<p>Hmmm. I’ll have to keep that in mind during my son’s college search. Barnard financial aid office told me our EFC would be cut in half when he starts school. The schools he is most interested (FAFSA only schools) in will probably give him full merit aid, the way his numbers are coming in. He is looking at a major that isn’t offered at many schools and the only two schools in state offering it now are directionals where he should get big time merit aid.</p>
<p>blossom- your son’s insurance rate is based on the actuarial pool that he is in. Whether you agree with the formula or not, there is at least a rational explanation why there is differential pricing for him- ie his costs to the company are expected to be higher. </p>
<p>There is no such differential cost to the University of educating the daughter of someone who make $100K verses a daughter of of someone making $40K. Its a discriminatory policy based on factors other than actual costs involved. </p>
<p>The closest analogies might be differential pricing for seniors and children. However in the dining world the senior and children’s portions are often much smaller and the choices more limited than than the full price fare. Its not necessarily different prices for the same thing. In the case of things like movie tickets reduced prices often represent an inducement to capture an additional market- full price adult ticket escorting a child fare. Likewise senior tickets are usually sold for the earlier, less desirable shows. Effectively the price is same as the matinee but extended to one additional showing, and to a price sensitive group that might not otherwise be purchasers. These are not analogous to the college tuition situation. </p>
<p>The actual spending by the college per student is more interesting, and is one of the better argument to be made on the Ivy degree., However it is ridiculous to include the costs of massive building campaigns against the current student body because
a. some of these vanity projects will have little impact ion the majority of students
b. the cost should rightly be amortized over all the the student bodies through the useful life of the asset. </p>
<p>In the case of the billion dollar Allston Science Complex, Harvard’s cost per student is being artificially inflated. If you looked at the incremental cost of a student it would probably be much more like $20K.</p>
<p>It’s actually more like pricing for airline seats - except that having some folks in the low-cost seats is considered desirable for the benefit of the high-cost travelers.</p>
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<p>The existence of economy passengers adds to my pleasure in flying business …</p>
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How is that not like the college tuition situation? Don’t the discounted tuitions allow students to attend who would otherwise not be purchasers? Isn’t that the whole point? That people who have less than the OP in terms of money might get something he feels he can’t justify paying for himself?</p>
<p>The obvious answer is to have your child apply to schools where they would get the reduced price as well :D.</p>
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<p>Because Ivies could fill 100% of the of the seats without the inducement pricing. And while books are expensive, the economics of movie snacks means that the theatre owner really wants to get you in the door for the concession revenue, which is not split with the movie distributor. There is no similar follow on revenue stream for colleges. If the college wanted to offer a discounted tuition for students taking all 9am classes at the satellite campus that might be a fairer comparison. </p>
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<p>Airline pricing isnt based on who your are- is based on something you did- such as book early or late, fly standby or accumulate airline points. And in most cases the airline gives preference to the higher fare- choice of seats, better seats, boarding first.</p>
<p>The analogy is this - When someone opens a club, in order to attract a better crowd to elevate status of the club, they need to comp some high profile people to come who may otherwise not go. If a club is very hot then there’ll be bouncers with people standing in line, no need to give a discount. As a matter of fact, there maybe people using all kinds of contact in order to get in.</p>
<p>There are actually many other types of organizations that offer sliding scale pricing. I know of athletic clubs and gyms that do, cultural institutions, medical professionals. My CSA had a sliding scale option and I know of some farmers markets that accept EBT and double EBT dollars (so somebody can spend $10 on their EBT card and get $20 worth of food at the farmers market).</p>
<p>It’s both about making sure that they are reaching out to and providing goods and services to a diverse population, and actually having a diverse environment. These gyms, for example, probably have a mission statement and want to make a point of not just helping a bunch of upper-income people get in shape in a room full of upper-income people. It’s not just colleges.</p>
<p>Isn’t OP’s original point that his high-income household saved for college and skipped the lavish lifestyle. Meanwhile, another high-income household could’ve lived lavishly, bought $75,000+ cars and $10,000+ vacations, ate at gourmet restaurants, bought expensive clothes and household items, but have little savings. Both households’ 401Ks and pension plans are same. Both households have $200,000 incomes, but one has significant savings, and the other has alot of expensive experiences and consumer goods. One household faces a $50,000 EFC. The lavish-living other household gets a $25,000 EFC (theoretical) and drives their Mercedes station wagon to drop-off their scholarship/financial aid student to campus in Fall, subsidized by college for its lavish living and poor savings habits.</p>
<p>Many of our friends are in same profession and have similar household incomes. Some live like austere monks, and others live paycheck-to-paycheck, but all are in upper-upper-middle-income bracket (95%, let’s say). Some have millions in savings and our setting up trusts, and others are fretting that their children will need significant financial aid to make college possible (aside from cc, which are of poor quality here).</p>
<p>^^^^</p>
<p>This is probably the most misunderstood aspect of financial aid. The majority of a family’s EFC will be determined by income, not savings. Typically, savings not in qualified retirement plans are assessed at 6%. So yes, if you save, you might have a higher EFC. But in your scenario above, both families would probably be full pay given the income level of the families, but only one would have the savings to afford it. </p>
<p>If you don’t believe me, here’s CC’s own take on the matter:</p>
<p>[Financial</a> Aid - Is Saving Penalized? - financial-aid - College Confidential](<a href=“http://www.collegeconfidential.com/financial_aid/ants.htm]Financial”>http://www.collegeconfidential.com/financial_aid/ants.htm)</p>
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<p>I’ve seen some net cost calculators of colleges where they assume everyone will take out $12,000 a year of parent PLUS loans. </p>
<p>Often, having substantial savings for college will allow a student to avoid having to work during the academic school year, will avoid the need to take out expensive unsubsidized loans, and will avoid the need for Parent PLUS loans. That it turns makes it easier for parents to save for their own retirement. </p>
<p>Overall, it always pays to have saved for college. Remember that none of your savings in retirement accounts counts against you for financial aid, and that only about 6 to 7% of the money you have in college savings accounts is expected to be used each year for college expenses. In my state, money you have in that state’s 529 plan is not even considered when they calculate college grants from the state.</p>
<p>OK, so I went to the Harvard financial aid calculator and put in a 200K income with no savings (family of 4, 1 kid in college) and got an EFC of 43, 600 and then I did the same but added 100K in savings and got an EFC of 46, 100.</p>
<p>Here’s another analogy that occurs to me–the high school organizes a field trip to an amusement park. If you want to go, it costs $50. The school comes up with some extra money so kids who don’t have the $50 can go. Are the people who have to pay being punished? I don’t think so. Especially if (as I think is the case with the Ivies, at least) none of the financial aid is really coming out of tuition.</p>
<p>If you are truly so well off that you would get absolutely no aid at the Ivy league schools, you indeed are very well off. Enough so that you’re not likely to get much if any sympathy here. Did you run the net price calculators at some of the Ivy League schools, or are you making assumptions? To be a full pay at Yale you would need family income in the range of $200,000 a year, or significant non-retirement savings. - Do you realize that puts you close to the top 2% in the nation? If you have that kind of savings outside of retirement account, what is the rainy day you’re saving for? If it’s because of your income, plenty here could show you how to live on much less. </p>
<p>It is not a question of whether any Ivy League school is affordable to you, but whether you are willing to make the sacrifices the rest of us have made our entire lives. If you’re not ready to make that sacrifice, then she has decide whether to spend the money on a “top” undergraduate program (though there are plenty of great programs outside the elites), with the experience that goes along with that expensive undergrad experience, or to save it for later - keeping in mind that kids do change their mind over time, and she might not end up in med school. </p>
<p>If you think the Ivy League experience is that important, then buck up and pay for it, or find a way to make it happen. If you think she should be able to “compete,” have her complete the applications, and let THEM tell you if you qualify for need-based aid. What does it cost you? An application fee, and the cost to send scores! Then she can make the completely informed decision of whether it is worth the price.</p>
<p>^^exactly and skrlvr’s numbers kind of prove that. Even at an income of $200,000 you are still qualifying for aid at Harvard…</p>
<p>Again, I go back to my other post–apply to a school where your child will get the merit aid and your problem is solved :D.</p>
<p>I wish OP would return and contribute to the discussion. </p>
<p>While his assets seem to be in savings, which are liquid and probably not generating a lot of income in terms of interest or dividends right now, the situation is somewhat more complicated in cases such as ours where the assets are income-producing real estate intended to provide retirement income but not in “retirement vehicles”. </p>
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Some of the “discount” aid comes from the federal and state government. When I go to the grocery, I have to pay $7/pound for the organic chicken I prefer. People on food stamps get a voucher and could buy the organic chicken for free. The store doesn’t provide the discount, but it does come from the government and the store does not need poor people to buy organic chicken and could sell 100% of the chicken without the food stamp “discount”. Am I being “punished” for having enough $$ that I have to pay full price? If so, well then bring on the cat-o-nine tails ;)</p>
<p>“Are the people who have to pay being punished? I don’t think so.”</p>
<p>Actually, according to the university, they are being rewarded, with better classmates.</p>
<p>I think Harvard should just auction off 10% of the seats. Then all the others could be free.</p>
<p>I think Harvard should just auction off 10% of the seats. Then all the others could be free.</p>
<p>Ha! That’s a great idea! The other ivies, Stanford, UCLA, Berkeley, and a few others could probably do that, too.</p>