<p>@GMTplus7:</p>
<p>How old is that woman? At one point in time, you could say that Duke was a party school for rich kids, but you have to go back 40 years or so (Vandy was in that phase a while longer). </p>
<p>@PurpleTitan The boys are two years apart. Thanks for a ray of hope. :-)</p>
<p>@PurpleTitan wrote: </p>
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<p>Please re-read my post. I never limited my comment to Federal direct loans, so your post really does not even address my point, as subsidies take many, many forms.</p>
<p>A couple salient questions: Exactly which entity provides the cheap money to the banks to provide the parent and student undergrad and grad loans? And which entity looks at banks’ loan records to make sure that the banks are giving loans using looser and looser standards to increase the number attending college? Answer: the government. There is so much propping up of the market that it is not even a real market anymore. </p>
<p>Bottom line is that banks would not be loaning this money if the Feds did not provide it first at sometimes zero percent rates, when factoring inflation, to the banks. And colleges raise their rates in tandem with the increase in cheap money provided by the Feds.</p>
<p>This is no different than the cheap money that created the housing bubble. Much of this money IS NOT coming from the deposits in the banks, but the banks are taking a big risk if the parents and students default. </p>
<p>I also disagree that colleges, in general, are dipping into their coffers like you say. The overwhelming majority of colleges do not have such well-funded coffers in which to dip. There is must be another reason why a school like Harvard and no name private college cost essentially the same AND it is obviously not because they have the same endowment size from which to draw. However, they do both have the same loan market for parents and students that is created by the Feds, and thus no name college can charge $55K without blinking an eye if enough parents and students line up to take the loans. And, so far, there is no shortage of such parents and students.</p>
<p>BTW, not that that woman’s opinion matters, but UChicago, JHU, and Rice also offer some significant merit scholarships, and nobody will accuse those schools of being party schools for rich kids. WashU and Emory do as well. So do UMich, UVa, and UNC (many smaller scholarships but only a few big ones).</p>
<p>Drop down a tier (in both privates and publics), and large merit scholarships are much easier to get. What state, BTW, @GMTplus7?</p>
<p>no state. Americans living overseas.</p>
<p>@awcntdb:</p>
<p>Except that Harvard and no-name privates don’t cost the same. Harvard runs a true high price+full fin aid model. No-name private may have the same sticker price, but virtually no one (except suckers with too much money) pays the sticker price there. No-name privates give out “merit” scholarships left and right because they’ve figured out that if they charge 45K and give everyone a 20K scholarship, they can get more students to come than if they simply charged 25K from the get-go.</p>
<p>@PurpleTitan </p>
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<p>Maybe not 40 years - a frat had burned down before my campus visit to Duke.
Frat life seemed annoying enough that it was a big factor in me not choosing
Duke (and their merit aid was worst among the 4 elites I applied to).</p>
<p>The comment about Yale is interesting too. Presumably there is an income range
where only a handful of colleges HYPS + MIT will offer need based aid.
And they also include private school tuitions for siblings in their formula IIRC.</p>
<p>Someone should write an android app that collects all of this in one place:
merges the results of the maximum loan estimator
info (which is based on major) and adjusts the college lists based on aid
factors adjusted for income range, other factors (private school tuitions,
large property or other assets), national merit finalist etc. Factors in
graduation rate into cost estimate. Let’s you run simulations with
different inputs etc. builds a list of colleges to consider (even better
if it linked to survey data, rankings, and subjective data from that list)</p>
<p>Picking the wrong college could easily be a $100,000 mistake.</p>
<p>Maybe the colleges are in a cartel. /tinfoil</p>
<p>@PurpleTitan:</p>
<p>You have fallen for the slight of numbers, and not looking at the end result.</p>
<p>Merit aid is an accounting line gimmick on a budget sheet, NOT real money added to the school budget line. If I artificially inflate a price and then say I give you merit aid, it does not mean that I added money to anything from anywhere, and, more importantly, it does not mean the money even ever existed.</p>
<p>However, the real test is who has the highest loans after college. Hint: it is not Harvard grads or grads of the very top-10 colleges and universities. Compared to the top-10, the average student at schools that give merit aid have much higher outstanding loans because after merit aid many of these students still need to borrow way more than the average Harvard student. It is not difficult to look at a school’s endowment, the merit it “gives” out and realize that for most schools no way the endowment return can even cover the merit aid without decreasing significantly.</p>
<p>For those who pay full price, merit aid simply brings the price back down closer to the true market price if loans were not artificially subsidized. </p>
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<p>I know you are joking, but a serious answer is as far as pricing goes no one needs to be in a cartel to play follow the leader. </p>
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<p>@awcntdb (or others - feel free) For private colleges whose all-in retail cost is over $60,000, what percent of those aggregate costs are covered by student loans? In order to pin the tail on that donkey - I think we need some numbers.</p>
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<p>I’m always a bit perplexed by these conversations. What colleges, specifically, are we talking about? If it’s just Harvard and about 20 others, this is not a big national problem, because not that many people are affected, really. It seems to me that the reality that we are looking at now is that, except for a few super-generous schools, students who are not full pay, and who are not eligible for substantial need-based aid have two good options; (1) Go to a state school in your home state–and sometimes in other states; or (2) go to a private school where your academic credentials will get you substantial merit aid. Why, exactly, is this a catastrophic problem?</p>
<p>By the way, there are lots of products for which poorer people get discounts–although the determination of who is poor is crude, such as assuming that students and senior citizens have less money. Thus, all movie theaters and many restaurants, and many travel businesses, give such discounts. And they don’t do it because they are idealistic, which I think is probably the motivation for at least some colleges giving financial aid to the poor.</p>
<p>@GMTplus7:</p>
<p>Yeah, that’s not an enviable situation to be in. Roughly half that country lives in a state that has a public or two that is very good in something (or many things, in some states).</p>
<p>However, all is not lost. Look at the schools I mentioned. If you drop down a tier to USC/Case/Miami/etc., scholarships that cover roughly half-tuition are much easier to come by. If your kids are looking at LACs, many of them can be quite generous with merit aid. This is especially true for many of the female-only LACs. Also for many of the small engineering schools like WPI/RPI/Stevens. Olin and Cooper Union are half-tuition, I believe (and very well regarded in engineering).</p>
<p>@awcntdb: </p>
<p>The only government-backed loans that have expanded are the parent PLUS loans. The direct loans limits have not expanded. The Fed has always controlled the money supply. Bank lending standards are actually on the stricter side these days (a couple years back, they were the most strict they’ve been in decades). What has changed is an explosion of for-profit schools (that are better at generating debt than giving their grads skills).</p>
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<p>As far as I understand the thread, it is not an issue that choice does not exist. </p>
<p>The question is why and how could prices keep rising at 2 and 3 times inflation and pricing some out of higher-end colleges. Something is causing that. It is easy to say market demand, but when that market demand is fueled primarily by loans there is the question of who is funding the loans. </p>
<p>I gather this discussion would not be occurring if there were no easy loan market and parents and students felt they were paying the true market price.</p>
<p>I don’t think the price increases at the very most selective schools is driven by loans. I tend to think that it is a combination of increased costs, and very strong continued demand among people willing to pay full price. If it wanted to, Harvard could fill its entire class with full pay students–even at a higher price than it charges now. But is this true at, say, Notre Dame?</p>
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<p>You are still missing the bigger picture of how the Fed works on different levels.</p>
<p>The government backs the private loan market as well by providing the cheap money for the banks to borrow and then lend out as private loans. The loan does not have to have the Fed-subsidized name on it to be subsidized. Just like during the housing bubble, your X bank mortgage did not have to say Freddie Mac to be back by government. </p>
<p>@Hunt HYPS of course - but also Tufts, Cornell, Harvey Mudd, Haverford, Brown, Columbia, BC, Dartmouth, Northeastern, Northwestern, Amherst, Middlebury, Bates, Georgetown, Bucknell, USC, Reed, Swarthmore, Stevens - and lots more I’m sure. I am indeed blessed that CA has some excellent public schools. UC costs are rising out here too (protesters out in force) but we should save that conversation for another thread. The inflation of my alma mater and similar is out of whack compared to even the cost of health care. Your perspective is this is not an important issue. Ok - thank you for your opinion.</p>