It’s not true, and this idea was discussed at the beginning of the thread.
From my experience it’s difficult to game the system, I think most who aren’t paying full price are either in real need of FA or are getting merit, even if a small amount.
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My H and I were having this conversation the other day. We have been saving in our kids’ college fund since they were one or two (if I had to do it all over again, we would’ve started when I learned I was pregnant). Before we even thought about college, my H had a friend who said not to save anything because anything you saved would count against you with financial aid. I thought this idea was nuts and risky. So while there may be people who are gaming the system and maybe they will receive thousands of dollars in financial aid that we will not, I still would not have done it any other way. It is better for us knowing we have money saved then having to stress about getting financial aid. Also, I think our earnings put us in that “donut hole” category where we might be considered full pay anyway.
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D is at a need-blind private school that costs 80k/yr. We don’t pay anywhere close to full price for her education. Because of our financial circumstances (e.g. layoffs, grad school), we started saving late for college. We have some money saved in 529 accounts and retirement accounts but our largest asset is our house. Were we to sell our house, we could pay full freight with money left over. We are very frugal, live in less house than we can afford, drive older cars, and take inexpensive vacations. We are middle-income by her college’s standards which means tuition is fully covered by institutional grants. This year, we paid 15k using 529 funds and current income. Our state flagship with top merit and on-campus housing would be 23k/yr. We did a lot of research to find the best price. Colleges that included home equity in their FA calculations (e.g. Brown) were non-starters because of affordability.
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And it’s a large donut hole! Most parents I know are truly shocked at the cost, the lack of merit and the lack of financial aid.
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What puts many middle-income families into the full-pay category is the home equity in their primary residences. Whether and how it is considered has enonmous impact on their qualification for and the amount of financial aid. I’m still surprised by how many families don’t take it into consideration in their college selections.
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Is it always apparent? ie: the college asks about home equity within their net price calculator?
Colleges don’t give you their formulae but you can figure them out by entering different scenarios into their calculators. This link provides a list to get you started but it’s dated:
Yes, many do. For example:
Colleges using the College Board template (e.g. Brown) can include questions used to determine home equity.
On the other hand, some colleges offer lower quality net price calculators that do not reflect their actual financial aid policies.
USC recently discarded any consideration of home equity in its financial aid calculations: USC unveils major expansion of financial aid - Los Angeles Times (latimes.com)
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From the link, it looks like this was written in 2014, is that correct?
In any event, from our experience last year having my D20 apply to both USC (which does not consider home equity) and Emory (which, according to this list, hits home equity “hard”), we found Emory’s financial aid offer to be slightly better than that of USC, in both amount and type of aid. Just wanted to note that these lists may be outdated and it would be a good idea to check each school’s most current financial aid policy, as the author herself suggests.
I believe you’re correct. To get an updated list, you can run a set of hypotheical scenarios with only income and home equity as variables (keeping other inputs constant) for any college you’re interested in.
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The USC net price calculator does ask about home value and mortgage debt, and different values here (with everything else remaining the same) do change the net price that results.
So if USC no longer considers home equity, it seems not to have made its net price calculator reflect that.
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It is strange that they didn’t change the NP calculator. The only reason I happen to know about the financial aid/policy change is because my daughter was an applicant last year when there was all the publicity about it.
I don’t think this is true. There are a lot of full or close to full pay families that borrow from their home equity, retirement accts, or from family. I’ve heard FA officers mention it’s assumed parents will do this when financial need is computed.
I guess we could go back and forth on whether borrowing still means affording.
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Not to drag this out much more then but all the parents I know in my town who are full pay are NOT borrowing.
They have saved a lot and have healthy incomes that don’t require loans, grandparents, etc to pay the high prices. Most are physicians, but some are lawyers, and still others are business owners.
So while the FO officers say full pay includes those whom borrow, I can add that definitely those that are full pay also include those that can write a check.
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Before getting the actual financial aid offer, the net price calculator is the best available estimate of financial aid for a specific college. Of course, the applicant must be careful to put in all of the information correctly, which can be tricky for some situations (sometimes made worse by inadequate instructions, such as how to handle divorced parent cases).
But if the college has a low quality net price calculator or one which does not reflect its actual financial aid methodology even when all inputs are done correctly, then there is no good way of finding out before applying whether the college may give you sufficient financial aid.
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My sister has a college account for her kids, her oldest will be full pay at Richmond, a couple of years ago she realized she was going to need more money in it, she had planned on only needing $600,000 for her 3 close in age kids. It’s not a problem, she can easily afford it, but even she was shocked at the increase.
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Exactly! Tuition has increased incredibly.
When our fellow group of parent friends over the years would talk schools, EC’s, pets, etc. (you name it we all talked about everything with each other) while gathering at bday parties, school events, etc we all kept each other up to date on the need to start saving and planning then.
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I just tried it myself. USC either fail to update its NPC, or the LATimes article wasn’t 100% correct. Not only it still takes primary home equity into consideration in its FA methodology, but it also doesn’t “eliminate tuition for families earning $80,000 or less annually”, as claimed in the LATimes article.
Another indication that the NPC is likely in error: its output is based on 2019 USC CoA.
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