<p>Some high income parents we know are telling their kids to attend state universities for undergrad, and then they'll pay for graduate school, public or private.</p>
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Berkeley and UCLA will be more selective, though, definitely. $25k difference will be the determiner for parents of admittees at plenty of top privates.
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<p>Y'all are just missing the numeric point: privates are NOT $25k cheaper to the masses. For anyone up to $180k income, Harvard would be the same price to attend than a UC at in-state rates. Other privates have eliminated all student and parent loans, i.e., 100% grant aid. Thus, for many families with incomes approaching $150k, privates can be the same price (or less with merit money) as instate UC (whose costs, of course, WILL increase). It's only for the top few income percenters, i.e., full pay folks with incomes approaching $200k+, that will have to make this economic decision.</p>
<p>What percentage of private colleges have adopted Harvard's policy?</p>
<p>bluebayou correctly points out that families with annual incomes greater than $180K are a tiny percentage of all American families. What percentage are they of parents of students at top colleges? Twenty-five percent, maybe? Certainly a significant percentage.</p>
<p>^^actually, CF. Full payors are approx. 50% of many private colleges; at some private colleges full-payors represent 65%+. But, again that just reinforces my point. The full pay rich will continue to be full pay and send their kids to privates. It's those in the "middle class" that have to make financial decisions. And, the amount of colleges that have adopted H's finaid policy is not that relevant. A better question, IMO, is can a family with a $125k-150k income attend an elite private at the same cost as the instate UC and the answer is YES! </p>
<p>To be sure, the non-elite LACs and non-elite privates will take a hit in yield this year, but there is absolutely no reason to believe that the Ivies+MIT+Stanford will be hurt on yield -- otherwise, ED apps would have been down, not UP.</p>
<p>You're pretty cavalier about those rich people, bluebayou. $180K+ may sound like a lot to you, but in a high-cost area, with a big mortgage, loss of investments and no job security, not so much. Those are the parents who are telling Junior how great UC is. Even if you have a $200K income, $50K is not chump change. AFAIK, college tuition isn't tax deductible.</p>
<p>180K income is the top few percentage of ALL household income.</p>
<p>if these people have been making good money for years, and putting it away and took it out of the stock market several years before they need it (as you should do with ALL money invested in stocks), then I'm not seeing why a decent chunk of $$ hasn't been put aside.</p>
<p>You are NOT supposed to be paying for college exclusively from current income, especially if you've been a high wage earner for many years.</p>
<p>Sueinphilly, you say what rich people should have done. I agree, but I'm talking not about what should have happened, but what did happen. Given the situation high-income parents are in now, even if that situation is the result of bad financial planning, what are they going to do? It's no good to say that the Hawaii vacations and the HELOC to remodel the kitchen were bad choices; that's true but irrelevant. They're back from Oahu now, the granite counters are already in the kitchen, and they have to decide which colleges they're going to pay for. I say in a lot of cases, two years ago Junior would have been headed to a private, but now Mom and Dad are looking at their house value and their 401K, and telling Junior he's headed to Flagship State U.</p>
<p>agreed. hopefully any parents who read this forum and still have years until their kids go to school choose to forgo Oahu and granite and BANK it.</p>
<p>and whatever you do, do not put money you can't afford to lose into the stock market. I view it as legalized gambling and we the investor don't get to roll the dice. </p>
<p>It is a shame that it took $4 gas and and an economic meltdown to get people to realize that living below your means every day is the way to go.</p>
<p>Believe me, if the GNP was based on my consumer spending over the past 20 years, we would have seen negative growth long ago.</p>
<p>Every day of my life I look at it like this could be my last paycheck and I live accordingly. I can prepare food on my speckled formica countertops the same as someone who has granite.</p>
<p>That is what I have been predicting for months now. </p>
<p>Colleges are going to be hit with much lower yield percentages this year and next. Once they are accepted (and finally face the cost factor and diminishing lending options) they will not matriculate to the less endowed schools. Plus many families with AGIs of over $200,000 will not be sending their extraordinary kids to the Ivies and the like, for the same reason. </p>
<p>As a result there will be huge challenges facing over enrolled community colleges, state colleges and universities. Many<br>
students will be unable to even get into those cheaper traditional fallback schools. More students will be taking a gap year. </p>
<p>Others will be joining the military. Particularly scrambling to do so before the presently dormant but still pending military draft bill (aka National Service Act) is passed by the Obama administration. Unlike the draft law during the Vietnam era, this one will not permit college deferments and Canada will not be a sanctuary because of the coming North American Union now cleverly referred to as the Security and Prosperity Partnership of North America. </p>
<p>Of course, I have never wished I were more wrong than with that prediction, but all signs point to it.</p>
<p>^^ A lot of people in $150K+ income brackets have NOT been making that kind of money for years. Some just recently got there, and some of those just recently finished paying off their own educational loans. Most did diversify their investments, putting their money into real estate (primary residence), stocks, bonds, and cash---and all except cash are now down sharply, and cash is earning close to zero. No matter, at that income level they're pretty well guaranteed of being iced out of need-based FA, even though the full sticker price of a private college might easily represent 40% or more of their after-tax income. </p>
<p>And bluebayou, I think you're just dead wrong about the cost of attending private schools for those in the $80K to $150K income range. What you say about HYPS is true; these schools have very generous FA policies for families earning up to $180K. But very few other private schools can match their generosity. The Project on Student Debt has put together some very instructive comparisons of various schools' FA policies. For a Michigan family earning $80K/year, it will cost about $5K more per year to send their kid to Northwestern than to the University of Michigan. At a family income of $120K, Michigan is $23K/year cheaper than Northwestern. At $120K and above, Michigan is $26K/year cheaper. That's not chump change. People at many income levels will be facing these kinds of hard decisions,and in many cases private schools are going to be on the losing end of the price comparsion.</p>
<p>Here in Pa, the current economic crisis has speeded up
state school trend - many of our wealthier friends are
already sending their kids not only to PSU and Pitt for
around 25 grand a year but also to the lower level states
- West Chester U is very popular at 15 grand a year. It's
becoming state subsidized higher ed for wealthy people.
And it's not just for the cost - some of these state schools
have excellent programs, the kid can have an off campus
apartment (or people buy a townhouse for 4 years and sell
it after grad) and keep their own cars etc. This year PSU's
apps are way up - they haven't even given a decision to
people who applied in early Fall. The same is probably true
for West Chester, Millersville etc. As I see it, the economic
crisis has mainly accelerated the trend.</p>
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<blockquote> <p>Full payors are approx. 50% of many private colleges<<</p> </blockquote>
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<p>I thought that number was high until I went through the eight people in my D's living arrangement at a private school...4 full pay, 2 $0 EFC, 2 1/2 support. Just coincidence?</p>
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Full payors are approx. 50% of many private colleges
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<p>Yep. In round figures, that's what many private colleges have reported for many years. </p>
<p>This is a Common Data Set question, so it can be checked for many colleges year by year.</p>
<p>I believe in saving for retirement but not in saving for college. Here in California the Cal State system has always provided a decent college education for less than the cost of sending a kid to a K-8 Catholic school. For me to consider a college affordable I must be able to pay for it out of CURRENT income or I won't bite.</p>
<p>I know this is a minority viewpoint in this forum, but consider that regular and substantial saving for retirement will in itself create a surplus cash flow that can be switched over to college spending when the need arises. Spending below one's means is absolutely necessary to become financially independent, but for me that surplus and the income it earns belongs in my estate where it will take care of me and eventually provide for my heirs.</p>
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You're pretty cavalier about those rich people, bluebayou.
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<p>Not cavalier at all. (Check my sn, I live is SoCal, so I understand about housing costs.) The facts are the facts; $180k income is the tippy top of the world.</p>
<p>bclintock: I don't disagree -- READ carefully. But, some on this thread claimed that MIT (and other highly selective schools) would have a lower yield; ain't gonna happen -- too many rich families in the world available to pay full fare.</p>
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But very few other private schools can match their generosity.
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<p>Agreed, and so stated. Again, read CAREFULLY -- I stated quite previously:</p>
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To be sure, the non-elite LACs and non-elite privates will take a hit in yield this year, but there is absolutely no reason to believe that the Ivies+MIT+Stanford will be hurt on yield -- otherwise, ED apps would have been down, not UP.
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<p>It's just not logical.</p>
<p>I apologize bc for the grouchiness of last night's post -- apps still ain't done....</p>
<p>SueinPhilly, your assumptions about $, income and consumption ring hollow with me. No Hawaiian vacations or granite countertops here. Instead you'll find 2 150k+ mileage vehicles in the garage and postponed needed new roof for the house. This fall for our 20th anniversary we spent 3 days in Manhattan borrowing a friend's apartment and buying theatre tix 1/2 price at TKTS. These are our choices, and we don't begrudge them. Our income is "high" by standards discussed here. For 17 years we aggressively put money into UGMAs and, later, 529s. We forewent consumption in favor of education for our kids. As a result, we entered 2008 with 90% of what we would need for our kids' college educations. We were ready to start laddering the money out of the market into cash, particularly the older one when the bottom fell out. </p>
<p>By foregoing luxuries such as expensive vacations, new cars, granite countertops, and the like, we were able to create sufficient funds to educate our kids. Or so we thought. We knew that our income would likely preclude substantial FA so we lived frugally so we could pay for it ourselves. </p>
<p>We didn't have the foresight to see the market collapse. I beat myself up plenty for that. Now I'm done looking backward. What's done is done. What I now know is that I still make too much to qualify for FA and the money we saved for college is heavily dissipated. </p>
<p>So when I read your assumptions about frittering away money on baubles and luxuries, it compels me to set the record straight for at least some of us. Too much income for FA, not enough income to pay tuition, and lost savings due to market collapse. Not saying anyone should feel sorry for me or anyone else. Just pointing out that, for all but the uber-rich, many of us are facing unforeseen and difficult choices.</p>
<p>So, laxtaxi, I'm guessing you're in the expensive NY metropolitan area. What have you heard from your friends and the parents of your kids' friends? Are parents as willing to spring for high-dollar privates as they used to be, or are some parents urging their kids to go to privates?</p>
<p>I am from NJ, and I can tell you that for years prior to these bad economic times many professionals in our area had already said no to the private schools. I am not including the unusual student who might get nearly a full ride, but those with students who are getting Bs and B+s. Now many upper middle class families in my area are feeling the pinch and are uncertain about their futures. I have seen those who would have easily spent money on some extras for their children cutting that out too. I am talking about items such as tutoring, class overnight trips, private music/art lessons, and summer programs that cost money. I really think that applications to our instate schools will surge. I think that parents might allow their kids to apply to private schools, but if the packages are just not there, they will go to Rutgers, or one of our other instate schools. I also think that many families will think about letting their children stay on campus for one year, but will then have them commute to save more money. COA instate is still quite expensive.</p>
<p>why was money you would imminently need in anything remotely volatile.</p>
<p>I am not a market guru, but I do hear Suze Orman say to NOT put money you will need in the next 10 years (and can't afford to lose) in the stock market. I live by those words and stay away from the market. Yes, I missed out on gains, but I didn't lose 30-40% of my savings either. There are safe investments (CDs) for those of us with no tolerance for risking capital. </p>
<p>I also will not invest money I can't lose in something that doesn't let you move it to safer investments whenever you want to. Most 529's have a money market option that pays a pittance of interest.</p>