<p>@GMTplus7 You raise another thought. The common wisdom is that if you have a school that you think would really suit your kid - just apply there regardless of cost. Somehow things are supposed to work out or whatever. The fault I find with that is getting a kids hopes up, getting the thrilling rush of the acceptance letter (woo hoo! tears and hugs)… Then comes the FA package and it’s $2,000 of student work or some such off of the $65,000 Georgetown (or whatever) bill. I’m in a similar spot with a very high stats kiddo. You’re put in a position where the rug might get pulled out from under him when all is said and done.</p>
<p>@GMTplus7: Georgetown doesn’t offer big merit aid? I know that BC does. Maybe ND as well (they certainly have merit awards).</p>
<p>For the international stuff, JHU has some big scholarships as do GWU and American.</p>
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<p>We’ve been talking about that with my kid. We visited a reach school and after I asked if she plans to apply. She said yes. I asked what if they accept you but we can’t afford it? She answered that in that case she won’t enroll because she has not been working so hard on her grades & tests just to go into debt.
So, fingers crossed that she’s mentally prepared not just for possible rejection but to disappointing FA offers.</p>
<p>@awcntdb “Seven in 10 college seniors (71%) who graduated last year had student loan debt, with an average of $29,400 per borrower. From 2008 to 2012, debt at graduation (federal and private loans combined) increased an average of six percent each year.” and… "According to the College Board’s Trends in College Pricing, the 2011-2012 average total costs (including tuition, fees, room and board) were $17,131 for students attending four-year public colleges and universities in-state and $29,657 out-of-state, and $38,589 for students at four-year private colleges and "</p>
<p>So if the average cost for private college is $39k per year ($156k for four years) and the average student loan after four years is $30k - I don’t see how student debt caused the excessive increase in retail pricing overall. We’re talking about 20% of the private school pie - perhaps 25%. Less still because only 71% of students had loans.<br>
You seem to driving at student loans being a causal factor in the rise of college costs. Or am I mis-understanding? </p>
<p><a href=“http://projectonstudentdebt.org/state_by_state-data.php”>http://projectonstudentdebt.org/state_by_state-data.php</a></p>
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<p>UC tuition history indicates that tuition tends to be stable in non-recession years, but rises greatly during recession years due to state government budget cuts.</p>
<p><a href=“http://data.universityofcalifornia.edu/student/tuition-fees-financial-aid/data-tables/Student-Fee-Levels-1970-2011.pdf”>Institutional Research and Academic Planning | UCOP;
<a href=“News Fix - Daily Dose of Bay Area News | KQED”>http://blogs.kqed.org/newsfix/2012/07/18/csu-and-uc-tuition-hikes-over-time/</a></p>
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<p>I am not saying that. Higher student loans are the result of prices increases, not the cause. </p>
<p>The way to look at this is to understand the following process and then ask one pertinent question:</p>
<ol>
<li><p>When a college increases the price it charges a student, it basically receives its money upfront. Meaning that the student cannot attend unless the college gets paid in the beginning of the semester.</p></li>
<li><p>The average cost of attendance increase has exceeded 2X the inflation rate, sometimes hitting 3X.</p></li>
<li><p>Even with unnatural price increases, the colleges still got their money upfront, but clearly the students do not have that money because they do not have jobs, which are increasing pay at 2 to 3X inflation, and the parents do not have such jobs either. The key point is the college tuition increases continued during recessions when wages of parents and students were stagnant, when wages were negative, and when the job market (the supposed repayment vehicle) was soft. Where is this money coming from to pay the colleges?</p></li>
<li><p>The more specific question to ask then is, “Even when there is a negative climate of income capability to ensure repayment, exactly who is supplying the money that allows colleges to be comfortable raising prices at 2 to 3X inflation, money the parents and students clearly did / do not have?” Some entity must be supplying or subsidizing the money that allows for education loans to be given to students, co-signing parents, and to parents directly in order to pay the colleges. The one entity that subsidizes these education loans via cheap money is the Feds. Therefore, colleges have no fear in raising rates, since the Feds indiscriminately back the higher education loans. Unfortunately, the students and their parents get stuck with much higher loans for the exact same degree.</p></li>
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<p>@awctndb:</p>
<p>You Seem to ignore points.</p>
<p>Again, net tuition (after fin aid and merit aid) has increased at a rate far closer to inflation than sticker price tuition has.</p>
<p>Here’s a relevant article:
<a href=“How the Government Exaggerates the Cost of College - The New York Times”>How the Government Exaggerates the Cost of College - The New York Times;
<p>"Net tuition and fees at private four-year colleges have risen 22 percent since 1992, the College Board says, and the increase has been 60 percent at public four-year colleges. Community-college tuition has declined, because aid grants have outpaced published tuition. These numbers are obviously quite different from the government’s index showing a 107 percent increase.</p>
<p>From an economic perspective, the College Board’s net-price data makes more sense than the government’s index. Higher education is a white-collar service industry that is split between the public and private sectors and largely immune from foreign competition, much as health care is and, to a lesser extent, day care is. We shouldn’t be surprised that the actual increase in real college prices over the last two decades – somewhere in the range of 40 percent to 50 percent – is quite similar to that of health care or day care."</p>
<p>So basically, the upper-middle class (and above, though once you’re bringing in more than half a million or so a year, I’d expect that you should be able to save up a bit for college) has been socked hard. Though in-state publics should still be affordable.</p>
<p>The really poor who don’t have what it takes to get in to the really generous elite privates (especially those with no-loan policies of some type) have also lost out, as, unlike 20 years ago, when Pell Grant+Stafford Loans+work-study was enough to cover everything, if their in-state flagship gives poor fin aid, the only realistic path is working their way through CC or a directional first. </p>
<p>For everyone else, I don’t think it’s been that much worse</p>
<p>^^ Yes, I ignore the net tuition point because I believe you are leading with a false number. That average net tuition includes students who pay near zilch to attend school and those who pay zero. They are not the people getting hit. </p>
<p>The question is what is the net tuition increase of the people actually spending their own money, being given limited to no finaid, and those risking to take out loans in the form of finaid to pay. This is what @GMTplus7 is pointing out. The net tuition increase you cite is a smokescreen that masks the real increase for those who are spending their own money. (I count easy money finaid as one’s own money because you have to pay it back, with interest over a long time which increases the cost by a lot overall)</p>
<p>Plus, it does not pass the smell test anyway - if the real rate increase for everyone were closer to the inflation rate, then there should be no problem then. Go sell that to parents and students who are actually paying the bills and see what they tell you. </p>
<p>And this is the problem with using averages, they can be used to hide where a real problem lies.</p>
<p>Reminds me of a president that came in and told me that he was increasing the price of a product line an average of 6%. Then I asked what was the proposed price increase of the top of the line product, which was already in the upper tier if its market. He said 10 to 12%, depending on options included. Yikes!! That would have been insane. He would have damaged that product’s market share. But, note that the average of 6% included products that had little to no price increase. If I did not ask that specific question and just looked at the averages, no way could I have deduced the actual effect on our top product, which would have been a huge negative. </p>
<p>“So basically, the upper-middle class (and above, though once you’re bringing in more than half a million or so a year, I’d expect that you should be able to save up a bit for college) has been socked hard. Though in-state publics should still be affordable.”</p>
<p>Directionals, possibly - state flagship may or may not be. My well regarded state flagship is $35K a year. No, that’s not $60k, but that’s a good chunk of money. </p>
<p>@Pizzagirl If you pay the $35k in CA for public you have another side of fairness. That is there are many students who pay little or nothing riding the support of those who do. An example - I know a student whose parents are divorced. The dad is a successful engineer who worked as a key member of many startup companies that went on to flourish. The mom went on to raise the child and chose not to work or go to school and was supported by alimony and child support. When the kid went to a popular CA public university - he paid nothing. I guess the assumption is that the dad has flown the coop and probably wants no part of paying for the kid’s education therefore the kid has 0 resources. Anyhow there any many examples of this kind of generosity. The CA Dreamers is another example. I support high services and taxes in that I agree that societies need to educate their young people if they want future success. But how can someone who’s paid taxes to the state for 35 years be charged $35,000 for his kid to go to school while the kid of someone who comes from Mexico just two years prior to matriculation can go for free? And why would a kid from Idaho have to pay $57,000? Answer: to pay for more kids who can pay nothing. </p>
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<p>Even the $200,000 to $300,000 range income level (which people around here seem to think of as “upper middle class”) should be able to allow saving up quite a bit for college, if one did not fall into the trap of expanding one’s spending to consume all available income.</p>
<p>Of course, the reason colleges do this is because enough people in that range and higher are willing enough to pay the list prices, despite the griping. I.e. the colleges can fill their seats at that price. Discounts (i.e. financial aid and scholarships) can be used to entice students who are especially attractive to the colleges but are less likely to be able or willing to pay the high price. Nothing more than price discrimination, which lots of businesses do or want to do.</p>
<p>If you go to the fin aid forum, you’ll find that kids of divorced parents often fair badly when it comes to fin aid because pretty much all Profile schools expect both parents to contribute to funding (even when one refuses to do so). CA may be an exception because the UCs are FAFSA-only schools and committed to strong fin aid for state residents who make below average.</p>
<p>There’s quite a bit of variation by state. The UCs have good fin aid for their in-state poor. If you’re poor in AL and want to attend UAT but don’t test high enough to get one of their merit scholarships, you’re out of luck. 'Bama spends virtually none of its own money on fin aid.</p>
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<p>Haven’t ever been through this, but I thought it was common in divorce settlements to spell out the higher
earning parent’s minimal financial obligations to the children through college not just the minimum child support while they are under 18. I have certainly heard some strange examples, step father and mother and divorced father all three being expected to contribute when calculating the EFC - if one or more doesn’t want to or can’t contribute the college becomes unaffordable.</p>
<p>My wife and I often joke that we’re divorcing to get the free ride. :-)</p>
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<p>Yes, but the most selective schools do not give merit aid, and they have deliberately raised their tuition to fund a transfer of money to financial aid grants. I’m not just referring to ivies. Other schools: Tufts, Williams College, Pitzer, Pomona, Georgetown, Wesleyan, Amherst College, Middlebury. They are very proud to declare on their websites that they don’t give merit scholarships of any kind. </p>
<p>I know of many upper income but not-wealthy families who have opted out of this circus and are pursuing only the merit-granting schools. Not surprising that these schools are rising quickly up in the rankings, despite what that arrogant Yale grad said about these merit-aid schools being for dumb, rich kids.</p>
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<p>However, there may not be much money to contribute after a divorce. Divorce is usually quite bad for the personal finances of everyone involved. Compared to continuing to be happily married, the divorcing spouses spend a lot of money on lawyers, may have to sell assets at suboptimal times, and have higher costs to maintain separate households rather than sharing one household.</p>
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<p>The more I think about this statement I am not too sure how a statement that vastly limits to whom it applies is touted, as a general fact for all. </p>
<p>Clearly, the above can be shown to be true (after finaid and merit aid), but is patently false for the following groups:</p>
<ol>
<li><p>Students who get no merit aid. Includes the students at merit aid schools who do not qualify for merit aid, so they are heavily loan-based. And the students at no merit aid schools.</p></li>
<li><p>Students who get merit aid, but very little to no finaid.</p></li>
<li><p>Students who get neither finaid or merit aid.</p></li>
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<p>These three groups represent the majority of students, not the minority of students. Therefore, the majority of students and their families have experienced net tuition rates easily approaching 2X rate of inflation per year. And given the recent doubling of the loan interest rates under the ACA, these families in the end will definitely pay a good bit in excess of 2X inflation rate per dollar borrowed for school.</p>
<p>How does the non-profit status of most (?) colleges and universities play into this complex issue?</p>
<p>@awcntdb : I don’t follow your logic on group 2. I suppose I should have said “after fin aid and/or merit aid”. That’s what net tuition is.<br>
If you got a full-tuition scholarship to Emory 20 years ago, you’re only paying for room&board+ancillary costs. Same as now, and those costs have not increased that rapidly.</p>