<p>Sure, they have money for merit aid. But merit aid usually doesn't bring the cost of a small LAC down to the cost of an instate public. Sometimes, yes, but usually, no. If you look at the budgets of small LACs, you see that the average tuition actually paid is much bigger than an instate public tuition.</p>
<p>yes but if you are trying to pick between Notre Dame ($50K/yr) and U. of Michigan ($23K/yr in state) for either the engineering school or the business school, which would be chosen by most parents?...if this pattern plays out with the terrible economic issues into 09, then U of M will go up in the ranking and privates scholls like ND, Vandy, Cornell, NW. etc....will go down and these schools will not be as much the upper middle class kids, who did excel in school but now the parents cannot afford or RISK their financial future with more debt and costs</p>
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Cardinal Fang, I think the point the small LAC's were trying to make in the article was that they had money for merit aid but that their application pool was shrinking because applicants didn't realize that the money was still there. And with the overwhelming increase in applicants to public universities I think this could be a rude awakening for people who put all their eggs in one basket.
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<p>Yeah, that's how I read it too. </p>
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<p>This comment intrigues me in several ways.<br>
First, is Laf considered a small LAC? At 2,800 students I put it at the large end of the LAC spectrum. </p>
<p>Second, how will Laf be in trouble? Do you mean to say that its "generous merit" rep is in trouble? Or the quality of its next class? </p>
<p>I don't mean to invalidate you on these points. I'm just trying to find perspective and understand them. :)</p>
<p>I just picked Lafayette more or less at random as an example of a liberal arts college that is not an Ivy-caliber school. I don't have any information about it in particular. But schools like Lafayette, liberal arts schools that are not in the top twenty, will in my opinion be in trouble. Even though they offer generous merit aid-- which is to say, even though they discount tuition to entice students to go there who otherwise wouldn't have-- they still cost more than instate publics. The article didn't talk about Lafayette, but all the other non-elite privates that it did talk about have significantly fewer applications this year compared to last year. So schools like Lafayette are going to end up dipping deeper in the application pool.</p>
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yes but if you are trying to pick between Notre Dame ($50K/yr) and U. of Michigan ($23K/yr in state) for either the engineering school or the business school, which would be chosen by most parents?...
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<p>But, it's not Notre Dame at $50k per year. I haven't researched ND's financial statements and don't have any particular interest in doing so, but I have looked at the financial statements for a dozen or more of the top LACs in the country. The highest average net tuition, room, board, and fees I've seen are in the $32k to $34k per year range. </p>
<p>So, the comparison (for the average customer) becomes Notre Dame or Swarthmore at $32,000 per year or Michigan in-state at $23,000 per year. That is not so cut 'n dried, is it? The difference is even smaller with the new loan-free financial aid packages -- a savings targeted specifically at need-based fiancial aid families in the $60,000 to $200,000 annual income bracket.</p>
<p>ND:$49k after expenses ^</p>
<p>Cost</a> of Attendance : Office of Student Financial Services : University of Notre Dame</p>
<p>InterestedDad, I think you're averaging the wrong things. Average net tuition includes all the students who get large amounts of need-based aid. Those students, we can presume, will continue to get large amounts of need-based aid. But consider the rest of the students. Their average net tuition is considerably more, because we just subtracted out the students who pay minimal tuition. For those students, Michigan may well turn out to be considerably cheaper.</p>
<p>I'm going to UT - Austin.</p>
<p>I was going to apply to Chicago, Northwestern, Penn, Cornell, NYU and Notre Dame, but my mom said if I want to apply anywhere else I can pay the application fees and take out loans. </p>
<p>Naturally, I'm not too eager to pay a few hundred $ out of my summer job money to see if I can go to a school I can't afford. My dad is 53, so he's got enough in retirement savings that we don't demonstrate any need, so I would be in debt up to my eyeballs by the time I got a degree. </p>
<p>At first I really didn't want to go to a state school, but I've done plenty of research for UT and overall I'm satisfied with how respectable the school is on a national and even global scale, not to mention the in-state tuition.</p>
<p>Cardinal:</p>
<p>Alas, I can't find Lafayette's annual fiancial reports on-line. Unless somebody can find them, it's really tough to say how rough they might or might not have it.</p>
<p>The baseline financial health of a college on June 30, 2008 has a direct bearing on how quickly and how deeply it needs to react to the economic downturn. Colleges that were at the top of their endowment spending ranges or, even worse, out of equilibrium and above their targeted range during the boom years, are going to experience more pain going forward.</p>
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InterestedDad, I think you're averaging the wrong things. Average net tuition includes all the students who get large amounts of need-based aid. Those students, we can presume, will continue to get large amounts of need-based aid.
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<p>I'm just looking at it as a black box. X number of students pay Y number of dollars, so the average student pays Y/X. To be sure, some students pay more than the average, some pay less.</p>
<p>Colleges aren't stupid. They'll price their seats to fill the plane, just like the airlines do. If they need to offer $10,000 discounts to five more rich kids to fill the plane, then they'll just lop one really poor kid off the bottom and us that $50,000 for rich kid aid money to compete with U Mich in-state. That's why I say that diversity and affimative action will be a likely casualty of the economic downturn.</p>
<p>If a private college wanted to, they could simply charge everyone $32,000 (after discount) and the change would be revenue neutral. The wealthy customers would get a great deal. The poor customers would be gone. Kind of like a merit aid college!</p>
<p>I don't want to single out Lafayette. Maybe they'll be fine. But if there are more and more students like openskittles, then private colleges will have to become less selective.</p>
<p>I wonder if need-blindness will be a victim of all this, even if colleges are not candid about it? A need-aware, but still highly selective school has a lot more flexibility to control its FA budget by becoming slightly more need-aware near the admissions cusp than a similarly selective, but truly need blind school.</p>
<p>I think we're seeing two big trends in response to the economic downturn, and in a way they seem contradictory, but they're really not. The first is a classic "flight to quality." Parents look at their kids' education as an investment. An investment in a top-tier school is almost always a sound investment, but it becomes especially attractive in a scary economy like this one. HYPS grads are always going to have plenty of opportunities, so even for parents paying full freight, those schools remain attractive. But paying $200K for your kid to attend a St. Olaf or a Lafayette may look like a much riskier investment right now than it did a couple of years ago when graduates of schools like St. Olaf and Lafayette were doing just fine. So there will continue to be very strong demand for places at the schools at the very top of the heap, those with sterling reputations and nationally and internationally recognized brand. But you don't need to go very far down the pecking order to start to feel the downdraft. Even fine schools like St. Olaf and Lafayette are apparently feeling it.</p>
<p>The other trend is bargain-hunting. Most people just have a lot less money than they did (or thought they did) last year. Home values have plummeted, and for those still paying a mortgage the percentage loss in equity is greater than the percentage loss in home value---in some cases equity losses approach or exceed 100%. Retirement savings have shrunk, and even though few people plan to tap retirement savings to pay for college, it's downright scary if you're 10 or 15 years from retirement and suddenly your dreams of the "golden years" have turned to dross; it makes tapping other investments a much bigger deal. Other after-tax investments are also down. Self-employment income and family-owned businesses can expect some lean months, or years---if they survive at all. Employment may not be looking so secure for many. Loans are much harder to come by, and taking on additional debt in a sour economy with income uncertain and other assets shrinking is a scary proposition. Given those kinds of hits to family finances, many people are shopping harder for bargains, and may be willing to "trade down" if they feel they can still get a quality product at a more attractive price. That's why applications to state schools are up sharply, and why the top state schools will probably have the opportunity to become somewhat more selective in this period. Private schools that can continue to offer generous need-based financial aid and/or merit aid should be able to hold their own, especially in attracting kids from lower or moderate-income brackets who may find the net cost of attending a private school lower than even an in-state public; but for families earning $100K or more, the in-state public will usually be cheaper, sometimes by a wide margin. And not every private school will be able to meet the rising tide of demand for need-based and/or merit aid from acutely cost-conscious, and increasingly needy, applicant families. So once again, it's the smaller, less nationally prestigious, generally less well-endowed private schools---schools which in many cases do not meet 100% of demonstrated need even in more affluent times, or include a lot of loans in the typical FA package---that are at greatest risk.</p>
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My dad is 53, so he's got enough in retirement savings that we don't demonstrate any need
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<p>Have you tried a lot of online financial aid calculators? I thought there is a different treatment of funds in retirement accounts from funds held in other forms.</p>
<p>Just to point something out--nowhere in the article was Lafayette mentioned as feeling the effects of the new economy. There are no facts I have seen anywhere about Lafayette and what it's application numbers look like this year. The article referenced mentions St. Olaf, Colby, Hamilton and Colorado College as having lower RD applications. I wish people would stick to the facts her on CC.</p>
<p>It was clear that CF picked Lafayette as a generic example. While the article did not mention Lafayette, I think that CF and IDad are basically on the money, especially for LACs which might be ranked at 20 or lower. More of these schools are need aware, and I expect many of these schools will become both less socio-economically diverse and less selective. Like the airlines, colleges fixed costs are high, and the marginal cost of an extra student or passenger is low. So they have a great incentive to fill the plane / hit their target enrollment numbers. </p>
<p>How much of a change this will be is uncertain at this point, and depends on the financial situation at each college. But I think the direction of the change is clear.</p>
<p>How long do you think this will last?(private enrollments dipping?)</p>
<p>I know it is dependent on the economy, but do you think it will be back to normal by 5 years? Shorter? Longer?</p>
<p>What's normal? Twenty years from now we may see that today is normal and the past five years were just fantasy bubble.</p>
<p>The colleges have no choice but to start contingency planning on the assumption that the current endowment levels are the "new" normal. They have three years to phase in the new budget reality, but many of the changes will take three years to fully implement. For example, you can't just start firing tenured faculty. So, if part of your plan is to reduce the size of the faculty, you have to stop hiring now and bleed the size of the faculty.</p>
<p>In my opinion it will get worse... much worse. But I really need to research the numbers to back up my opinion, lol, which is based on my belief that the demographics point to smaller high school graduating classes in five years which will mean smaller entering freshmen classes which will mean many colleges competing for fewer students. </p>
<p>Isn't this year's graduating class the biggest ever with smaller classes behind? Again, I am going on heresay, have not yet checked the numbers.</p>
<p>I agree with those who say big changes are in store. Top schools will admit a somewhat different mix of students. Lesser private schools, hurt badly by the perception they overcharge, will pretend to be selective while taking all comers. State schools will get so many highly qualified students that vast numbers of lesser applicants won't make the cut anymore.</p>
<p>Whatever does happen we're going to know about it fairly soon. The Fall of 2009 isn't that far off.</p>