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

Paying for College
81

<p>FYI CalMom, my parents did not wake up one day earning 6 figure salaries, its not like they had the resources to save for my college fund for 10yrs. </p>

<p>Now that they have just hit success within the past few years, all of the money must go to taxes, taxes that pay for free camp for "poor" kids or free lunch, when my parents can't afford to send me to camp after paying taxes and I have to pay $2 for a terrible lunch. The financial system is basically saying: better to make less and get free rides than make money and lose all of it to government.</p>

<p>I mean, I'm gonna have to pay like $500 total in college applications while others pay $0! Where's the middle ground?</p>

82

<p>That's simply not true. I don't know what your parents tell you, but "all" the money does not go to taxes. Some of it does, but not "all", and not "most". Dadx4 did a very good job of laying out a sample payment plan combining savings and loans -- if your parents didn't make enough to save in the past, they certainly are in a position to borrow and make payments in the future.</p>

83

<p>I hate the fact that some people who earn quite a bit, or whose parents earn quite a bit, have the feeling of superiority at times and feel like they're the ones paying for everyone else, as if they are the only people who pay taxes. Those "poor" kids with that free lunch might have it because they can't pay for the $2 for lunch. Then there are those that can, and do, but don't want to. If that's the case, then don't. I didn't have lunch for the last 3 years of HS, not once. </p>

<p>I've been to a "Free Camp" that asked the teens coming to give what they could towards the $400 per person. I gave $100, and so did my friend. That was a lot to me. Then there were rich kids in mansions and driving new cars that came and gave nothing at all. Nothing. </p>

<p>I would rather grow up in a decent home living a decent life for the first eighteen years of my life than go without and have a Pell Grant for college. There are lot of students who, even with low EFCs, can't afford school. Federal aid may help some, but it certainly doesn't foot the bill for all those poor students. You can make a dollar over the maximum and be out of the running, but you will still be just as poor as the person making a dollar under the max.</p>

<p>When I first found out that I wasn't going to be able to afford college, I envied a friend who got a pell grant and is now going to college free. Then I think about the fact that she's never had her own room in her family's 2BR/1BA house with 4 kids. I think about the fact that when we all went to the mall, she never bought much more than lunch. When everyone was getting their Driver's license, she didn't bother because there was no chance she'd get a car. Now, she's in college free. I wish her the best, because there's no way I can say I need it more than she does. Much less all of these kids that make a lot more than my family does that have a lot more than we do. </p>

<p>I apologize if this comes off as harsh, mean, or as if I'm ranting. It's not against anyone in particular. But when you see all of this "Poor me, it's not fair" stuff over and over from people with incomes over double of most families, it can prick you the wrong way and get quite old.</p>

84

<p>Majesa,
Excellent post that also shows a lot of appreciation and empathy.
Since you mentioned your not being able to afford college, please also start a thread asking for advice for yourself. Whatever your reason for feeling you can't afford college, there are still ways of going to college. and doing so without taking on staggering debt. Lots of caring, knowledgeable people here can help you find your options.</p>

85

<p>"Now that they have just hit success within the past few years, all of the money must go to taxes, taxes that pay for free camp for "poor" kids or free lunch, when my parents can't afford to send me to camp after paying taxes and I have to pay $2 for a terrible lunch.</p>

<p>Puh-leaze. Find out something about the tax system and where your money goes.
It also seems that if your parents are making a decent income and "can't afford to send you to camp" then they need to reconfigure their budgeting. They also need to stop lying to you because paying taxes isn't why they can't afford camp.</p>

<p>And if you want to go to camp so bad, then get a job and pay your own way.</p>

<p>Take a very close look at the lives of poor people and see how lucky you are. Presumably, you have health insurance, can afford to get your dental work done, have your own car or are able to get transportation with your parents' cars, which are in good shape; don't have to work after school and on weekends to help support yourself and your family....</p>

<p>As for paying $500 to apply to college, that's your choice. No one is making you apply to those many colleges. Poor kids may be able to get fee waivers, but most still can't apply to the kind of colleges that you can. They lacked attending the decent schools that allowed them to take AP classes, get useful info from guidance counselors, and taught them well enough so that they did well on the SATs.</p>

<p>Poor kids also can't afford things like transportation, wardrobes, etc. that would allow them to go far away to school. The things you take for granted -- such as having parents who can drive you and your belongings to school, and being able to buy things to furnish your dorm room, etc. -- are things that poor kids don't have.</p>

86

<p>Revise the FAFSA? New in IHE today -
Simplicity vs. Equity in Aid Applications
<a href="http://insidehighered.com/news/2007/10/26/aid%5B/url%5D"&gt;http://insidehighered.com/news/2007/10/26/aid&lt;/a>
"Keep it simple and low-income students will fill it out — and go to college...Because of the current rules on the federal aid forms, many said, families of means, families with the ability to pay for their children’s college education, are found eligible for federal aid."</p>

87

<p>As someone from an upper class background, I am very offended mz innocentz post. I absolutely hate it when people pretend like the financial aid that lower income families get for college is worth more than growing up in a middle/upper class family. I think that's just a ridiculous claim to make. </p>

<p>mz innocentz was completely off-base in her post.</p>

88

<p>"Grow up. As the previous poster noted, $200,000 per year is only middle class to someone living in some posh suburb that is out of the reach of the vast majority of Americans."</p>

<p>Not necessarily. NYC Garbageman and admin living in a very middle class neighborhood in the city with that income. No college for us. Definitely not wealthy.</p>

89

<p>I find it very ironic that those who either appear to be recipients of financial aid or sympathize with those who do have recommended that the hypothetical upper-middle class family should have to reconsider their college options. I hear the argument time and time again that financial aid exists so that the lower class does not have to face the choice of obtaining a good education or obtaining an affordable education. It's a double standard to expect that the upper-middle class deserves a burden of facing these tragic conditions while the poor do not. Not having money nor having money makes anyone superior over anyone else: I'm simply arguing for equality. For both sides of the issue, while I cannot expect a person with few assets and an income below the poverty line will produce money they simply do not have, neither do I expect a rational member of the upper-middle class to make life style changes that a recipient of financial aid wouldn't ever be expected to. Sure, everyone should be living within their means, everyone should be saving for college 18 years ahead of time rather than expecting colleges and the government to swoop down and save them. At even modest growth rates, we're talking about a few hundred dollars a month over 18 years amassing to $200,000 today. How many who cry for financial aid spend their money on cable? satellite? Starbucks coffee? new cars? gas-guzzling SUVs? designer clothes? When you think of the things everyone spends money on, many of them are truly unnecessary. They obscure the simple reality for us that we can in fact afford things such as massive college tuitions with just a little bit of wise financial management.</p>

<p>I say this because after working for 6 years and saving literally 99 cents of every dollar (after taxes) I rightfully earned by the sweat of my brow in savings bonds and a small retirement account (I appreciate the miracle of compound interest ;) ), I too will have to sacrifice my work at the altar of college expenses. I could have just spent it all and enjoyed it, but where would I be but looking for a hand out?</p>

<p>(For reference: I do not accept the argument that making one additional dollar costs you an entire dollar in taxes to the government in order to subsidize those who don't make as much simply because it's not true.)</p>

90

<p>"while I cannot expect a person with few assets and an income below the poverty line will produce money they simply do not have, neither do I expect a rational member of the upper-middle class to make life style changes that a recipient of financial aid wouldn't ever be expected to. "</p>

<p>? Even with extremely generous financial aid (which is very rare), low income people still have to make sacrifices to go to college that middle and upper income people don't have to.</p>

<p>For instance, low income students often help support their parents, grandparents, siblings with the jobs they work during the school year and summer while in high school.</p>

<p>Only a small proportion of people in this country don't have to factor finances into their college choices. The more money one has, however, the more options one has when it comes to colleges. I see middle class and affluent students complaining regularly on CC about having to go to, for instance, "just" their in-state publics, when low income students may have difficulty affording living at home and going to the local community or 4-year public university. Low income students also may have to take out a staggering amount of loans to help cover the costs of public colleges that middle and upper middle class students are able to go to without having to take out loans, and while also having new cars, new computers, cameras, etc.</p>

91

<p>Sonofsam -- what you and others at the upper end of the economic spectrum don't seem to get is that (a) need based financial aid is not a guarantee, and (b) you have more money.</p>

<p>As far as I know there are no colleges that guarantee to meet the FAFSA EFC with grant aid -- all colleges giving need-based aid will take a variety of factors into consideration; the vast majority do NOT promise to meet "full need"; those that claim to meet "full need" are making their own determination of "need" -- and most college financial packages will involve a significant amount of loans. </p>

<p>The year that my d. started college, my AGI was about $36K. My d. qualified for a Pell Grant. The college financial aid package from my daughter's elite "full need" meeting school still required us to pay almost $15K. If I add back the loans and work-study (into the "we pay" rather than "we get" column), then our cost of attendance was over $17K. I actually paid out about $12.5K -- the rest came from my daughter's earnings and from loans. </p>

<p>That also was the best offer she got from a private college - the other colleges (including those purporting to meet 100% of need) wanted at least $10K more from us. </p>

<p>I am quite sure that a person who has net earnings that are 3 or 4 times as much as mine ought to be able to pay out 3 or 4 times as much as I do. So if I can pay $12.5K for my kid, nothing is going to convince me that the $200K earner can't pay $50K if they want to. </p>

<p>The problem is that many well-heeled people also have a misplaced sense of entitlement. I'm willing to sacrifice and work hard to send my kid off to an Ivy-affiliate, and my kid is willing to do her part and work hard as well -- but it seems that the big earners want something they can pay for out of pocket without thinking about it -- just write a check and be done with it.</p>

<p>Well- that isn't the way it works. </p>

<p>I would be absolutely delighted to trade places with any one of the high-earning whiners. I would be delighted to earn $200K next year, take whatever tax writeoffs I had and pay my alternative minimum tax, pay the full cost of my daughter's tuition & housing, and forget the whole financial aid thing. Why? Because I would end up with more money in the end. The issue isn't how much I pay out -- it is how much I have left over after the payout. </p>

<p>My 2 questions stand to the high earners:</p>

<ul>
<li>How much did you save?</li>
<li>How much do you plan to borrow?<br></li>
</ul>

<p>It isn't a matter of ability to pay when a family with a $200K income decides they can't afford private college for their kids; its a choice -- they are earning more dollars each year than the full cost of tuition and they have a variety of options on how to spend. </p>

<p>I'm not earning more than the full cost of tuition, and I'm not earning enough to qualify for private loans. (They look at income to debt ratio and say no). However, the financial aid system makes it possible for me to send my kid to a private college, if she got accepted to a college which would offer sufficient financial aid, and if she and I are both willing to sacrifice and take on loans. </p>

<p>The $200K earners aren't looking at what is possible or not -- they are envious because it isn't easy. I think in addition to being envious they are pretty darn stupid, because they keep leaving the income part out of the equation. </p>

<p>I mean, are there any takers for my swap income & costs offer? It's a good deal -- you give me your income for the next couple of years while my d. is still in college and pay our EFC, I'll give you mine and pay yours.</p>

92

<p>


</p>

<p>Addendum to above offer: I'd like to swap lifestyles as well.</p>

<p>The other part of the idiocy of the above statement is the assumption that we median income earners have been living the same lifestyle as the upper income folks. You can't give up what you never had in the first place.</p>

93

<p>From a previous post:</p>

<p>My 2 questions stand to the high earners:</p>

<ul>
<li>How much did you save?</li>
<li>How much do you plan to borrow?</li>
</ul>

<p>........ I think in addition to being envious they are pretty darn stupid......</p>

<hr>

<p>Ok I'll bite. My income this year is nowhere near $200K, in fact my net income is negative and I'm living on savings. However, several years ago I had a couple of $200K years. For son #1 (high school junior) I've saved $100K, and for son #2 (high school sophomore) I've saved $65K. Plan to borrow: zero I hope, but possibly $10K or so for son #2.</p>

<p>I'm not envious of people who don't have high incomes, nor am I envious of people who do. And I hope I'm not pretty darn stupid, although my sons (who, now that they're teenagers, know everything) might disagree ;-)</p>

94

<p>The financial aid picture is just a snap shot of each families CURRENT income picture. My family is fortunate to be upper middle class according to current income. However, this income just started 2 years ago and to simply assume the family making this high income should have been socking away since birth is not always reasonable. It wasn't always easy raising a family of 8. Yes, that too is a choice. </p>

<p>I will not be able to just select any college irregardless of cost. I have 5 sibling following me in this adventure. I am hopeful to get work study and a decent deal on loans. My parents can afford to kick in $10K per year and will borrow another 15K per year. Add that up for 4 years and six kids. It is difficult for just about every family. We had thought home equity would be an option, but values are declining and lenders are tightening up the amount of equity they will let you borrow. There is just nothing there. I do not think the system is unfair, but understand that paying for colleges even for someone like the OP is not as easy as some of you make it out to be.</p>

95

<p>I think what sonofsam is trying to say is that a previous poster said that "rich people" could move to a smaller house to pay for college. Calmom, you are living in a house you said is worth over half a million. Why can't you move? </p>

<p>I'm one of those high earners. My adjusted gross income minus federal taxes paid is only $5,000 more than my efc. My health insurance is $12,000 per year, and the taxes on my tiny house near the murder capital of the nation are $2500/year. Somehow, I managed to save $180,000 for my child's college over the past 18 years. I live in a house that's barely worth $100,000, drive a 14 year old car, clip coupons, buy clothes @Target, don't take vacations, and gasp! don't even have cable.</p>

<p>How many hours do you work? If it's not over 40, you're not trying hard enough. What happened to the days where kids worked their way through schools? I realize you can't do it now, but there's no reason a kid can't work at least 10 hours/week during the school year and full time in the summers.</p>

<p>When I went to college, I worked constantly. I didn't know anybody that got financial aid. I think there was a stigma attached to it back then, not a sense of entitlement/lottery like there is now. I blame all the financial aid given out for making my tuition so high. Where do you think the schools get the money for their endowments from? If they didn't given out financial aid, they could lower tuition for everybody.</p>

<p>Do we really want to live in a socialist country? I don't. BTW, for those of you that do get financial aid, please don't rub it in the faces of those that are subsidizing you, that you have a half million dollar house.</p>

96

<p>I have a half million dollar house and believe me, it's not rubbable. It needs a great deal of work and is on the lower end of the spectrum in NYC. We make a lot of money now but have only done so for the last several years and the making of it involves two jobs for my husband and 65 hours per week for me. Prior to that, my husband made less than $20,000 per year and we were raising three kids. We can't leave NYC because he barely graduated from high school and has no transferrable skills so can't leave his city job which has a residency requirement. My daughter goes to an expensive private college and we get zero financial aid. She chose a school that's probably lower than she could have aspired to, received scholarship money, and worked from the time she turned 16. If she maintains the GPA required for her scholarship, she'll get out of school with a small but manageable amount of debt. We feel proud, humble and grateful that our daughter is where she is, but we worked very hard for it and I can assure you that we aren't rich.</p>

97

<p>vballmom, obviously if you've managed to save a combined $165K for your kids' college, you're pretty smart. If you now have no income, then you'll have a low EFC -- if those funds are in a 529 or in your own name, then those assets will add $9K to your EFC (if that is ALL you have, then your EFC will probably be even less). So look where your savings have gotten you: $165K in the bank-- and a financial aid system that lets you hang on to 94% of it each year. </p>

<p>I'm sorry that your income situation isn't what it once was, but I think you will agree with me that its a lot smarter to save while the cash flow is good rather than get tied up into a higher end lifestyle, and then be complaining years down the line about how unfair the financial aid system is. Those of us who have never made $200K annually in our lives don't have a chance to build up that kind of nest egg either. </p>

<p>My comments above were directed at the folks who don't save and refuse to consider borrowing, and then think the system is unfair because they don't want to pay out of current income while they are still earning the $200K either.</p>

98

<p>
[quote]
Calmom, you are living in a house you said is worth over half a million. Why can't you move?

[/quote]
70% of the homes in my county are priced higher than the one I lived in. My house is only about 1100 square feet. And what my house is worth is different than the amount of equity I have -- I still owe almost as much on my mortgage as I did when the house was purchased. I looked online at a real estate being sold in the lowest income area of SF (Bayview/Hunters Point) -- and houses smaller than mine cost far more. So there's no such thing as a cheaper house to own in my area. I live in a very small, low-end house at is it. I'd have to move out of state or to a rural area. If I moved, I'd also lose my chief source of income -- which makes no sense. If I stayed local and simply rented, the rent I would pay for a small apartment would be more than my monthly mortgage .... so again that makes no sense. </p>

<p>I think you just don't understand the California real estate situation. I live in a little tract home that was built in the 50's and sold for around $15-$20K. There have been no significant improvements or add ons to the property. It's a home that would probably cost $150K or less to rebuild (at least according to my insurer's estimates) sitting on a postage-stamp size lot on land that's worth $500K by itself, simply because of the location. So basically, it would probably cost me as much to buy an equivalent size lot and erect a tent. </p>

<p>But I haven't been complaining about my situation -- my home equity is considered by my daughter's college, which is one reason why I have to pay well above the amount of the the FAFSA EFC -- but I don't object to that practice. I understand that I am financially stronger because I own a house and that there is no unfairness when the college chooses to look at my equity. I also understand that even though I pay more than a parent with similar income who rents, I am far better off because I own the house. </p>

<p>I'm talking about what makes good economic sense -- and it makes sense for me to stay in my home. It would also make sense for me to earn more money if I could, even if it meant that financial aid to my daughter decreased, because more money is better than less. In fact, since I am self-employed, the first thing I did after my daughter got accepted to her college and I looked at the numbers was raise my rates. So my income went up about 10%. What happened to my EFC? It went up, too -- my d's grant for year #2 in college is a lot less than the grant for year #1. But I am making more money. More money is better than less money, even if I have to pay more to my d's college. </p>

<p>The point is, I'd be better off with $200K of income paying full freight for my daughter's college than I am with an income of $50K paying about 40% of the total. Every extra dollar I earn results in a very slight improvement of my long-term economic situation overall, even if EFC goes up -- and once I hit the the point where I no longer would qualify for need-based grant aid (maybe around $100K?) every additional dollar of earnings would be mine to keep, since my payout with college expenses would no longer rise with the income.</p>

99

<p>


It sounds like you are making money because both you and your husband choose to work very hard. From what you say you could probably choose to work less -- say, one job for your husband and a part-time job for yourself -- and have a lower FAFSA EFC -- but you don't. </p>

<p>I assume that is because when you look at the numbers you come to the same conclusion that I do -- it's better to earn more and pay more for college than earn less and hope that your kid can attend a private college with generous need-based financial aid policies (as opposed to the more typical private or public college that where you could expect to be gapped and have to take out substantial loans). If you are looking at the overall financial strength of your family, and the long-term, big picture -- I think that's a pretty inescapable conclusion. </p>

<p>I'd also note that your daughter did have the option of attending CUNY and living at home. I think CUNY is a pretty good deal for NYC residents. (My daughter's first year writing prof. at Barnard last year earned her Ph.D. from CUNY). </p>

<p>I'm not saying this to challenge your choices -- given my son's positive experience at a CSU I am under no delusions as to the "necessity" of my daughter's Barnard education (Barnard is better, but not $30K better). But just as I appreciate the fact that California offers many very affordable options for an education and recognize that a private college is a luxury and a choice -- I think the same is true for NY. I'm willing to pay out a substantial chunk of my income and take on debt to support my daughter's choice, for a variety of reasons. My son decided on his own that he preferred a more frugal choice -- he is very pleased that he can pay his own way and will graduate debt-free.</p>

100

<p>"I'd also note that your daughter did have the option of attending CUNY and living at home. I think CUNY is a pretty good deal for NYC residents. (My daughter's first year writing prof. at Barnard last year earned her Ph.D. from CUNY). "</p>

<p>My daughter didn't have the option of CUNY. She was rejected from Hunter (which seems to happen very, very often although daughter and several others we know were told it was a sure thing), for practical reasons decided not to apply to Brooklyn College, and wanted to reach higher than the college of Staten Island because the teacher program is so overcrowded that 6 years is the norm. The commute from Staten Island to other boroughs, particularly off rush hour, can often be two hours or more each way, so not worth it. Yes, we could choose to work less now, but that's only in the last couple of years. Before that we had no alternative because of my husband's income. We're now playing catch up for all those years. Which is why I'm so adamant about the kids going to college. I don't want anything from anybody and am willing to work my butt off to pay those bills, but, again, life can be complicated and we're definitely not wealthy. It always amuses me when peole talk about people like us (gargabemen, cops, firemen, nurses, etc.) being wealthy because most of those people are in a totally different class, are well educated and probably never meet people like us.</p>