What I've learned about full-ride scholarships

Parents Forum
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<p>I understand why people in higher income brackets are frustrated, but as someone in the $40-$50K range who does qualify for need-based aid, I don't think the system is unfair. It is stingy, but the calculation is directly related to current income and assets. It is a system built on the assumption that middle class families with a steady income will borrow. Families with less money qualify for more aid, and families in median income ranges qualify for a moderate amount of aid. The families who do not qualify for aid may see themselves as "middle class", but the reality is that they have upper range incomes. </p>

<p>A family whose EFC is $80K probably makes $150K annually or more. Even if they have made that money for only a short time, it gives them a lot of extra cash on hand and borrowing power. </p>

<p>I've played with the financial aid calculators and done the math over and over: if I make more money, I will qualify for less financial aid, but no matter how I do the math making more money will put me ahead, because only about I am losing only about 45 cents on the dollar for increased income. So the bottom line is that the family with a $90K annual income qualifies for less aid, than I do on my $45K income, but they have more money. The idea that a family will be better off if one parent quits their job is simply misguided -- if the goal is to have the largest grant possible, then yes -- my grant is bigger when my income is less. But if the goal is to improve one's financial position, then I am better off earning more -- if I earn $10K more next year, I may have to pay $5K more for my kid's college the following year, but I will have more overall. </p>

<p>Bethievt wrote:
[quote]
I'm trying to find a financial safety for my son's best friend. His parents have worked themselves into a position of having two good jobs and they bought a run-down house and fixed it up, so they now have an expensive house (because every house here is now expensive) with no mortgage. Not a tragedy, because he can go to flagship U., but he doesn't want to go there.

[/quote]
Why can't this 2-income family take out a mortgage on their now fixed-up, high-equity house to finance their son's education? They are in a pretty good situation financially now if they don't have a mortgage to worry about -- a lot better off than I am carrying a $190K mortgage on an annual income of less than $50K. I'd have a tough time borrowing the full cost of my d's education, because I don't think I could afford a hefty monthly loan payment on top of my $1500 monthly mortgage. But you've just described a couple that makes more money and has less expenses.</p>

<p>Of course they have the right to choose a less expensive alternative; if I had all the money in the world, I might be reluctant to pay the full cost of attendance at a private college for a kid, especially if I felt that the flagship state U. provided an equally good education -- and I don't fault any family who makes that choice. But that's not the fault of the financial aid system. I would gladly trade my economic position and my daughter's $30K grant for a six figure annual income.</p>

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<p>Calmom, if I am reading your post correctly, a person that makes $90,000 instead of $45,000 is only going to come out around $4,500 to $10,000 ahead per year after paying taxes and college costs. I can see why a person making $90,000 isn't too happy. </p>

<p>Let's see. You lose 45 cents of every dollar to college costs, your income is federally taxed around 25%, your state tax probably around 5 to 9%, 3% to medicare, around 6% to social security and there isn't much left over. </p>

<p>If you have 2 people working making $45,000 each, it might be cheaper for 1 person to quit his/her job and stay home. You then can save on commute costs, eating out, clothes, taxes, and whatever I'm missing. </p>

<p>In the world of college costs, sometimes $90,000 isn't more than $45,000.</p>

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<p>Keep in mind that the financial aid formulas deduct out state & federal income taxes paid. </p>

<p>Here are figures - let's assume 2 people working, 2 kids, one in college, $50K in savings. I used the streamlined financial calculator at finaid.org and assumed the family lived in NJ and that the older parent is age 50.</p>

<p>With $45K earned income, only one parent working, the family's EFC is $2831.</p>

<p>With $90K income, both parents working, the EFC is $13,848 -- obviously a lot more -- but that is about $11,000 increase increase out of a $45,000 increase in income. Yes, you have to figure in the tax bite, commute costs, etc -- but the bottom line is that at the end of the year, that family has more income than they would if there was only one income. </p>

<p>If I turn the scenario into a single parent household - one parent, 2 kids, one in college -- $45K annual income -- the EFC is $3788 - almost $1000 more than the 2 parent household would have had to pay with one nonworking parent. This is because the income protection allowance for a single person is significantly less than half of the IPA for a married couple -- so basically the married couples starts out with an advantage over the single parent. </p>

<p>The single parent is unlikely to be able to double her income, but lets say that instead she gets an offer of a better job that will earn $60K a year. The increase of $15K in annual income boosts EFC to $7508 - more than $3700 above what it was before -- but that leaves another $11,000 in increased wages to go for taxes, other expenses, and some gain in overall income. </p>

<p>Is it easy? No. But is the person who makes more money better off than the person who makes less? Absent unusual or extraordinary personal expenses -- usually yes. </p>

<p>The bottom line for me is borrowing power. ALL parents, no matter how wealthy, are eligible for a federal financing program via PLUS loans. Every $100 in additional monthly income translates into $8000 of borrowing power, at current interest rates (which are now fixed, so they will not change in the future). </p>

<p>So let's look at Bethievt's friends, who have the fixer-upper house with no mortgage. I have a monthly mortgage payment of $1500. If my house was paid off, I could use that same monthly payment to borrow $180,000 with a PLUS loan - that's enough to put one kid through college. Now it will take me longer to pay off my mortgage that it will to pay off a PLUS loan -- so basically if Bethievt's friends were willing to take on the same amount of debt load to pay for college that I already have to deal with just to keep a roof over my head, they'd be fine.</p>

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<p>There are very few people fortunate enough not to have to pay rent or a mortgage, bethievt. Your friends are indeed in a better position financially than so many others & are indeed confronted with the same tough choices as many of us--how much are we willing to pay out of our family assets to allow our children to go to schools that will cost more than we'd like?</p>

<p>Unfortunately, for many of us, the answers are not all that "easy" or comfortable. Calmom has done a nice job of showing us a bunch of different scenarios.</p>

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<p>I understand exactly what you're saying and agree completely!</p>

<p>My boss and I have had this conversation before - now he makes my salary x 7. (Not that he doesn't deserve it - he does work his butt off!)</p>

<p>Anyway, we were discussing college costs - and of course his EFC was very, very high, so he will be paying everything out of pocket. I told him that my EFC came out to be about $3800 and I didn't have to pay too much for my D currently in college. His comment? "You're so lucky - single parents have it good with college costs." My comment back to him????? "I'll take your salary over mine any day and pay the full cost of the college!!!!" He thought about it and said "you're right."</p>

<p>Now, I don't own a house - I rent. So, I can't tap into any equity. In addition, due to financial reasons (which I am slowing digging myself out of - very bad divorce many years ago), I don't qualify for a PLUS loan. So, there aren't many options here.</p>

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<p>It is tough luck that one's choices in life have consequences.... but isn't that what we keep trying to teach our kids whether they're three and just dumped their orange juice down the sink, "oh well, no more juice" or 17 and get caught for ditching a class?</p>

<p>I am lucky to be in a two income family. There were many years early on when my salary paid taxes, childcare, and commuting costs. Many of my friends and neighbors, faced with the same math, quit their jobs. "why work to pay the IRS?". Fast forward 18 years later.... I've got an income which has gone up, thankfully. I've got a 401K I can leverage; disability insurance; life insurance; spouse has tuition assistance and a pretty generous corporately funded scholarship plan for employees children. I'm not bragging.... and I certainly paid my dues, but that's our reality. It usually pays to plan ahead.</p>

<p>Meanwhile, the friends and neighbors (and a sister-in-law or two) who were highly, highly critical of my choice to work, and complaining constantly that:
1-- with 15-20 years out of the work force, your choices are Walmart or the Gap-- a little higher than minimum wage, barely "worth" the effort of working.
2-- Said jobs have no benefits.... and if you get fulltime and qualify for benefits, said benefits are "too expensive" (i.e. not free).
3-- Colleges don't seem to understand how important it is to little Jonny and Susie that they had a mom home fulltime... why are they being "penalized" by only having one income all those years? Colleges should be more generous with one income families than with two (all things being equal) since one income families have less economic security.... what if breadwinner gets laid off? company goes broke? Plus wife has no IRA, 401K, pension... how is she going to fund their retirement if they have to "use their savings" to pay for college????</p>

<p>The math that colleges use isn't perfect, by no means, and for sure it penalizes families in areas with high housing costs, all things being equal. On the other hand, people need to take some responsibility for choices that they've made, and continue to make.... these choices have consequences down the road. You want a parent home with the kids? You won't have built up a pension. You want to buy a house with no mortgage? There goes your savings.... You want to take the kids to Disney and lease a new car every other year? Great, but don't expect colleges to look at your credit card debt with sympathy vs. a family struggling to cover the basics.</p>

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<p>
[quote]
1-- with 15-20 years out of the work force, your choices are Walmart or the Gap-- a little higher than minimum wage, barely "worth" the effort of working.

[/quote]
</p>

<p>Who are these women? Are they educated women who left successful careeers to stay at home? I doubt it. While nobody can expect to reenter the workforce at the same level her working friends have now achieved, I don't know any returnees who are stuck in retail sales clerk spots. One's past job history, combined with valuable work-related volunteer experiences, and perhaps a course or two to tune up rusty skills has worked wonders for the SAHMs who jump back in to the job market.</p>

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<p>This is an interesting thread. I am a high school senior looking at colleges. I'm doing pretty well. I am planning on appying to four top tier national unviersities, a northern top masters school (usnews ranking category) and my local State flgship university (2nd tier national university). </p>

<p>I think you have to go with whatever stategy works for you. Momfromtexas is doing what worked for her. Good Luck. Whoever said "Money doesn't matter, is either rich or a fool". Cost is a large factor. I am applying for all the merit aid I can get. I don't want to be in hock up to my neck (or my parent's either). But if I can get a decent package from a top tier university, my parents and I wil consider taking on some debt. </p>

<p>I'm applying EA to the northern masters institution (to qualify for merit aid), my stats are well above their qualifications and I hope to get a pretty decent merit package.</p>

<p>At my in State U, I should be a "University Scholar", with at least a $10,000 scholarship. My dad jokes that if I go to State U, he'll give me a car. No debt neeeded here.</p>

<p>The point being I really would like a top tier university, but you've got to hedge your bets. After all the letters go out, we will have to exam each offer ( I hope to get at least one from the top tier institutions), but no ED for me. I have to consider the financial aspect. </p>

<p>I think in some cases ED disadvantages students with less money. CMU even states that ED candidates will be guaranteed their full need is met, all others no guarantee. Other top tier universities include all students in merit competition, although I'm not sure how open the process is.</p>

<p>So my heart is with a top tier institution, but my wallet is with momfromtexas. I hope whatever strategy every one chooses, that it works for them, and that they get multiple offers aceptable both in academics and cost.</p>

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<p>From early posts in this thread, posts mentioned how full price of tuition along with room+board at some privates could be anywhere from over $30k to over $40k per year. </p>

<p>First of all, I assume momfromtexas lives in texas. Her 2nd son would have been accepted to UT--a highly reputable public school. For in-state students, I heard that tuition+room and board totals less than $15k per year. </p>

<p>Why does your son need to have a full-ride to be able to attend college? If you really aren't able to afford to pay a penny, I'm sure he would be offered financial-aid. </p>

<p>With a 1410, there are private schools such as Syracuse and BU that would probably offer a merit-scholarship--probably not a full-ride though.</p>

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<p>Actually, UT, with instate tuition and room and board, books and fees costs around $20,000 per year. I only know this because my son is going there next year and we have thouroughly looked into all the hidden costs that colleges tend to throw at you!! :)</p>

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<p>$20,000 is about what most of the big publics cost. Not an insignificant amount of money, alas, and it makes me worry about the accessability of the big Us for the middle and lower-middle class...</p>

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<p>“$20,000 is about what most of the big publics cost. Not an insignificant amount of money, alas, and it makes me worry about the accessability of the big Us for the middle and lower-middle class...”</p>

<p>Not to seem like a “let them eat cake” attitude…but…there’s more than one way to skin a cat. My H had zero money to go to college. He worked his way through community college and went on to graduate from an outstanding engineering university with zero debt. Sure, it took him seven years instead of four. But it can be done. </p>

<p>Even though we are paying our S’s way, he still had money saved up from several summers of work to the tune of several thousands. And we also had a little put away as well. Had he worked part time, he could have contributed an additional grand or so during the year. </p>

<p>The way I see it is this: Say it does cost $20K. If kid goes to CC for two years, working PT and living at home, then if kid uses summer savings ($2K), plus works part time ($2K) for the last 2 years at state U, plus parents save $1K per year of kids life, and therefore contribute another $10K per year, that leaves a deficit of $6K, or $12K debt. That’s pretty doable.</p>

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<p>cal mom</p>

<p>Maybe I'm just a whiner. I think the problem in my son's friend's case is that he has the free-ride offer from state U he doesn't want to attend. This lessens the appeal of taking on big debt on his parents' part. So I'm looking for the merit aid.</p>

<p>I certainly am glad that the aid is concentrated where it's needed most, no argument with that at all.</p>

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<p>I left a successful career as a software engineer to stay home with my son. We took a 60% cut in pay, got by with only 1 car, and gave up having savings, 401k, etc. I have no regrets. Those years with my child were priceless. I take responsibility for my choice. Some things are more important than $$.</p>

<p>I went back to work when my son was 9. Computer programming, like any technological field, changes extremely rapidly. If I could go back to work after being out of the field for 9 years, I’m sure that others in less technologically dynamic fields can too. I suspect that some of those ‘complaining’ moms may be feeling that they did not progress as people during the years that they were devoting their lives to their children. That’s a shame, really: parenting is a very noble profession and should be respected more. Those moms should feel good about their choice and recognize its value, while at the same time recognizing that, as with any choice, there are advantages and disadvantages. If they now have only minimum wage jobs as options, then I suspect they probably didn’t have very many career options to begin with. So it’s not the fault of their choosing to stay home; it’s probably a deeper issue such as never pursuing their own career in the first place, when they had the chance, before becoming parents.</p>

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<p>$20k is a lot of $$ to us. But, the way I see it, that's about what most people spend on a CAR.</p>

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<p>doubleplay, of course it's doable. (Though not everyone can live at home and go to college for the simple reason that not everyone lives near enough college to do it.) And yes, the community college option exists to make it cheaper. But it doesn't change the fact that the route of getting a 4 year education at the big U, with all the enriching experiences it entails, is getting harder for the middle and especially the lower-middle class.</p>

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<p>Why is it that schools can't hold down their costs? Somewhere on CC there was an article about how colleges continue to increase their amenities, and also the cost of attendance, because students demand it. If the schools keep filling their seats, I guess they will continue to spend/cost more. With vehicles, there appears to be a limit on what people are willing to pay for gasoline...at about $3/gallon people often give up the suburban for an economy. I wonder when we will hit that price with private/public schools. We already hit it in our family, as we don't feel Harvard is worth $30K more than our state flagship. But it is different with every family and I wonder when schools will no longer fill their seats.</p>

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<p>Just to revisit the issue of moms who stayed home & now their job prospects are pretty bleak: I have a good education & had varied, professional work experience. I happen to live in the land of huge automotive cutbacks. Job prospects are awful, and I can't even get an interview (hard to sell yourself if you can't even get the chance to sell yourself). I am not complaining, just stating the facts. I am fortunate, because I have a part-time position that pays decently. I just want to point out that the self-righteous people who feel those who have stayed home & are having trouble finding a job are somehow undereducated or WHATEVER ... lighten up! Let's all try to honor each other enough to realize that we all have different experiences through which we view the world. Let it be. As I tell my kids, if you don't have anything nice to say ... don't say anything at all.</p>

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<p>I am one of those people who must be brain dead from my years at home. My degree is in aerospace engineering. I worked for 10 years before quitting for 17. Now I tutor kids in math at my kids school. There isn't much demand in the area I live for aerospace engineers and it is hard to compete with the ones coming out of college with skills that didn't exist when I worked before (Matlab what???) But I realized all along that it would be hard to get back in, just like I realized it would be hard to pay for college. Nobody told me not to worry about saving for college or retirement because my kids would likely get aid and we would likely have a great pension. Quite the opposite. We are not the least surprised by our inability to send our kids to elite private schools. Just like we are not surprised that we won't be celebrating our 30th wedding anniversary in Tahiti. It was never part of the plan. But there are worse things. I think we'll live. I hear Tahiti is hot and Boston gets really cold.</p>

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<p>shedevil -- and you know what? you can do very well in life without setting A FOOT near Boston. So I hear, anyway ;)</p>