids who would kill it at Harvard (or anywhere they go) because of space limitations and holistic admissions.
There almost certainly isn’t the same percentage of super-high potential kids among the general population.
We’ve been over this before. Assuming a kid has high enough stats(which is a separate control variable), whether he applies to an Ivy or not has more to do with his family’s willingness and ability to pay the net price than having super-high potential.
My $0.02 is that the fancy private college donut hole is roughly from about $150k to $450k depending on circumstances (where you live, how many kids, how strong the kid’s stats are, etc. etc. etc.).
For fancy private colleges, you are absolutely, 100%, no question about it, MIDDLE CLASS if you are in the 90-95th percentile of U.S. household incomes. Middle class among the U.S. population is one thing. Middle class at a top 25 private college is a totally different thing. And here is the indisputably proof.
90th percentile is $160-170k per year in the U.S. And here’s what the MEDIAN family income is for a group of fancy privates (per NY Times database from 2017):
WUSTL $272k
Gtown $229k
Vandy $205k
Brown $204k
Dart $200k
Penn $196k
Yale $193k
ND $191k
Duke $187k
P $186k
H $169k
S $168k
Figure that roughly half the families at these schools are full payors. So (again depending on circumstances) full paying by the “fancy college middle class” is often impossible to extremely painful. Maybe you can do it if you only have one kid, but not 2 or 3. And/or if the grandparents are kicking in. Sure some low donut-holers can get some aid at HYPS. But few kids get into HYPS and the aid for donut-holers really doesn’t much exist once you come down from the rarified air of the HYPS heights.
The other proof of the donut hole is all those CC favorite schools a bit below the top 25 (Tulane, Miami, Case Western, state flagships etc. etc. etc.) that cater very specifically and very successfully to those families who perhaps “could” drop $280k per kid on undergrad, but most often opt for the options priced between $100-200k.
P.S. The oft-maligned NYU comes in at a surprisingly modest $149k. As NYC-ers know, NYU’s heritage was primarily a local commuter school catering to the working classes. It has come a long way from that, but not totally 100%.
@roethlisburger, and what are you basing that assertion on?
Anyway, not all who did not apply have high enough stats.
And even among those who have high enough stats, there would be many who don’t apply even if finances aren’t the reason.
(CC isn’t representative of the overall population).
Have you actually read the study? Do you understand what a multivariable regression is? The important point is what new information is in this control variable not contained within any of the other control variables.