There are significant numbers of kids with stats, educational backgrounds/goals, ECs, etc. who would otherwise be good candidates for “elite” schools who do not apply to any such schools for financial reasons. No doubt most of these kids would not gain admission (as is true with any unhooked candidate). But presumably some would. There are also kids who do apply, gain admission but do not attend for financial reasons. Not sure I have seen any data tracking that (nor do I think that would be easy data to track/gather).
But those kids exist today. And as college costs continue to rise faster than inflation, again I expect to see more kids/families in that situation. I have already seen families with older siblings going to “elite” schools but with younger siblings in that same family (with similar stats/resumes and sometimes better ones than older siblings and families in the same or sometime in better financial positions) being told the “elites” are off the table for financial reasons. And as income distributions are bell curves, the lower income levels that begins to say no for financial reasons will mean more families saying no than did so at the higher income levels.
You are talking about families who do not think that $160,000 after tax dollars is a lot. And that is on top of $120,000 in after tax dollars. And now factor in multiple kids. From everything I know, there are a significant number of families for whom that is too much. Increase the after tax dollars necessary at a rate faster than a lot of incomes are increasing and it seems to me that the number of families for whom it is too much will only increase. How many families are we talking about and how much of an impact will that have on colleges? I don’t know (not sure anyone does). Though I suspect those lower down the “elite” ladder will be impacted first.
The top 15 are very tough financially for donut hole full pay families – which is probably about from the 95th income percentile ($150k where the FA drops off) up to the low 99th percentilers (about $300k). But I don’t see that evidence that that situation is getting any worse.
For years, high stat donut-holers have been opting out of the top 15 in favor of big merit deals at the top 50. But schools like Duke continue to enroll about half their class with full payors. And their admission and enrollment stats have stayed high year after year without having to resort to expanded merit aid.
Since much of the gains from increasing income inequality have been going to the very top earners, most top 1%-ers are continuing to be able to afford to full pay for top 15 schools like Duke. And rising stock market and real estate values add donations and endowment growth so that Duke can continue to pay out big FA dollars.
According to that NY Times artile/database, Duke is one of those schools which has more students from the top 1% (19.2%) than the bottom 60% (16.5%). Until another recession hits, the pricing model for the top 15 is probably just fine.
A couple points. One, I was not limiting myself to the top 15 (however you may want to define it). We had a 10+ page discussion on how elite should be defined with the only consensus being individuals giving some type of objective appearing formula that had to be adjusted to add schools which in the individual’s heart of hearts belong on the list but which were otherwise excluded by the objective appearing formula and knocking schools off which in the individual’s heart of hearts did not belong on the list but which were otherwise included by the same objective appearing formula. So limiting the discussion to some mythical list if 15 schools as if it were somehow absolute is meaningless.
Two, if you accept the notion that above $300,000 of income (and I am not sure what the threshold should be and inr reality is will vary by family, family situation, area of the country, etc.), families can pay (easily or otherwise) $70k/year for college (for multiple kids) all it takes is incomes not keeping up with the increasing cost of college for that $300,000 threshold to be increased.
Three stocks don’t rise forever. Neither does real estate. And the next recession is a matter of when.
Four, I am not saying I think we will see a dramatic decrease in the number of kids applying to “elite” schools for financial reasons. Only that I expect that number will continue to increase and at a somewhat increasing rate.
A minor point is I do think the donut hole situation is getting somewhat worse, simply because tuition costs are outpacing inflation. Even though the economic gains are heading more to the top, I’m not sure that outweighs tuition increases making the donut hole bigger.
My earlier post overstated the “never will change.” Everything eventually changes. But I don’t think the current model is in danger of breaking down sans major economic crisis. A shocking thing to me in the Notre Dame video pointed to here earlier was the statement that they’ve gone from 25% to 50% of the high stats Catholic kids applying. I’m not quite sure how they measure it, but the idea they get 50% of any group applying was sort of stunning.
@saillakeerie
It seems this arbitrary top 15 was another CC invention utilized to frame a narrative. The wretched hooked students make it incessantly difficult for the precious unhooked to stroke their egos by getting into certain schools. However if the increase the “elite” to top US NEWS 30 national ( top ~0.85% of all Universities) and top 20 LAC’s that’s more than enough spots for all of the so called “top students”.
If one couldn’t tell, I also have an issue with whom is described as a top student, act scores are only one factor.
For purposes of a financial/full pay discussion, I think focusing on the top 15-20 makes sense. Not because of prestige or eliteness perceptions. But because the USNWR top 15-20 is where there is little-to-zero merit money.
For a CA kid/family, BIG pricing difference between #20 UCB and #24 UCLA (if you pay in-state rates), or #23 USC (where 28% of kids get non-need merit based awards) vs. the full pay zone at no merit #5 Stanford.
Depending on family circumstances, I agree that $300k (which is the 1%-er threshold) may not be nearly enough to be full pay for every kid.
But the pricing model of the top 15-20 survived even through the great recession. What data do you see that suggests Duke etc. can’t continue to find its 50% full payors while increasing tuition/room/board by 4-5% a year?
And I’ll add to the list those students who have the stats-backgrounds-everything else who don’t apply to “elite” schools simply because they don’t want to apply to them—I’d suggest that there are a significant number of those, too, particularly but not exclusively outside of the mid-Atlantic/Northeast and urban West Coast.
Could a family earning $300,000 live like a family earning “only” $100,000, saving the rest over the years to have a rather substantial amount of money for parents’ retirement and kids’ college?
“A shocking thing to me in the Notre Dame video pointed to here earlier was the statement that they’ve gone from 25% to 50% of the high stats Catholic kids applying. I’m not quite sure how they measure it, but the idea they get 50% of any group applying was sort of stunning.”
243 Turtle -- clearly not the topic of this thread. But that stat totally blew my mind as well. 50% of all the high stat Catholic kids in the entire United States apply to ND. Wow -- brand differentiation like that should be the subject of a Harvard B school case study!
But more broadly, that stat is a great example of the overall trends being discussed on this thread. Like the “flight to quality” trend. And also the trend of the admission market moving from local/regional to more national/international.
So even though the number of high stat Catholic HS students isn’t increasing, the number of qualified participants swimming in ND’s pool is much bigger (and much more competitive) than before.
Having said that, it looks like ND’s stats (apps, admit rates, student test scores, etc.) were pretty much sideways for the 2020 class and 2021 class. I do think the competitiveness in the top 15-20 really isn’t getting much worse (even though ED continues to push apps up and admit rates down at many top schools).
This might be a useful rule of thumb: Making the equivalent of a car payment for 18 years allows you to fully save college tuition for one child.
When my oldest was born 18 years ago, we were making far less than $300k, but we opened a 529 plan and started auto deducting $300 a month. We had calculated that would yield about ~$250k by the time she was done with college. Similar plan created for my son born three years later with a slightly higher contribution.
We contributed less during some lean years. And we were fortunate that our incomes rose later so that we were able to contribute the per annum gift limit.So both plans are now fully funded. But even if our incomes had remained stable, I am confident that their college funds would have remained on track for full funding.
So, put me in the camp that you need far less than $300k a year to fully fund college. The key is to start early.
It’s probably easier to go from 25% to 50%, which is sort of a doubling, than 50% to anything even close to 100%, or even 75% for that matter. Notre Dame has resisted ED, presumably because their “brand” keeps their yield good without needing ED. But yeah, the flattening might say once you get to 50% of your natural target population it gets harder.
That’s broadly the argument that things haven’t become much more competitive overall- there just aren’t that many more high stats kids to get. But I would define competitiveness as how hard those high stats kids have to work to be high stats, and there I think as long as those some of those high stats kids get bumped “down” (down in quotes because they are perfectly excellent schools), the work load will creep up.
Not a surprise. When I posted about families who are expected to be full pay but do not have the funds to do so, I expected responses like we have now seen in terms of they should have saved the money, we saved the money, etc. Took a little longer than I expected. Though the two posters who brought it were in the 5 I would have guessed might. Very predictable.
The point isn’t the could’ve, would’ve, should’ve issue (that is one that has been beaten to death multiple times here – though to be fair, that doesn’t stop a number of discussions here). Its the reality is that there are a lot of families who do not have sufficient funds to be full pay but who are otherwise required to be full pay. And from everything I see, I expect those numbers to increase going forward. Will that have a huge impact on 'elite" schools (however you define it)? Doubtful. Though I expect it will have an increasingly significant impact.
@turtle17 From what I have seen, ND’s marketing department is second to none. Friends who send their kids there say its cult like in many ways. Will be interesting to see how changing catholic demographics will impact ND (and other catholic institutions) going forward. Former catholics are about 15% of the US population (if a religion it would be one of the largest in the country). And current growth in catholics is in different demographics than has historically been the case and in ways different than the US as a whole.
@northwesty Please point me to the place where I said Duke would have trouble finding enough full pay parents willing to full pay. I will give you a hint though: I didn’t.
A lesson that I have tried to teach my kids is: “Most problems in life are predictable, and most of those are avoidable.”
Two things in life that are completely predictable are that you need funds for your retirement, and for your kids college. Most people within the top 20% of income can plan to achieve both of those goals. Now, there are plenty of reasons why such a plan cannot be executed (loss of job, high medical expenses, etc.) But there is no excuse for failing to come up with a plan and working towards it.
Nobody is required to be full pay at a private university. I wish we could retire that trope. A friend of mine who lives an upper middle class lifestyle and has four kids sent all of them to college- loan free. The parents were candid with their children- the vacations- not going to sacrifice. The vacation house- not selling it. Full freight at a private U- not happening (they are affluent but not Bill Gates rich).
One kid lived at home and commuted to a non-flagship branch of the state U. They didn’t have a major in his field of interest so he majored in something else. Not a choice I’d have made, but he’s employed and self supporting now. One dormed but went to a college two tiers below where his stats suggested he’d find his “peeps”. Also self supporting, employer paying for grad school one class at a time. Similar choices made by the other two- merit money at colleges that “kids like them” rarely apply to, and a letter from the GC assuring the adcom’s that they were NOT a safety school.
An unconventional attitude for sure- but hey, it’s not my money and they aren’t my kids. But “required” to be full pay? Nobody shows up and vacuums money out of your checking account while you aren’t looking.
@hebegebe Again, not seeking to re-litigate the savings issue. Its a subject to has been discussed multiple times here. Point is that there are families without sufficient funds. Whether its a result of bad planning, no planning, failure to execute, unforeseen circumstances, etc. isn’t relevant to the point being discussed. I know its sometimes difficult for people here not to judge and/or paint with broad brushes. And one more time, from everything I see there will be more families in that situation going forward (without judgment as to why though I am confident there is plenty of judgment here to be had). And also people who, like @dfbdfb notes, have no interest in attending an “elite” institution (lots of judgment here from many for those folks as well).
@blossom Other than the fact that no one here is advancing the trope you seek to retire, your post is spot on. Two thumbs up.
“@northwesty Please point me to the place where I said Duke would have trouble finding enough full pay parents willing to full pay. I will give you a hint though: I didn’t.”
But you did say this:
“Four, I am not saying I think we will see a dramatic decrease in the number of kids applying to “elite” schools for financial reasons. Only that I expect that number will continue to increase and at a somewhat increasing rate.”
If there were increasing numbers of families opting out of the top 15-20 game due to financial reasons, then the pool would get smaller and less competitive. Sure Duke can always find full payors to fill its seats. But the question is whether Duke can do that while still maintaining or increasing its already high level of selectivity and competitiveness.
So far, I’m seeing zero evidence of that the pool is shrinking for $$ reasons. Duke (and its peers) are as competitive as ever and the continue to maintain their very high level of full payors (I think it is around 50% at Duke). We’ll have to wait and see what happens in the coming years, but it seems so far that the pool of highly qualified full payors is keeping up with the 4-5% annual increases from the top schools. Take a look at Duke’s ED and financial aid numbers, which should give some insight into how the full pay pool is doing.
2012 Duke admitted 645 kids ED from 2,227 ED apps. 48.1% of Duke freshman were found to have need. ACT range 30-34.
2017 Duke admitted 816 kids from 3,445 ED apps. 45.0% of Duke freshman were found to have need. ACT range 31-34.
ED increasing over the last five years. Full pay percentage up over the last five years. Test scores up a little bit.