The ability to have more choices is, in my opinion, the single best reason to save for a child’s college education, if a parent is able to do so.
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I don’t remember if Gladwell ever discusses that or not. I’m not really a fan of his, and don’t find that he has a good understanding of college admissions. Which I understand, because it’s not transparent, even to those of us who live it everyday!
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That was definitely our position also. Recent university graduates frequently make barely enough to live. Our position was always that if the kids take loans, the parents were going to be stuck paying it off. If the parents are in their 40’s when the kids graduate university this might be reasonable. If the parents are older than 65 when the youngest graduates university this is not likely to be a good idea. Some of us can work past age 65, but many of us cannot. Life has a way to throw a monkey wrench into the workings of any plan that assumes that you will work into your 70’s.
Some NPCs seem to assume that it is reasonable to take on debt when the parents are going to be past 65 at graduation (for those NPCs that ask for the parent’s age). I do not think that this is a good idea at all.
Sometimes the parents have to be the bearer of bad news, and students have to find affordable alternatives. At least in our experience an affordable undergraduate program can lead to a very good and highly ranked graduate program.
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We are in the identical situation with kids who worked to their absolute full potential. As parents, we all want to live in a world where kids who work and achieve at the very tippy top “deserve” to go to the very tippy top institutions.
In our case, our son lives and breathes engineering. We know that most ABET accredited colleges will give him the tools he needs to succeed. But, the top ranked engineering programs have things that aren’t replicated elsewhere. Massive research labs, full test tracks, buildings dedicated to huge maker spaces. It’s stuff that our kid would truly appreciate and engage with. Plus, he’d be surrounded by some of the brightest engineering students in the world.
We are deemed full pay by all the places he’s applied to this year. As the acceptances trickle in, we have to choose between sticker price at the top ranked engineering programs, and some merit at his match and safety schools. In most cases, the merit hasn’t been as high as we hoped. (Maybe because he’s in an over saturated demographic for engineering?) So, in actuality, the differential between the highly ranked programs and the others amounts to 80,000 to 100,000 over four years. We’ve also got our less expensive in-state options which don’t hold a candle engineering-wise to most of the places he’s applied.
The “right” combination of solid earnings and accumulation of savings can put middle class folks in the full-pay arena. In our case, we will probably work a few years longer than originally planned so our son can go to the college of his choosing.
One of the engineering programs our son is considering is UMich. Being full pay, we joke that we are going to pay as much as the Obamas pay.
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I think this is an important topic for discussion. There is a certain incongruence between judging colleges on their Pell numbers and need-blind policies.
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For reference, $200k household income percentiles from Household Income Percentile Calculator, US - DQYDJ and Income by City Calculator and Income Stats by City
90th US overall
90th Houston
89th Phoenix
89th Miami
89th Atlanta
88th Honolulu
88th Los Angeles
87th Dallas
87th Chicago
86th Portland
86th San Diego
84th Philadelphia
84th New York
82nd Seattle
78th Boston
75th Washington
73rd San Francisco
66th San Jose
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We saved $ in 529s for our 3 kids. We’ve hardly taken any vacations, drive old cars, etc. We will be paying full price for at least 1 kid (1 got some merit, and we don’t know yet about the last one).
What surprised me was that families we know who live in expensive houses, drive new cars, have the latest tech, and take vacations say they are getting financial aid. One family said they purchased everything in cash so as not to have savings, and didn’t take much salary from their business, thus qualifying for aid. When our older S was looking at colleges, a couple from San Francisco told me their financial advisor had counseled them on how to qualify for financial aid by not setting up 529s and other mechanisms. Putting aside any ethical issue with this, and assuming this really works, I wonder if this is common and why few people pay the sticker price for college.
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A college can increase or decrease weighting of application attributes that correlate to SES. While it will not be exact for individual applicants, it can shape the class’ SES profile and FA need overall. For example:
- Favor legacy → higher SES.
- Favor first generation to college → lower SES.
- Favor expensive extracurriculars like “preppy sports” → higher SES.
- Favor working to help support family as extracurricular → lower SES.
- Require CSS Noncustodial Profile → eliminate a large percentage of FA-needy students (about half of kids see parental divorce, most of which are nasty and uncooperative).
- Require more application items → higher SES (because lower SES students are more likely to have counselors, teachers, parents, peers reminding them of items and early deadlines)
- Admit more through ED → higher SES (because many FA-needy students need to compare FA offers)
- Choose high or low SES high schools for recruiting → obvious effect on SES.
All of the above can be done while being need-blind for individual applicants in admissions.
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How do you define “few” in this context? If half of the students at a particular college “pay the sticker price,” does 50% = few?
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Some colleges use CSS Profile to collect more parental financial information, in order for colleges to catch what they consider to be “FA cheaters”, although the additional forms can also be barriers to genuinely FA-needy students who may not know about them (or have uncooperative divorced parents in the case of the CSS Noncustodial Profile). Many of the private colleges with “the best FA” have about half of students paying list price without FA.
@thumper1 this is my thought process. If a fixed interest loan is 4.25% and I can make 10% on my investments, she can take the loans. I can pay them for her, Right?
And, here we are being totally honest, reporting all income and cash under the mattress. It gets me riled to know there are people who don’t report all their income and then qualify for more aid.
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Where can I get a guaranteed 10% ROI?
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Or a student loan interest rate of 4.25%?
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If you are aggressively invested, and the stock market has a very, very good year, you might make 10% on your investments.
If you can reliably make 10% on investments with minimal risk, then you can make enough money on Wall Street that the cost of sending even three or four kids to Bowdoin or Harvard at full sticker price is not going to bother you, and you will not need loans.
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Bernie Madoff? Oh, wait, never mind.
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Minimal risk? There’s no such thing. The risk-free rate is currently around 1%. The other 9% you make is from taking risks, whether they’re market risks, or credit risks, or interest rate risks, or…
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If you can make a “guaranteed” more than 4.25% then yes.
But where can you make a “guaranteed” 4.25%. Municipal bonds - which are as safe as you can get - are paying under 3%.
You can make 4.25% - but not close to guaranteed.
I don’t. I was responding to the OP’s statement that people say you “rarely” pay full price. IF that’s true, I was wondering if even people who should be paying full price aren’t by gaming the system. If so, that would lead to fewer people paying the sticker price.
My sister has been telling me about this friend for over a decade. She can’t understand why her friend (who has an MBA) didn’t just get a good paying job and save for her kids’ education, and live a normal life, instead of living in a tiny home, no vacations, hiding money - apparently this whole lifestyle took an enormous amount of effort. For example, to pay for dance lessons she’d clean the studio and be a receptionist part time. I see nothing wrong with being frugal, but not just to get free college. I’m curious what her retirement looks like.