NJParent:
Rutgers charges $11k for tuition ($33k total COA), which seems like a pretty good deal, no? Of course, that is before any merit scholarships awarded.
A few years? A couple of my Ds top choices went up $7K in since last year and are over $70K per year. At that rate her last year could be pushing $100K!! Definitely not worth it unless you are very very wealthy and paying that amount per year would not dent your finances.
Rutgerâs COA for OOS students is $50K+:
https://financialaid.rutgers.edu/cost-of-attendance/rutgers-2/
Compare that to Oxford for non-EU students:
https://www.ox.ac.uk/admissions/undergraduate/fees-and-funding/tuition-fees?wssl=1
The cost at Oxbridge is already among the highest outside of US and this is not even an apple-to-apple comparison.
@bluebayou, I would think you know this, but âdoughnut holeâ is typical in reference to affordability to a specific college or set of colleges, not âany college any whereâ.
@1NJParent, youâre comparing Rutgerâs total COA (which includes books, travel, $3K of spending money as well as tuition, fees, and R&B) with just Oxfordâs tuition. When you add up Oxbridge International tuition + college fee (something they donât charge UK residents but do charge Internationals) + living costs (R&B) + books + travel, the total is more around $60K/year (give or take, depending on the exchange rate). Granted, a degree may only be 3 years. But you would only solely concentrate on 1 subject (or whatever subjects are in your course) and a kid who qualifies for Oxbridge would almost certainly be able to knock a year off RU with AP credit as well.
Actually, today is the first Iâve heard the term with respect to education. I get the point about affordability of higher ed, but the term donut hole just doesnât work. It fits well for Medicare Part D, since the feds pay money up to a certain point, they pay zero for awhile, and then they start paying again. In other words, a clear hole. For higher ed, its really just linear to zero aid. (Donut hole is a bad label, IMO>)
Perhaps how you use it, but when I googled the term (again, first time I had heard it), the articles/blogs that popped up was that "I wanted to attend a pricey school, but my parents could not afford itâŠâ Moreover, community college is really cheap, so how does that fit into the so-called donut hole theory of higher ed affordability?
Based on your screen name, I assumed that you were a NJ resident. Regardless, OOS price is not relevant bcos, conceivably, such OOS student (to NJ) has their own state public to attend.
And the cost of Oxbridge is relevant, how?
I just picked one of the most expensive and well-known uni outside of US to illustrate. I certainly could have picked a more comparable foreign uni that would have significantly lower tuition/fees.
If you want to compare with the in-state tuition/fees, perhaps the comparison should be make to their tuition/fees for EU students. Both are subsidized.
@PurpleTitan
No, I didnât just compare with Oxfordâs tuition alone. Oxfordâs tuition is ÂŁ16,230 and fees for non-EU students are ÂŁ7,570. The total, at todayâs exchange rate, is less than $33K.
@1NJParent, but youâre still not including Oxford R&B (and travel and books and spending money that RU includes in their COA; also, that tuition is for the cheapest Oxford majors). The comparable RU OOS cost is $31K (OOS tuition+fees).
The doughnut hole term refers to families who believe they canât possibly afford the calculated cost of attendance without borrowing too much or draining their retirement fund. On CC it typically refers to middle class to upper middle class families whose kids canât attend their top choice college for financial reasons or to those chasing merit money. The hole in this case is making too much money to get financial aid but not enough to be full pay at private colleges. Most of these families have saved, but enough to pay maybe $40K per year, but not $70K.
Of course doughnut hole families that are well informed and practical find affordable choices for their children. In some states this has made the admission standards to the top state colleges very difficult. I donât believe there are many families that get substantial financial aid by gaming the system. Equity in a second home would count as an asset. Yes, having non-retirement savings reduces financial aid, but income is the biggest driver. Those earning that much have a lot to be thankful for. But that doesnât mean those folks arenât going to complain about the cost of college, especially on CC or be frustrated that their kids canât attend their top choice schools.
It also doesnât mean it is not a problem that many private schools have classes made up of the very rich and those that have relatively low incomes (except at very few of the very top schools). When my kids were young, I could never imagine that college would cost $70K per year! And that wages would stagnate for close to 10 years.
If someone earns at the equivalent of over $200K for many years without a job loss, health issue, or other major expense, they probably can save enough for full pay college. But if that income level only came later, or was interrupted it may not. The financial aid office typically doesnât differentiate that.
@PurpleTitan I agree with you that the cost in this comparison is similar. Now, bluebayou picked Rutgers for comparison. I think youâd agree that Rutgers is not comparable to Oxford. Itâd be an easy pick for someone whoâs accepted to both. If I were to pick another comparable uni here in the US, the cost differential would be obvious.
70k per year for an undergraduate degree can be worth it. It depends on the student and the institution. There is also a mistake that keeps being made in this forum in general. The true cost from an accounting standpoint of a Stanford or Harvard education is around 250k per year. So 70k is just a small fraction of the cost.
If âworth itâ considers a reasonable loan payback, or even the lifetime earnings NPV of the delta between attending the state flagship vs a full pay private, the answer is almost always a resounding ânoâ.
My opinion is âyes, in some cases, but no, in most casesâ. I have no study to base this opinion, just personal observations and conversations.
I live in a community with varying degrees of affluence. Listening to stories concerning college admissions has always been interesting to me. And now that my oldest and her peer group are graduates (as of last year), the outcomes from those college choices are intriguingâŠyet admittedly, still a work in progress. You can learn a lot by asking the question, âWhat would you have done differently?â Friends, who sent their kids to expensive schools, donât say the experience at the school was less than imagined, but I have heard them question whether they needed to spend that kind of moneyâŠafter the fact.
We fall into this category and actually know quite a few families who do too. I think the reason for this is because we live in a state with a strong state flagship university, UIUC. My kids and many of their friends at UIUC could have attended more expensive schools, but chose not to do so. It was over graduation weekend at a couple of parent gatherings that we talked about this topic. It was a lovely surprise to learn that many of my daughterâs friends had parents with similar values.
$130k at U of I versus $240k somewhere else was a no-brainer for us. We could afford the $240k but had confidence in both of our childrenâs abilities. We envision the spare >$100k (times 2) being used to improve their quality of life down the road. Just because you can afford something more expensive, doesnât make it the wise/best decision.
Our family is definitely a âdonut holeâ family. We only became local in the US in 2012 after moving from Europe. - so only started saving for college a few years ago. We have two Ds who will be going to college and we have saved less than the cost of 1 year in a $70K type school for each. Our EFC is over 100% but that does not mean we can afford the full cost of a $70K+ college by any stretch without significantly eating into retirement accounts. I think these costs compared to a European college are way too high and definitely are looking for the best value for the cost options - merit scholarships become very important when there is no FA open to us. In my estimation we are looking at max $50K per year costs and ideally less than $40K would start to get to good value for a top ranked private college (not Ivies though as Ds donât have the stats for these)
"ideally less than $40K would start to get to good value for a top ranked private college (not Ivies though as Ds donât have the stats for these) "
And thatâs the problem for full pay families. Unless your daughters have some sort of amazing extracurricular talent, youâll find that to get enough merit scholarship to reduce the costs of a top ranked private college to below $40k, your daughters will need Ivy level stats.
There definitely is merit money out there and you donât need Ivy level stats for all merit, but you do to get merit from top ranked schools. Otherwise, your best bets to keep costs under $40k will be your state schools and mid-tier private schools. Or, think about European schools. We figured our son could get his math degree from Imperial College London for under $150k total, which is slightly less than what youâd spend for 4 years of US college at $40k a year.
@1NJParent:
âIf I were to pick another comparable uni here in the US, the cost differential would be obvious.â
Pick Cal then (arguably the best public in the US): $42K/year in OOS tuition.
More expensive than Oxbridge, but in the ballpark. And thatâs with the GBP exchange rate being relatively favorable. If it hits 1.7 to 1, costs would match Cal.
âIn my estimation we are looking at max $50K per year costs and ideally less than $40K would start to get to good value for a top ranked private college (not Ivies though as Ds donât have the stats for these)â.
Iâm trying to wrap my head around this. What âtop-ranked privatesâ are you thinking of that wonât require Ivy-level stats (even assuming that finances isnât an issue)?
And why privates?
âThe last few studies I have seen is showing that since the ability of non-college educated young people to earn a living wage is declining, the marginal value of a BA is actually going up.â
Thanks for the correctionâI used âmarginalâ improperly in my post. I think the more subtle view is this:
- Many years ago you didnât need a college degree to be successful; however, many people were not very successful. And if you did have a college degree, you were likely to be successful.
- The interim period (where we probably still are) is that a college degree is seen as a minimum requirement for many jobs, and many people have college degrees. A college degree does not guarantee your success, and lack of college degree does not guarantee lack of success, but there is a correlation, favoring those with a degree.
- In the future, it could be that a âcollege degreeâ in itself will not be seen as particularly valuable, absent a set of skills derived from it.
What is missingâand maybe there are stats for thisâis how much value a generic college degree (that does not confer a particular skill such as engineering or programming) adds for a kid who is ambitious, capable of being successful at college, but who chooses to go into business, a trade, or the military instead of going to college. Anecdotally, I know of several kids who dropped out of college to run businesses and are doing very well, and I know of many college grads who are working McJobsâas well as several who are college grads but who earn a living as a guitar teacher, landscaper, or fine cabinet maker. (In these cases, it probably helps that these people are part of the âeducated classâ and share the culture of college-educated middle class culture with their clients.) The averages probably still favor college, but I wonder by how much, and for how long.
In many white-collar fields, the fear of overseas outsourcing is realâcomputer programming, engineering drafting, scientific research, etc. In the past 10-20 years, many in these fields have talked about how being a plumber might be a more secure and better job ultimately than being a PhD scientist or a programmerâthat talk has quieted recently, but the issue is not going away. To me, this just reinforces that idea that you need to seek value in everything, and especially with the biggest purchases of your life. I donât see the value of very expensive private college degree in most cases.
If we are talking about valueâŠreturn on investment. I would not consider simply earning a degree from âany university, anywhereâ, at a cost of $15k per year, to be any wiser than spending $70k. The key is to find the balance. For my family the balance is in the $30k - $45k range; but my kids donât want to work on Wall Street where a prestige brand might be more helpful. They do, however, want to find a job outside of a 200 mile radius of home; so for an entry level position 5 states away, until they can build a work history, a semi nationally recognized name brand university may get a foot in the door over a degree from the local directional. IMO, desirability/reputation/rank matters at this point in time, when choosing amongst US colleges. We could be wrong on that point, but that is how we hedge the bet. The donut hole exists.
âThe true cost from an accounting standpoint of a Stanford or Harvard education is around 250k per year.â
The problem with that is that colleges can (and do) play around with their accounting in all sorts of ways to come up with whatever numbers they want. Thereâs cross-subsidization all over the place at a college. All you can be certain of is money coming in and money going out.
Just take as an example an engineering school:
Thereâs money coming in from undergrad tuition, professional Masters tuition, endowment income, and research grants. Thereâs money going out in PhD student upkeep, undergrad fin aid, faculty salaries and benefits, staff salary and benefits, research expenditures, rent and other upkeep costs. How would you determine how much was spent on each undergrad in that case?
Furthermore, as someone looking at a college decision, I donât particularly care about how much a college spends. For instance, if a company A has a policy of burning $100K in front of me for every $100K they spend in salary and company B doesnât, if company A offers me $100K and company B offers me $150K, I would take company Bâs offer even though company A would be spending more on me.
What does matter is ROI, opportunities, perks, etc. (with pretty much everything outside ROI being a a luxury good).