Let's pool our experiences to add some financial transparency to this college process

Parents Forum
1

Hello,
Not sure about others, but as a parent of 3 kids in high school, the oldest a senior, I am really frustrated by the lack of financial transparency in this college application process. From a financial planning standpoint, as a 50 year old dad with a 47 year old wife, paying most of 12-15 years of college makes it hard to figure out when it’s time to retire! Oh, what I would have done 2 years ago had I known then what I learned the past couple weeks. Let’s save others from that experience.
I am proposing we all share our kid’s stats with the results of financial offers from respective schools. I’ll lead off and if we could all try to post in the same format, might make it easier to read. Add info I am missing and I will do the same:

Kid stats: 4.8 GPA/3.98 UW. 35 ACT (not super scored), 1 Uconn ECE college class (junior year) and 8 AP classes (Chem: 5, APUSH: 5 both in junior year. Physics C-Mech, Calc BC, Stats, USgov, Macro/micro econ, all currently taking senior yr.)
EC: 4 years varsity tennis (captain senior year), 2 years soccer, Nat. Honors Society, commended psat, 2 years mock trial, 2 years model u.n., volunteer hours,
Looking to major/double major: Finance/Math or Econ/Math with the goal of financial analyst. (could always change!)
Family/Financial stats: parents married (50 and 47 yo), applicant has 2 sibs ages 16 and 14 (junior and freshman)
AGI: 122k in tax year for FAFSA/CSS profile, home equity: 225k, retirement savings: 300k, actively collecting pension of 47k/yr
FAFSA EFC: 33k/yr
Schools applied to in no particular order: Carnegie Mellon, UPenn, Duke, Northeastern U, Bentley, Uconn, UVM, UNH, Syracuse, Lehigh, Bucknell,
Results thus far:
Northeastern: Admitted but no honors. 22k/year Dean’s scholarship, Net cost: 35k/year, including 5k/year loan (so really 40k/year). Spoke with financial aid officer who said our home equity really hurt us. Research revealed Northeastern expects parents to use 5% of home equity per year. Seriously considering refi and put cash out into differed annuity.
UNH: Admitted honors. total 15k/year scholarships. No other info yet.
UVM: Admitted honors. 18k/year presidential scholarship. No other info yet.
No other info util March.

2

@chipperd
The online net price calculators show the estimated net price above estimated self help (that is, before deducting student loans and work-study). So if you follow that standard to state the net cost, for Northeastern your net cost would be $40K.

Are you a Connecticut resident? UNH and UVM are charging you OOS tuition rates?
So, their net costs are each around $40K? Are those merit scholarships (not need-based aid)?

3

You should consider cheaper schools. UConn? Schools with full merit for those stats?

You can put the equity into an annuity, but then that would be an asset. That is worse for FAFSA only schools.

4

Financial aid is based on the following premise:

Cost of Attendance - EFC = Demonstrated need.

At many places, your FAFSA EFC is going to be the minimum you have to pay. The only thing the FAFSA really does is determine your eligibility for federal aid (Pell grants, federal work study, SEOG, subsidized or unsubsidized loans) and in some cases state aid (in some states you will still have to apply for state aid)

At schools that give a lot of their own institutional aid, they will require either the CSS profile or their own financial aid form. Aid will be given on a combination f the federal methodology (to determine your eligibility for federal aid) along with the institutional methodology (to determine your eligibility for their money)

Most FAFSA Only schools do not meet 100% demonstrated need, They Gap. You are responsible for filling the gap.

For Northeastern, Your net cost is $35k/year. Your FAFSA EFC is 33k (that is the minimum that you will be paying anywhere unless your son can get full merit scholarship). Once you deduct your FAFSA EFC, there is approximately 2k remaining (this is less than the 5% home equity that they are recommending you tap in to).

Billable cost at UVM is $53,408 for OOS. You are not eligible for Pell or state aid.
With a scholarship of 18k and an EFC of 33k, you will be responsible for the Balance -$2,408. Do not expect any additional aid.

UNH COA as an OOS $47,570. Price after scholarship $32, 570 Your EFC 33k. Most likely no additional monies are coming as you have no demonstrated need.

On the front end, run the net price calculator at the beginning and have a realistic conversation with your kids about how much you can pay or borrow for college. Talk about how you are going to finance this over multiple years (each kid needs a 4-year plan on how to pay for college).

In hindsight perhaps you needed to cast a wider net, where your son would be guaranteed good merit $$ for his stats).

5

The winners in the annuity market are the issuers of the annuity-- they have their fees front loaded and are usually very profitable.

You are 50 and are currently collecting on a pension worth almost 50K per year???

6

What do you mean by “lack of financial transparency?” Every college has an NPC which should give you a pretty good estimate of cost if you have a typical financial situation. They’re not so accurate for the self-employed, for example. You can figure your own federal EFC because the FAFSA formula for that can be found online. How a school that uses the CSS profile figures your need may be a mystery. I’ll give you that one.

Sure there are things you can’t know at application time, like if your child will win a competitive scholarship or what a coach may offer in a non-headcount sport, but those things really are unknowable to the institution itself, too. It can’t pre-select the competitive scholarship winners and then make everybody go through the process just for giggles. It can’t see your huge medical bills until you file an appeal.

What is it you want an institution to be able to do at application time to make it financially transparent?

7

@chipperd I’m not sure that the issue is the lack of transparency but instead the schools your student chose to apply to. With your child’s stats, there are many schools where he/she could have applied where the total costs would have been 1/2 or less of the amts you are posting.

The collective wisdom of CC would be to make sure your child applies to a financially affordable school that he would be happy to attend.

8
  • Interesting concept. How are you different from College Abacus?
9

We had one school (Ithaca) where the FA package offered was not that close to the NPC. I suspect it was mostly due to our home equity; our house has almost tripled in value, and it’s not that far from being paid for.

10

, that is a great resource. Thank you. I wish the tool included gender in their calculations, given that some schools are giving different amounts based on gender (engineering schools to be specific).

11

i assume that you do not qualify for need based aid, at least at CSS profile schools. If admitted to Penn you will be full pay, no merit aid offered. Duke offers a small number of merit awards but they are intensely competitive. Again likely full pay there too.

If you are a CT resident, why would you expect a lower cost at UVM or UNH than you would have at UConn? UConn is a better school in my opinion that UNH or UVM. OOS schools are looking at you as a source of revenue.

12

@mardong RPI’s NPC includes a field for gender.

13

Of course, each college may calculate EFC its own way, which may be different from the FAFSA EFC.

However, colleges’ net price calculators can provide more transparency than there used to be before there were net price calculators (although the quality of such does vary by college).

14

@mardong " that is a great resource. Thank you. I wish the tool included gender in their calculations, given that some schools are giving different amounts based on gender (engineering schools to be specific). "

What is a great resource?

15

Your son has excellent stats. There are a lot of places that would give him excellent merit aid. Also, I am not clear on whether you are including your pension income in the $122k/year.

16

Also live in New England. Two oldest with similar stats. On paper financial situation is full pay (we were horrified at the total cost of $900K but we had a plan) but in the reality is that it is very unlikely that any of my children will graduate with their father, the bread winner, living. We only look at room, board and tuition, children are responsible for the rest.

First, our rule of thumb was $100K for instate flagship, $200K for private with merit aid and $300K for top tier (Penn, CMU) meets full need private. OOS is more murky and generally only benefits those that cannot get accepted to instate flagship, specific major with reduced tuition in New England consortium or for academic top tier powerhouses UVA, UMich, Georgia Tech, Berkley. My rule of thumb has proved to be accurate without regard to gender (one male, one female). Private schools know who they are competing against and the $25K/yr merit scholarships arrive - they also come with travel and research stipends and a few other perks. Make sure scholarships are guaranteed for 4 years and determine the required GPA.

Second, no one cares about preserving a nest egg for child #2 and #3. They only care about students currently enrolled in college and the total EFC. Once your 16 year old is in college, your EFC will be divided by 2, half for each child. This only helps if child #2,#3… (your assets will be depleted) is bright enough to get accepted to meets full need schools. Keep in mind that the top tier is telling me this knowing that my children are at the same school with a terminally ill parent, the bread winner. They do not care if we still have a 14 year old, they tell me they cannot be sure he will attend college, so it is not necessary to split the non-renewable assets that we currently have.

Your term of paying out could be for only 6 years and you will have 3 of those years with two in college; likely greatly reducing your total cost. Tell your children that they each only have 4 years to make it work. When our oldest both chose a top tier school, we said four and done, year 5 and grad school is on you. And after a devastating diagnosos, you may need to move home, work and help figure out how to pool resources for the youngest.

Is it worth it? I’m not sure, ask me in 10 years. Thriving students able to compartmentalize their studies is a priority right now. At least I’ve figured out college rules, fair or not, they are clear. Healthcare and the lack of interest in worrying about the terminally ill still raising children in what should be the prime of their lives, that’s an unsolvable sinking ship. Everyone wants to sweep it under a rug… Our children have an early look at the real world… Sometimes, I wonder of they will be better equipped to solve some of these problems…

17

@suzyQ7 - I guess the poster violated the TOS. It was their first post and they were touting their own service (try googling the name of the poster, which I referenced in my reply).

18

You should also look at schools that may give merit scholarship. Only you know how much you can afford per year. You have to find financial match schools for your kids either with lower CoA or affordable after need and merit based aids. The school list should include those appeared affordable on NPC first and then add some schools that may become affordable after potential merit aids.

19

Last year I also experienced that some schools simply look at what you have saved now and want it all before they consider aid. As parents, we have to look at this as a four year cost and we want to divide it out evenly. Colleges now simply put this huge risk on the families.

My wife and I were both blessed to be able to go to any college we could get into. We had the discussion with my father-in-law about our angst at maybe not being able to offer it to our own kids. His response was “none of our friends kids can do so. It’s a different ball game now.”

Very interested to follow this thread. I’m just starting the college search process with my second child.

20

Thanks for the responses. I obviously don’t feel this is a financially transparent process at all, NPC calculators included. They may spit out a number, but you have very little sense how they arrive at that number and therefore how you can plan. Did anyone else here know that some schools expect you to use 5% of your home’s equity per year? Or that some cap that at anywhere from 1-2x annual income and everywhere in between? And that’s just one factor of the calculation. And of course, a school can do as they please regardless of the number their NPC spits out and how do you know what they will do in your situation? Where else in the world would you be looking at purchasing a service in the 6 digits per kid where you wouldn’t want to know all the ins and outs and not be able to get that info?
Yup, frustrated and looking for answers.
Feel free to share your experiences or thoughts. Thanks for the input.