Need-based Financial Aid...a raw deal for middle class?

Paying for College
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<p>
[quote]
I certainly wish they'd take into account that he's a contractor, and the self-employment tax cannot, in fact, be waived with deductions, or that he'd been supporting a family of four on an extremely low income for 15 years with no savings, or that my mom hasn't worked in 15 years due to a severe on the job injury (and all the associated medical costs), or that my parents had declared bankruptcy a number of years ago, or any of those things that paint the ACTUAL financial picture.

[/quote]
Did you tell your school's financial aid office all of that?</p>

<p>Self-employment tax IS taken into account - 1/2 of it is deducted from AGI, and the other 1/2 is identical to FICA which is already accounted for in the FAFSA equations - that is why they treat earned income differently from unearned income.</p>

<p>The past financial history and current medical expenses are things that may fit into the colleges ability to adjust aid due to "special circumstances" -- but you have to tell them. They won't figure it out on their own.</p>

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<p>Yes. And I don't get it, but apparently none of it matters because of the way it is (unavoidably) done. I am continually told that because my dad fills out the self-employment schedule, it's his fault for not deducting his expenses. He can't deduct expenses he doesn't have, however -- he's a contractor, and all of his expenses are paid for him by those who hire him. </p>

<p>The bottom line is apparently that my dad has been filling out his taxes wrong. Alright then, fair enough -- considering how much the financial picture has changed in the past three years, there's a good chance of that. The oppportunity to hire someone to do it for him hasn't come up, though; they don't care about past debts that need to be repaid, so it doesn't matter that this extra income needs to go into that.</p>

<p><em>shrug</em></p>

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<p>I think the issue of "fairness" may also be the premise that some get a free ride- a really bright kid from a lower income family, but a well-prepared enough family that the DS is accepted to an Ivy, then with the current no lonas provision, the DS gets almost a free ride to a $50k+ school. </p>

<p>If I were the OP I would feel a bit like I am paying over $50k and subsidzing that other kid. Like medical care, where I am paying a ridiculous amount and we all know there are contracted rates with insurance companies and tiny amounts paid for the very poor, I would feel I could afford MY costs, but cannot and should not hav eto subsidize every one else.</p>

<p>If I were in the OPs situation I can admit I would have to deal with the unfairness of it all- I look at my first home in SoCal and whilst I bought for less than $200k, it is now $700k and more for homes in that neighborhood. If I lived in that home still and it was paid off, I would not be able to afford a refi, yet many privates would count that HE against my finaid.</p>

<p>I know in my case some of those schools limit the total HE assessed by a factor of income, but I think we can all admit we have been in a situation wherein we feel like we are subsidizing some one else and it hurts enough to cover our own costs, how can we pay for others, too.</p>

<p>I know, I know, the Ivys should cost way more than $50k and it is the endowments that keep it low for every one, but if you really examined the cost of the education, I would bet they could do it for less than $50k, it is long term costs that factor into endowment needs. So, yeah, a person paying full costs will experience some merited frustration, every one has had to go through it at some point in life.</p>

<p>We tend on this board to jump all over some one expressing this, but haven't most of us suffered some of this feeling- how about Curm and his D's package from great schools like Yale choosing to assign a higher EFC due to unusual circumstances, couldn't he feel some disgruntlement at hearing of a neighbor, who perhaps with no ranch lives more comfortably than he, who got a full finaid package. (sorry to use you as an example curm, but I think you are well known and respected)</p>

<p>I just think we come down pretty hard on people who are expressing a frustration we have all felt to some extent and hav erealized it is reality and have learned more and gotten over the angst and dealt with choices accordingly.</p>

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<p>calmom:</p>

<p>I used upper middle class statistics (i said middle to upper middle class in my original post so i wasn't just talking about middle class) to show that even families making $200,000 (upper middle class) are hard pressed to send their kids to private college. The natural conclusion is that families with less income (aka the middle class) would have an even harder time doing so.</p>

<p>And I did go to public school. So did my brother. We only went to private middle school for 3 years each because the local public middle school was AWFUL (and i mean awful. The average kid there scored in the bottom 30% of the state average. The teachers were totally uncaring and uninspiring. It was a bad environment). My public high school is in tatters. You should see the state of it. We had to shut down the campus because a chair on the upper story fell through the floor.</p>

<p>And yes, I am left with almost 30k anually after subtracting it. Did you see calreader's post that said families living in the bay area had to pay 70k annually in living expenses alone (not even including savings or retirement)? Here's a link to the full article: <a href="http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2003/10/01/BA14211.DTL%5B/url%5D"&gt;http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2003/10/01/BA14211.DTL&lt;/a&gt;&lt;/p>

<p>So no, it isn't as easy as you think for my family to send myself and my brother to a place like stanford or harvy mudd.</p>

<p>This thread is living proof of the fact that people assume just because a family has a 6 figure income, they can easily pay their way through just about anything. It's what the financial aid people at colleges believe so what do you know? Anyone who's income is 6 figures won't be able to get financial aid, even though without it, attending an elite private school is a huge hit (too huge for most).</p>

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<p>The story linked to above is four years old - the more recent story is here:
<a href="http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/10/17/MN0ISQEFP.DTL%5B/url%5D"&gt;http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/10/17/MN0ISQEFP.DTL&lt;/a&gt;&lt;/p>

<p>The point shouldn't be to argue over who has a right to feel anxious about college costs. They're high enough to scare most people.</p>

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<p>somemom--</p>

<p>You expressed my thoughts on this subject very well.</p>

<p>I know that for the ivies, the $45,000 doesn't cover the costs.</p>

<p>But I'd really like to know what my $45,000 buys at a LAC ranked about #40-50.</p>

<p>I wouldn't mind "buying" the product as much if I wasn't convinced that I was in fact paying for others as well.</p>

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<p>No one made you buy the product; if you didn't think it was worth it, there were lower priced alternatives.</p>

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<p>You're absolutely right, EMM1. I would just like more information from the schools in order to make a more informed decision.</p>

<p>I have always understood that institutional endowments/funds will fund need-based aid for qualified students.</p>

<p>But before I write the big check, I would also like to know if some of my money is being diverted to the same purpose. It may make a difference in my choice.</p>

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<p>vballmom--I don't know where you got your data from, but the UC's and state college fees and tuition are VERY low for in-state students as compared to most other states. Cal Poly fees and tuition run about $5500.00/year, and at UCLA it is a little over $7,000/year. We'rve moved from Calif. to Ct. to Ohio with college aged children and in-state college tuitions have risen quite a bit each place we go. Penn St. Univ. has one of the highest in the country. Of course, this does not include housing and meals, which is fairly consistent at each school and runs from 8-10,000/year.</p>

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<p>Does California have any state savings programs for college? Here in Michigan we have Michigan Education Trust. We paid less than $8,000.00 for four years tuition and fees at any Michigan public university when our son was little. Plus the state gives out scholarships for kids with good ACT scores.</p>

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<p>rcefn - I don't know where you got your data from, but UC housing costs are not $8-10,000/year. The average across all nine undergraduate campuses is $11582; Berkeley has the most expensive housing at $12482. If you take into account books and incidental expenses, the total cost is about $23,000 for a UC.</p>

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<p>shyanne - Michigan's plan sounds terrific! It would be great to have something like that in all states. Here in California, each UC campus offers a limited number of Regent's Scholarships that are awarded for academic excellence. We also have a state-funded Cal Grant program that pays tuition expenses (not room and board), but it is linked to both GPA and income. If you have a 2.0 GPA, the family income must be less than $38500 for a family of 4, and if you have a 3.0 GPA, the family income must be less than $73,00 for a family of 4. These are all terrific programs, but it would be really nice to also have the kind of savings plan you describe. We do have a 529 plan. Some states offer income tax deductions for 529 contributions, but California doesn't. California has a rich economy, but the state struggles to find money for public education at all levels. Last I heard, we were 49th of 50 states for per-pupil spending on K-12 education.</p>

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<p>A parent chimes in here. The OP started a good thread and unfortunately got shot down. Go back and re-read the 1st post of the thread.
Here in the metro NYC area you can spend up to $1 million for a studio apartment. Most studio apartments are well over $100K. Middle class houses in my NJ town are over $500K. They are very middle class, with 1 car garages, unfinished or part-finished basements, 3 bedrooms, usually 1 1/2 baths, and roughly 2000 sq ft on < 1/4 acre. That's a pretty median house in terms of nationwide house stats, not a luxury house. Property taxes in NJ are the highest in the nation (ours are over $13K) as is our state income tax. The OP didn't factor in the Alternative Minimum Tax for the hypothetical family, the very retrograde tax system that takes even more money off the top. Nor socail security, medicare, unemployment insurance, health, life, car insurance- these are NOT optional outpourings of mobney and they add up to tens of thousands of dollars each year. And if a hypothetical family has other children in school, they should not be expected to sell a house and uproot (I won't even begin to go into being tied into jobs by geography and perhaps one doesn't want a 2 hr commute each way!) to send 1 child to college. An AdCom at JHU told my DH and me how much of a screw job middle and upper middle class folks really do get from fin aid formulas. The state U in NJ, Rutgers, is not great. Our older D just graduated from there in May so we know 1st hand why it is not a match for our 2nd D, who applied ED to JHU. We are wrestling with fin aid formulas now- we make nowhere near $200 K but we did put away into a 529 plan since D #2 was born. Vacation? I only take vacation days when I travel for work -a couple of days here and there. As a family we have not been away together in 5 years and that was to a family wedding in Detroit over a weekend. Two vacations a year? I WISH.</p>

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<p>Shyanne,
California Gov. used to give out scholarships to kids who earned 5's on their AP tests. Currently, there are no merit based scholarships for higher achievers who are in the middle class.</p>

<p>Currently, state college tuition is reaching $30K level ($120K for four years), and it is a stretch for any family who has to take loan to pay for it irrespective of whether you are in lower or upper middle class.</p>

<p>Most of those families who are currently earning six figures may not have had six figure salaries throughout their carriers. I sympathize for those families.</p>

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<p>Shyanne,
California Gov. used to give out scholarships to kids who earned 5's on their AP tests. Currently, there are no merit based scholarships for higher achievers who are in the middle class.</p>

<p>Currently, state college tuition is reaching $30K level ($120K for four years), and it is a stretch for any family who has to take loan to pay for it irrespective of whether you are in lower or upper middle class.</p>

<p>Most of those families who are currently earning six figures may not have had six figure salaries throughout their carriers. I sympathize for those families.</p>

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<p>I'm sorry if I didn't understand the original statement about California tuitions, Calreader. As I read it, vballmaom stated that TUITION for in-state students ran $25-29,000/year, not including room, board, books etc. Of course, adding these components makes the total cost much higher. And room and board always depends upon where the school is located. At Cal Poly, the cost is about $8500.00 for room and board--of course it is much higher at UCLA, but because the actual tuition and fees are so low, the total cost of everything is still very affordable compared to other states. I loved living in California and attending the public university--my nephews and nieces are all attending the UC's and Cal Poly--I feel that they are the best bargain in the Country--having to leave the public university system was my biggest regret about leaving California.</p>

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<p>I'm trying to make a point about need-based financial aid and how it doesn't do what it is supposed to. All it does is enable the very poor and the very rich to attend a school and does nothing for those in between.</p>

<p>A middle to upper income family has better access to good K-12 schools than does a poor family.
Consequently, their kids have a better chance at getting merit aid from colleges or by gaining admitance to one of the colleges that meet 100% of need.</p>

<p>My oldest's freshman year- we made about $55,000 before taxes. Not rich, but not poor.
Our EFC was $12,000, but the college made up the difference- including a great deal of self -help.
EFC is not meant to come solely from income but from savings and loans as well.
Work study paid for her books and personal expenses.
Stafford loans are available to every student, ( unsubsidized), even Jennifer Gates
Lots of ways to finance college. D had taken a year off as well to earn an education award by doing volunteer work through Americorps.
It is expensive, no doubt about it.
However, I think part of the problem is because families who make double or triple what the average American family does, are used to having " a little more".
They like it, they * deserve* it, they work hard for it and they want to keep getting a * little more*.</p>

<p>Living in an expensive area, sending the kids to expensive need based only schools is part of the package. So many parents are piqued that Ivies don't offer merit based aid.</p>

<p>Well I understand their frustration, but really think out of the box and expand your choices to include schools that do offer merit aid, &/or are more affordable.
:)</p>

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<p>Arg. Emeraldkity4, the <em>whole Bay Area</em> is expensive! All ten counties, not just one or two ritzy towns or neighborhoods. (Though we certainly have those too.) Are you really suggesting that people of moderate incomes who have children should not live in the Bay Area, even though it's one of the main sources of jobs in the state? Sounds like it.</p>

<p>I do volunteer college counseling on financial aid at my children's public high school. I was helping a couple of families last year who each had an income of $55,000, just like yours. Their EFC's were lower, perhaps because they had very little savings. Their kids had applied to San Francisco State and San Jose State, because those schools are less expensive than UC's and closer to home, which is a big factor for many immigrant families. Both of these families got precisely zero in grants. They were offered large, unsubsidized student and parent loan packages, with no work-study. One of these families had two parents working four jobs. One of the families had a single mom.</p>

<p>You were lucky in your financial aid awards, which is great. But not everyone shares your luck, and it's not because they have chosen to live in big houses or waste their money in other ways. You are making unrealistic assumptions about other people's lifestyles.</p>

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<p>Calreader,
I don't think the examples that you have given are comparable to the OP's (200k seeking an elite private vs. 55k seeking a state college).</p>

<p>I agree with you about the system being broken for the later, which I do consider middle class. But I'm wondering if it isn't a problem with both FAFSA (which determines how much need there is) and the state college system (which determines how need is fulfilled). I'm not putting down California, my state is in exactly the same position, with very poor funding for education, resulting in many kids finishing at a state college with large loans.</p>

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<p>It sound like California colleges cost about the same as Michigan colleges. Where I live kids don't even think about attending Harvard or Yale. Their tuition alone is equal to our income (before taxes).</p>