Some hard lessons about college costs

Parent Cafe
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<p>What % of kids are on financial aid at Williams, anyways? It seems to give decent aid as I know some relatively high income families get some money from there."</p>

<p>It’s roughly 50/50, but quite a few of the second 50 are those getting the fluff $5k in lieu of loans (COA will go up a bunch each year, so it really costs the college hardly anything). They have increased Pell (that is low-income) students in the past several years, though not to a particularly high level, and added international students. The number of middle income students (small to begin with) is basically flat, and not much different than 40 years ago. (I’m willing to bet that, like H., that’s where they get the bulk of their spectator sport athletes, but of course they won’t release any data on that score.) </p>

<p>Williams is a somewhat special case as regards admissions. Because it is so rural, it has had some difficulty in getting top-flight minority candidates to attend over the years (relative to other top colleges). So admissions are basically in two tiers. They accept a huge 45% of their class ED, and with a 40% acceptance rate - they lock in students who specifically want to be there (close to 100% yield), and then have a 10% or less acceptance rate in the RD round, with a pretty low yield. This approach also allows them to rationalize their financial aid budget, as they know precisely how much they’ve “spent” on almost half the class before they begin RD admissions.</p>

<p>“Sarah Lawrence should not be charging what it does, IMO, but I can only assume that their cost analysts see no reason to drop the sticker price to a lower level…”</p>

<p>I imagine they think they are charging what the market will bear, though since they aren’t a market leader, I doubt they will ever find out. Certainly as the COA at prestige privates has gone up, so has the number of applicants.</p>

<p>“Perhaps that is the case for the top 0.1%, but not for the bulk of the households who are considering sending their kids to college (including the state universities that enroll most of the four year college students).”</p>

<p>As I wrote, top 5% (“their traditional market”), but only for the prestige privates (which, if they - including all the Ivies and top LACs - all disappeared from the face of the earth tomorrow, wouldn’t make much difference in the total college picture.)</p>

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<p>The above discussion is another example of how several issues became meshed together. I will accept Mini’s numbers that “prestige privates” like Sarah Lawrence and Bennington have never been cheaper for their traditional markets. When I was that age and looking at schools, their traditional market was seen to be primarily young women who had money to burn and didn’t need to make a living when they got out. Where students run into trouble in this marketing age of “choose what you love and the money will follow” is when they dream on a school like this they often feel like they deserve to go there if they get in. A couple months ago there was a thread like this on the FA forum RE a girl who really, really wanted to attend Bennington - trying to pressure her parents into taking out loans to fund it. We have all read these threads RE NYU. In my mind, as private institutions they serve a niche audience. I don’t feel any more justified complaining about their sticker price than I would complaining about the price of things at Neiman Marcus.
The cost inflation at state public CCs and Universities is a completely different issue. I have not looked into it (there’s a project for someone) but if the current COA of a private U is roughly twice that of a sample public U in-state I can’t imagine that in the 80’s the private colleges were running only 4-6k per year.</p>

<p>Again, I admit that these are rough estimates, but is it fair to say that the relative cost of in-state public for it’s “traditional market” has increased a much greater percentage than the relative cost of top tier privates for their “traditional market”?</p>

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<p>I don’t think so. I don’t see Mini’s analogy holding true for me, in my personal example. My alma mater has a $60K+ COA these days. It cost me less than 10% to go there in the early 70s.I don’t think salaries have risen 10 fold. We make a lot more than what my father’s pay would be today, and we can’t pay that price, just can manage a little more than half that and with some loans. So I can’t provide for my kids the way my Dad in his middle income government GS12 job was able to provide for us back then. </p>

<p>As for state schools, it has become a problem. I’d like to see the federal money focused on state tuition, not room and board for in state options and have the private schools stripped of those funds. As Mini says, and I do agree with him here, if the top 5% schools disappeared off the face of the earth, it isn’t going to make a drop of difference in the total college picture. I 'd rather see those funds going the the wider base. I am more concerned about giving more kids, if not all, the option to go to college after high school, whether directly afterwards or years down the road. I’d also like those who do take the cc route due to lack of money, for them to be able to transfer more smoothly into a 4 year school and for one to be accessible and affordable for him/her with room/board payable if no such options are available locally.</p>

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<p>Boston College was $3,500 in 1980 (not including room and board), so I think that COA could be within 4-6K/year.</p>

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<p>It holds true for us. Our income isn’t much to write home about but our assets went up considerably the last 17 years. Might be rental properties, small businesses, stocks, bonds or gold coins but there are a lot of people out there with a lot of assets.</p>

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<p>I could see that. What do you think about research money? Many top privates get
a lot of money there too.</p>

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<p>How about a tax credit for contributions to state universities?</p>

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<p>I went to a private college in the mid 80’s and it was $15,000/year COA. That same school is now $43K/year. Starting salaries out of college when I graduated were in the $16-20K range. Same careers, starting salaries today are in the 40-50K range. Obviously limited sample but the ratios hold true from then to now. What is different is the amount of LOAN debt by a percent of salary is significantly less today–on average. It was about $16K back then, $24K now.</p>

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<p>I remember when room and board for Duke was around $7500 (late 70s - early 80s). In fact, I recall the great hullabaloo when room and board crossed the $10,000 mark - “oh, no! Who can afford to pay that every year?!”</p>

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<p>BCEagle91:
Tuition for University of Pennsylvania
1985
Undergraduate Schools:College, School of Engineering and Applied Science (SEAS), the Wharton School, and the School of Nursing
Tuition: $9,525
General Fee: $875</p>

<p>2011-2012
TUition and fees $42,098</p>

<p>Tuition and fees for The University of Washington
1985 - $436 per quarter full time instate so $1,308 per year
2012 - $10,574 in state which represents a 21% increase from 2011 </p>

<p>So, side by side (tuition and fees only):
1985 = $1308 VS $10,400 / Penn is 7.95 times more expensive than U of W
2012 = $10,574 VS $42,098 / Penn is 3.98 times more expensive than U of W</p>

<p>or . . .
to look at it another way
U of W tuition and fees increase 8 fold
Penn tuition and fees increase 4 fold</p>

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<p>Early 70s, guys. I am 10 years older than you guys. I don’t remember the exact amount but it was just about covered by the NMS award. I’ll look it up…</p>

<p>BCEagle, I’ve always enjoyed reading your ideas. I’d like your thoughts on how to control the costs of college so that they are more available to more people without dumping more money into the situation. I would not want to take research funds from the private universities, as I don’t know the situation or ramifications of doing that. I would like to take the funds from them for financial aid. They can pay that small difference in aid themselves. It’s not as though the private colleges have that many PELL kids, and when I see some of the for profit schools and other marginal schools in line for that federal money, giving back so little, it bothers me a lot.</p>

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<p>Averages can be misleading. The school says that it provides an average of $31,000 in aid. Fine. It has two students who get $62,000, so the average is $31,000. Two kids. Just an example. Not everyone receives $31,000, so deducting $31,000 from $60,000 is really bad math.</p>

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<p>BCEagle is on the right track: assets are not income. In late 1990, after a downturn, the S&P 500 index stood at 300.09. Today it is 1396. That’s an increase of about 350%. For those who were invested, they are likely ahead of tuition increases over that time (and that is not ever considering reinvested dividends…).</p>

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<p>CPI inflation is such that $1.00 in 1985 is supposedly $2.13 today.
[CPI</a> Inflation Calculator](<a href=“http://146.142.4.24/cgi-bin/cpicalc.pl?cost1=1&year1=1985&year2=2012]CPI”>http://146.142.4.24/cgi-bin/cpicalc.pl?cost1=1&year1=1985&year2=2012)</p>

<p>So if we look in inflation adjusted dollars, we see:</p>

<p>Washington in-state: $2,786 -> $10,574 (3.8 times increase)
Pennsylvania: $22,152 -> $42,098 (1.9 times increase)</p>

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<p>I don’t have a problem with moving Federal Aid to public colleges and universities. I’d even be fine with changing the tax credits and deductions to public colleges and universities only. This would also have the benefit of fixing the for-profit schools problem.</p>

<p>My son’s school is a good example of providing opportunity to students that aren’t of means. They have a President that has greatly increased fund-raising. They have raised rates and increased financial aid and there are many commuters to the school from the city where they reside (it’s an armpit of a city). They also do a massive amount of research and there is an emphasis there - sometimes an overemphasis. This is a place where they do a lot with their dollars and where I would rather donate money than the schools that I went to.</p>

<p>I’d guess that there are a lot of schools out there like this - we just don’t talk a lot about them here.</p>

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<p>I think that there was a lot of inflation from 1980 - 1985 as I was pretty surprised at what one of my younger sisters wanted for college after I started.</p>

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<p>UCB - I have to run so don’t have time now to find the numbers and do the math, but I would be interested to compare UCB out of state. My mom cites $2500 as the 1985 cost and isn’t it closer to 50k now?</p>

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<p>If you’re talking about overall inflation, yes, indeed; the CPI increased about 35% between 1980 and 1985.</p>

<p><a href=“ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt[/url]”>ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt&lt;/a&gt;&lt;/p&gt;

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<p>1985 UC fees were:</p>

<p>$1,326 ($2,820 CPI adjusted) in-state
$5,142 ($10,492 CPI adjusted) out-of-state</p>

<p>2011 UC fees were:</p>

<p>$13,181 in-state
$36,059 out-of-state</p>

<p>(does not include housing, books, incidentals, which could raise the out-of-state list price cost to over $50,000)</p>

<p><a href=“http://budget.ucop.edu/fees/documents/history_fees.pdf[/url]”>http://budget.ucop.edu/fees/documents/history_fees.pdf&lt;/a&gt; (note: the first page of “mandatory student charge levels” is not the full amount of fees; look at pages 2 and 3 for the in-state and out-of-state undergraduate fees)</p>

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<p>The admit % doesn’t say anything about the admissions standards. The CA situation was debated in a different thread, and the consensus seemed to be that it’s still much tougher OOS.</p>

<p>NY is interesting. Do you have any evidence for that claim? No offense, but it’s tough for me to give any credence to what a HS GC thinks given what I’ve seen in the past few years. :slight_smile: NY might have an inverted situation, since those schools aren’t particularly attractive for strong students from OOS, even given the reasonable prices. NY might have a chicken-and-egg problem.</p>

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<p>Our student attends a school where there is no merit aid and no athletic aid…only “need” aid.
AND at the U–your student’s “need” is based on what the school decides…not based on what your AGI is on your tax forms. AND any outside scholarships are not stacked on your schools scholarship—instead they reduce your award.
Many students get some sort of aid, yet not necessarily all they need…and the school points them to find their own loans etc.
Many families pay full freight.</p>

<p>Having just submitted the documents for this year, we are waiting for the aid decisions. I suspect each year there is some level of anxiety for every family.</p>

<p>FWIW The tuition at the state U where both DH and I attended…is 400% of what is was when we attended…and is roughly half of what the tuition is where our student matriculates.
… however the state U’s freshman class is also about 2x our student’s U and in a more " economical " state.</p>

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<p>I think universities are incentivized in the wrong way. They lure top researchers, make them professors who don’t teach, then tell them to be “rain makers” who bring in the grant money. So a lot of the budget of the U goes to professors who don’t do the thing we pay tuition for – teach. Yes, it’s a good thing for important research to be ongoing at the schools our kids attend but the fundamental reason we pay to send them takes place in the lecture hall.</p>

<p>Then there’s a great deal of extra administrative layers nowadays. I can’t lay hands on it easily but that has increased something like 10 fold in 20 years.</p>

<p>So what we pay a lot for is research and administration vs actual teaching.</p>

<p>And, of course, there’s the whole issue of subsidizing anything makes the cost of it go up. If we grant FA to one kid the full pay kid will end up paying more and more. The government backed loans also enable price hikes. The truth is that putting more government control and money toward education will probably inflate tuition more than bring it down.</p>