<p>Do these privates that want this proposal to go thru expect privates that don’t “meet need” to also do this? Do they think that if those schools stop giving merit then they’d be able to “meet need”? If so, that’s not likely true.</p>
<p>Do they think that fellow privates will also then be required to be “need blind” with admissions?</p>
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<p>Yes. Exactly.</p>
<p>This, in fact, is the exact mistake in thinking being made by the administrators making this proposal. Since their product is subsidized by government backed loans, they actually believe middle income families CAN afford to pay. Of course, as much as I love the academic world, they do tend to remain out of touch with reality.</p>
<p>They are failing to understand that those who CAN pay might not WANT TO pay. There will always be financiall savvy people in the CAN pay set (how you get to that set), and they are the LEAST likely to pay more for the same product they can get down the street for less.</p>
<p>So, then, this will hurt everyone. More allegedly full pay merit candidates taking the state school spots that are relatively more affordable for those with less financial resources… and so on. The law of unintended consequences would be very hard on this one, imho.</p>
<p>But, as Americans, we are having a very hard time understanding that we have a smaller middle class than we used to, and so we just call those with middle income “middle class.” But saying it is so does not make it so, imho.</p>
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<p>Seems like many on this forum subscribe to a [definition</a> of “middle income”](<a href=“http://blogs.wsj.com/washwire/2012/09/14/romney-middle-income-reaches-to-250000/]definition”>http://blogs.wsj.com/washwire/2012/09/14/romney-middle-income-reaches-to-250000/) that is many times the actual median household income in the US.</p>
<p>Most households in the US own their own home, and most households in the US live in urban or suburban areas. The areas where $120,000 household income is needed to be “middle class” or “middle income” are outliers.</p>
<p>Of course, schools use merit to try to entice those kids with higher stats to attend. Why on earth would a kid go to ABC college that is nearly identical to DEF, when one is considered more selective and exculsive, and higher ranked on just about every survey and has much better name recognition? There has to be a strong reason, and money is the great equalizer. Is DEF $30K a year, or $120K over 4 years better than ABC? Now we begin to think about it. Especially when the health insurance premium goes up, and Younger Kid needs braces, and the car is getting unreliable, and the there is a leak in the roof, and the kitchen appliances are beginning to not work so wel, and mom’s part time job looks like it’s getting cut, and she’s had no nibbles on her resume that 's been out all year. Then you hear dad’s company is going to be doing some cuts as well. State U at $20K, honors college invite and a $2500 schoalrship is suddenly in the contention and that little local school offering free tuition isn’t looking so bad either. </p>
<p>So, yes, schools “buy” students with merit money… They also get kids who won’t consider a school because of geographics. When you live right near Notre Dame and that’s been the cry in your ear for your whole life, it’ going to take merit bucks to go to BC instead. That’s who BC tends to give that money for. That and other"types" on their wishlist.</p>
<p>Great idea. All schools should get rid of merit awards and reduce overall low tuition!</p>
<p>After all, look how well “every day low pricing” is working out for JC Penney.</p>
<p>Redd (2000) found that that tuition discounting didn’t always correlate with better median SAT scores at those institutions:</p>
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<p>It looks like the increase in SAT scores had to do with institutional selectivity, not surprisingly. BTW, Redd (2000) defines discounting as giving merit grants not based on need.</p>
<p>Now, it could be the case that those institutions needed to award merit just to keep the median SAT from decreasing significantly.</p>
<p>Unless they changed recently, BC gives out extremely few merit scholarships (something like 15 a year?) My D would have been full pay there, but chose a school that gave her merit. So they won’t draw many Indiana kids that way. My S chose a school that gives out merit based on a formula, less subjective that way.</p>
<p>My youngest D may be faced with a similar situation soon - more selective school without merit, or slightly lower ranked school with merit. We’re waiting on March mailings before she can make a decision.</p>
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<p>BC gives out 15 Presidential Scholarships for Merit. That’s not a lot of slots.</p>
<p>The BC/Notre Dame example is actually an interesting example to look at for predicting what will happen if schools do succeed in persuading the Justice Department to allow them to engage in this proposed form of price fixing. BC gives roughly 15 merit scholarships per year. Notre Dame gives roughly the same number. Effectively then both BC and Notre Dame are need based only colleges. They both cost roughly the same amount for full pay students. When you look at revealed preference numbers, Notre Dame (the higher ranked, more prestigious school) wins the matchup over Boston College something like 90% of the time. The bottom line is that where there is a generally agreed upon difference in perceived quality (as defined by rankings, prestige, general agreement – however you want to measure) the high stat, full pay kid will typically choose the more prestigious option, absent economic incentives to do otherwise. </p>
<p>To compete for the same population of high stat, full pay students, the less prestigious school would need to offer some form of economic incentive in the form of discounting – whether that be in the form of a lower tuition rate across the board or merit scholarships. This might be a case in which schools should be careful what they wish for.</p>
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<p>Aren’t recipients of merit aid considered “everybody”?</p>
<p>Yes, and, just as a caveat, BC’s financial aid is merit biased. They give more “financial aid” to those in need who they are also trying to attract. So, it’s not the same package for every student with the same “need.”</p>
<p>just fwiw</p>
<p>Haven’t read the thread, but did receive a mailing from American U that stated that they will focus a bit more on financial aid and a bit less for merit aid.</p>
<p>I wonder how this would impact lower income students - those with low EFC, who qualify for substantial need based aid, but also for merit aid. If they’re going to eliminate merit aid, will they do so for ALL merit aid? I ask this because even if a school meets need, they can do so with a variety of otions within their package - the student who qualifies for merit aid gets grants, while the one who doesn’t gets loans and work study. Their total aid may be the same, but the package is weighter differently, and is likely to influence where these students attend just as much as merit might influence a full pay student. </p>
<p>BC - when you’re looking at median income, there is a difference between median HOUSEHOLD income, and median FAMILY income. Consider this data from United Way in Connecticut which looks at median income based on family size in 2011:
[CONNECTICUT</a> STATE MEDIAN INCOME: 2012](<a href=“United Way of Connecticut – 211 and eLibrary – Resource Center”>United Way of Connecticut – 211 and eLibrary – Resource Center)
Look at a family of 4 - median income is almost $102,000 - and that is statewide. It is very conceivable that $120,000 would be middle income, and thus middle class by your definition.</p>
<p>You asked why a middle class family would own a home. Maybe because the choice is to own a home or rent one. If you rent a home, someone else owns that home, and still has costs associated with it. The average fair market rent of a 3BR home in my part of CT is about $1600 per month (according to HUD). Yes, there are some areas that cost less, but then commuting costs more, or local wages are lower (and there isn’t great public transportation between the jobs and the less expensive communities). If you want to live in the New Haven area, and commute to NYC for that high paying job, you’ll be spending about $450 a month for a commuter rail pass - plus whatever it costs to park your car every day. In other parts of the country $102,000 for a family of four would probably put you in the top 10%, but here it is solid middle class.</p>
<p>From that $102,000 you will pay roughly $40,000 in taxes (state, federal, Medicare, Social Security, etc), $25,000 for housing (rent or mortgage plus utilities), $10,000 for food (if you economize), leaving $22,000 for transportation, medical expenses, and any " luxuries." Because you have no pension, I would hope $5,000 of that is going into your 401K. Now look at what the EFC comes out to according to FAFSA: somewhere in the ballpark of $25,000! I suspect a family in an area with a lower cost of living having income of $102,000 is going to be able to come up with the $25,000 much more easily than a family from our area. Yes, the family from our area is likely to come up with their EFC more easily than a family making $60,000 or less, but that low income family also gets other state support the higher income family can’t get.</p>
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<p>You’re reading the numbers incorrectly. Those look like manufactured
numbers by a government agency - not actual survey numbers. Unless you
believe that the “typical family of 8” has a median income of
$140,722.74.</p>
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<p>Owning a home stinks in a real estate crash. Owning a home entails
risks and expenses that some aren’t prepared to deal with or would
rather not deal with. Nothing wrong with renting. 2005, the peak of
the housing bubble would have been a great time to rent. Let the
market crash and you’d be in a better position to buy several years
later.</p>
<p>My 2011 median household income number for CT is $64,032. I do know
kids that live in Lowell, MA and commute to Boston. It’s probably
about 1 hour each way when you factor in getting to the train station,
and transferring on the T to the workplace. The rents in Lowell are
probably a quarter to a third of what it costs to live in Boston.</p>
<p>There are lots of people with lower income that do deal with lower
income, high housing and transportation costs. How do you think
they do it?</p>
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<p>I just ran a family of four through TurboTax and came up with $11K for
Federal Taxes (BTW, I didn’t enter any deductions in). I used a CT tax
calculator and came up with $4,750 (it might actually be less if you
add the two kids). Then $7,803 for Social Security and Medicare. These
add up to about $23.5K. How do you get $40K? Are you applying marginal
rates to the whole salary?</p>
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<p>What is the city or town? I’d like to look up housing costs myself.</p>
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<p>That doesn’t sound very economical. That’s about what we pay and we
don’t economize that much.</p>
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<p>Yet people manage to live on far less in your state. A lot of people.</p>
<p>Only on CC would a topic of “why merit” turn into pages of bloviating on what defines middle class. It seems simple. Merit flows because is the student is selling something the school desires…increasing it’s geographic footprint, top 10% of class, valedictorian, etc. As long as there is competition for students with these attributes then merit money will be available.</p>
<p>Why is it OK for a school to raise it’s tuition when there is a big demand for spaces and however it is not OK for a student to leverage their desirable attributes and demand a discount?</p>
<p>It cuts both ways.</p>
<p>I think if some privates just stop sending out unsolicited “catalog” size brochures to the masses, the money would be better spent on merit for desirable candidates.</p>
<p>BC - perhaps you’re confusing median vs. mean? There are very few families with 8 people in CT, so I wouldn’t be surprised at all to see the median income at that level. Household income is median of all household, which includes all the retirees whose kids have left the nest. They are 2-person households (or even 1).</p>
<p>Your tax figures are off too - what age are you making the kids? They typical 4-member family with college age kids won’t get child tax credit, because the kids are too old - that’s an additional $2,000! I’m including all taxes - federal income tax, state income tax, employment taxes, sales tax… </p>
<p>You are in NH, no? The reality in Connecticut is far different. The $1600 is the rent HUD uses in central CT to determine rent subsidies for a 3BR home - it is the same number we use in my tax office when determining whether a client provides more than half of their own support (if they live in that size apartment in subsidized housing, because all they know is the base rent they are charged. Yes, it really is that expensive to live here.</p>
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If this proposal of limiting merit aid would make colleges worse off financially do you think the presidents would support it? Me neither. If it leaves them more or less the same, why would they bother?</p>
<p>Maybe the college presidents are wringing their hands over a system in which they raise the sticker price and then have to discount to get buyers, even if such a system doesn’t affect their bottom line, but to me it doesn’t pass the smell test. An alternative possibility, and one I find much more plausible, is they believe that if they can choke off the discounters then the average selling price will go up.</p>
<p>As Adam Smith famously said, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”</p>
<p>Bc eagle- you and I are close geographic neighbors and, at the risk of having those in the near area, Lowell mass is NOT known for it’s bucolic way of life and it’s superior school system. I dare say maybe that’s changing but many on CC go where the schools are and currently that’s not Lowell.</p>
<p>Sorry left out pt of sentence . I meant to say " at the risk of offending"</p>