They do not own a property and do not have any savings. They have taken luxury international travels a few times a year for the entire lives. On a 68k sticker price, one of the ivy calculators estimates they’ll have to pay $16,000 per year.
This is perhaps the post of the month on CC.
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Had they owned a property and saved by not traveling internationally, they probably still wouldn’t have to pay much more than $16k, if their income remains at about the same level. If they put their saving into owning their primary residence, a few of the Ivies wouldn’t even factor the equity in the house into their FA consideration (others would but only for about 5.6% of that equity).
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I actually live in 2021 NYC and know a bit about this topic.
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I’m all ears! Housing is the single most scandalous thing to talk about in New York:
Underground Lives: The Sunless World of Immigrants in Queens - The New York Times (nytimes.com)
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I doubt that. The family income not far from us only different is we have been saving put toward our future.
The only difference was that while they were living in luxury and spending every cent they earned as a one-income family of four, we were saving and investing, Our investment grows over time. As a result, we appear to be too wealthy to qualify for financial aid and will have to pay full tuition. I’d like to pay $16,000 per year for my kid private college and live the affluent and famous lifestyle as well, but at $70,000 per year, I guess I’ll have to keep dreaming about it and let that family live it.
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$300k income for a family of 4 with 2 kids in college and no assets (because they spent it all on the posh lifestyle) would get about $10k (off of the $78k list price) in need-based financial aid at Harvard, one of the most generous private colleges for need-based financial aid (see Net Price Calculator ). At most other colleges, there would be no need-based financial aid for students from that family.
So either the people you saw make nowhere near $300k income (at Harvard, reducing the income to $125k would put the net price about 15% of the list price – but most other colleges are significantly less generous with need-based financial aid), or the student found other money from merit scholarships at less selective colleges, athletic scholarships, etc. other than need-based financial aid.
Addendum: to get a net price of $16k at Harvard, that family of 4 with no assets would need an income of $139k with 1 kid in college, or $151k with 2 kids in college.
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I didn’t say they made 300K. I said even those who made 300 find it’s difficult.
So if you have an income of $300k ($218k after tax, assuming state is MA), but spent “luxuriously” like those people who have an income of $150k ($113k after tax), then you would have an extra $105k after tax money per year. Even paying private college list price would still leave you ahead of that other family in terms of savings and investment for those few years your kid is in expensive college. Of course, you could have been saving and investing the extra money you made in the years before any kids were in expensive college, which would put you a lot farther ahead financially.
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I attended 2 years of community college and then transferred because that was how my family was able to afford to educate me and my siblings. It was not my dream school - it was my reality. It was what it was. H and I are fortunate to have been able to send 2 kids to private colleges with no FA and no loans. I’m grateful for that. I do not waste my time looking around at my neighbors/friends and speculating about their incomes, judging how they spend their money and being upset if they mention receiving FA. Not my business.
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Look on the bright side. If your neighbors’ kid didn’t manage to get into one of the more generous colleges (those odds aren’t great for most kids), their options would be much more limited than yours because you have those savings.
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You can complain with a $300k income but it’s not particularly attractive and you might not get much sympathy. I’ve put 3 through college and do not plan to be a burden to them in retirement on less than 1/3 of that. Yes, they got need-based aid, but we still were expected to contribute 18-20% of our income. And they were expected to take federal loans (which they have all paid back by living well below their means the first few years out of college). So sure, complain away. Excuse me if I don’t listen.
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You’re not going to get any sympathy. Absent extraordinary circumstances, on $300k income, full pay should be possible - some from savings, some cash flowed. If it’s not, lifestyle choices are to blame, not what some other family did with their money.
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I’m not begging for sympathy; I’m merely stating the obvious that things aren’t as easy as they appear. Due to a high-stress work environment, the spouse has decided to retire. I’m working part-time stretch our savings to last us years before we can use our retirement funds. If my kid is still interested in medical school, a public university would be a perfect choice. As a result, we will be able to pay for the majority of the medical school tuition with very little debt.
Really? Can you substantiate that with a calculation
Unless someone in that income bracket has spent 18 years with their heads in the sand and not put away 5% of their pretax income in a tax deferred college plan, and on top of that have indebted themselves to the point that 50% of their current income is committed, this is NOT the least bit difficult — unless someone is reckless.
(Of course any amount of money can be squandered away, even millions.)
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It depends where you live and what the local house prices are. In CA a $300K pre-tax income means ~$200K after tax and a fairly average Silicon Valley house costs well over $2M (according to Zillow the average house in Menlo Park costs $2,689,291).
So unless you have a bunch of equity, that will mean spending ~50% of post-tax income just on mortgage, property tax and insurance (for comparison renting a nice 4 bed family home is also $7000-$9000 per month plus insurance, utilities etc eg 270 Santander Ct, Los Altos, CA 94022 | Trulia).
Now it’s true that most families here with teenagers bought their houses at least a decade ago when prices were half current levels, and many people certainly live in much less pleasant circumstances, but I don’t think anyone I know in their 30s or 40s would think moving their family to Silicon Valley nowadays for a $300K package was an attractive option unless there was a bunch of stock upside. That’s also why many people are leaving…
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Leaving $6K/month. Enough to put a cost-averaging $1K/month into a college fund once they started a family. Invested in a growth fund for the first 15 years this will grow tax-free to more than needed to pay for any college, and likely have money left over for a few semesters at graduate school.
Been there, done that - I can confidently/competently say: 300 K p.a. does make it easy.
Great if you have one kid. Two kids becomes really hard, three kids it’s impossible to save $1K each.