<p>We have friends with an income under $40,000. their child received a merit award of $31,000 from one school, and was offered loans and work-study to fill in the rest, another offered $42,000 strictly on a need basis. Sensibly, they opted for the $42,000, even though the school (an Ivy) was not the child's first choice (now very very happy with it). The first institution claims to be need blind in financial aid and merit, and awards the greater of the two. By doing so, however, it may lose students to schools who might otherwise attend for that kind of merit assistance, and also lose lower income kids whose need based package might be more generous elsewhere. I can see why schools would NOT want to follow this policy.</p>
<p>I think making college accessible to all students is a noble goal. However, one aspect that doesn't make sense to me is the policy that some colleges have of providing that all students below a certain income level will graduate from college without any debt. These programs are largely funded by the tuition payments of other students, many of whom will be paying off student loans for years to come. If you assume that students will be making similar incomes after graduation, what is the reason for this discrepancy?</p>
<p>I said I had mixed feelings about merit aid because I agree that when parents cannot or will not meet their EFC it is the students who suffer. I think this is particularly a problem for kids of divorced parents when one won't pay. They have already been through the emotional stress of divorce, and now they have the financial stress of meeting college costs. Merit awards give them some help. I do wish need-based aid could take those kinds of situations into account in a more fair way, but I also realize it would only encourage more parents to refuse to pay.</p>
<p>logosprincipal
where do you get the information that need based aid is funded by tuition from other students?
everything I have read indicates aid is funded through the college endowments and other accounts specifically set for that purpose</p>
<p>I don't know how this operates at all schools, but at UNC-Chapel Hill the "Carolina Covenant" is at least partially funded by tuition payments.</p>
<p>
[quote]
The current system gives double breaks to socially disadvantaged kids:</p>
<p>once during admission and then in financing.
[/quote]
</p>
<p>That's assuming the admission is need-blind which isn't necessarily the case especially for those diverting money for need-based to merit-based ones. Schools that do that may have incentive to take ability to pay into consideration (which hurts the poor students) because the more they do so, the more money is available for merit-based awards which are often meant to "steal" HYPS admits (hence raising the school's profile) rather than giving double-break to low income students (though that may happen to be the case for certain poor students but that's not really their goal/intention).</p>
<p>Merit aid is usually not derived from tuition. In fact, let's say it costs $55,000 a year to educate one student at a particular university. Let's say the tuition is around $35,000 or so. Even if someone pays full ride, they still need $20,000 in educational expenses covered. Endowments, gifts, and other money managed by the university is used to plug this amount. If a student gets merit aid for $15,000, then the university has to plug in $35,000 to cover the additional costs for this student. It's not getting this money from other students' tuition, since students who pay the full sticker price aren't paying <em>more</em> than what it costs to educate them; in fact, they are paying less. Awarding financial aid to certain students just means the college will have to cover additional costs for those students as opposed to a kid paying full tuition.</p>
<p>At least, this is the case with private universities, as I've been told by financial aid officers at a variety of schools. Public universities charge out-of-state students more (sometimes even 4-5 times more than in-state students) and sometimes use this money to fill in for in-state students' costs.</p>
<p>*UNC-Chapel Hill's Carolina Covenant will enable eligible students from historically low-income families to attend the University and graduate debt-free if they:work on campus 10 to 12 hours weekly in a federal work-study job throughout their four years here, instead of borrowing.</p>
<p> agree to have the University meet the rest of the student's financial need through a combination of federal, state, university, and private grants and scholarships. *
I really don't see where they say they are going to use other students tuition funds to fund this grants</p>
<p>Also you might note that "debt free" only means that they are going to meet 100% of need for these students- not that the students won't need to borrow anything</p>
<p>My D school meets 100% of need, but we still have to borrow a good chunk of her EFC</p>
<p>I have not read through all of the 5 pages of comment, so perhaps my issue has been addressed, although I would doubt it. I do not wholly object to merit based aid, because kids who work hard deserve it. no doubt. What I object to is kids, I'll say again, kids, studying late into the night, taking advanced subjects that they have no interest in, doing community service that they have no interest in, and achieving 4.8 or so GPA's on a 4.0 scale, (means nothing to me). what is missing is the ability for a kid to be a kid. It is so out of control that I truly think there should be some kind of legislature about it. AP courses at all schools or at no schools. GPA is 4.0, no higher. It seems kids have to decide if they want to be a CEO of a major company when they are 15 years old, and therefore begin the process at that point, or if they want to have a little fun. As parents, I think we all need to stop the insanity and say they should have fun. Then let the merit based aid fall where it may.</p>
<p>emeraldkity4,</p>
<p>I've been trying to find a link to this information, but I've not been able to find the original article that I read. If I can come up with it, I'll post it. I did read that the Access UVA program, which is similar to Carolina Covenant, is also partially funded by tuition payments.</p>
<p>Carolina Covenant is completely need-based and goes beyond the 100% of need that UNC-CH already promises. The intention is that it will cover all necessary expenses for low income students without any loans.</p>
<p>lewisloftus: Your comment that "public universities charge out of state students more . . . and sometimes use this money to fill in for in-state students' costs" is inaccurate. At least here in NC, the NC taxpayers absolutely subsidize the [relatively] inexpensive tuition costs for out of state students who attend UNC system universities. I don't know about other public universities, but this is true in NC. The OOS higher tuition costs do NOT support in-state student costs.</p>
<p>And, yes, many merit scholarships are funded by private endowments that have no bearing on monies used for financial aid--which is totally separate.</p>
<p>emeraldkitty: I believe the Carolina Covenant is all grants, no loans, and is 'debt free.' UNC-CH was the first public university to institute a program like this. 10-12 hours a week of work-study, but no loans involved. The University covers the entire cost of the education, aside from the work-study.</p>
<p>Appreciate all the lively & civil debate here. Very productive.<br>
Also want to clarify about EFC: A family even with an EFC of zero still has financial contribution to make. (1) The relatively "minor" (my quotes) tuition contribution is or can be, yes, a hardship. In the scheme of things it's a tiny percentage of the full bill, but sacrifices continue to be made (as they should be, i.m.o.). (2) full aid does not cover optional campus health insurance, necessarily; that can get added to the full bill, & then divided up for the family to make payments on. (3) travel from a distance is naturally expensive, & thus limited or (again) requiring continuing family sacrifice. (4) costs that a college considers optional, or which it projects to be low, a particular family may consider essential or important, depending on their or the student's personal needs, activities, etc. (5) music lessons for a performing arts student or arts-involved student are usually subsidized by half, if that. No question that it's helpful, but again, there's an out-of-pocket for that, too.</p>
<p>As with middle-class families, or unwealthy higher-end families supporting a pricey education, sacrifices will be ongoing for low-income, too.</p>
<p>This whole process, esp. for the "non-full-need" students, would be so helped by more regularity & consistency of information, as well as streamlining the merit aid process -- such as the gifting that is built into some college apps without add'l effort. Way too much inefficiency when it comes to searches & efforts. Improving this would aid the distribution of merit money and (again very importantly, i.m.o.) reduce admissions pressures on the very upper-tier schools which have money to burn.</p>
<p>emeraldkity4,</p>
<p>This isn't the article that I was looking for, but it does address the fact that tuition is used as a source of funding for Carolina Covenant.</p>
<p>
<p>The so-called "rich" aren't always rich. There are many families in expensive areas with incomes in the $100k-$150k range who get stiffed in the financial aid process who cannot reasonably afford to pay $45k per year for a private education. Many of these people are attracted by fat merit packages offered by lower ranked schools.
</p>
<p>This is exactly the frustrating situation we've found ourselves in. We're very middle-class in terms of income. We've scrimped and saved relentlessly over the years, cut every corner we could possibly cut, taken state park vacations, drove high-mileage old cars, paid off our debts (including house), sent our daughters to public schools, and managed to save some money for their education. We are now informed that we qualify for absolutely no need-based aid because of this, yet NO WAY can we afford $43,000 a year for the college my oldest daughter has dreamed of attending. Instead, our middle-class options are: state school, third-tier school with sufficient merit aid, or as noted earlier by someone else, obscene debt. While I'm venting ... my daughter received a $7,000 distinguished academic scholarship from a top LAC not noted for generous aid. We were thrilled. She subsequently learned that a very comparable student from her high school received the same merit award, plus a $17,000 need-based grant. Huh? He lives in an expensive neighborhood, with an attorney and an architect for parents. My husband and I are in journalism, not exactly big-money careers. Of course, there are things I can't possibly know about why one seemingly affluent family would receive a ton of need-based aid while another of apparently lesser circumstances would not. I guess I've been naive about this whole college process, but won't be for long.</p>
<p>Hindoo: </p>
<p>I totally agree with your post. (By the way, cavalier misunderstood my earlier post and wrongly addressed his answer to mine.)</p>
<p>Middle income people who save and have college funds for their kids are "penalized" by the system. The FAFSA system, as it is set up, inadvertanty discourages people from having college funds.</p>
<p>I have warned my siblings who have younger children to stop putting money in their kids' names for cars/college -- instead put in the parents' names. They were shocked to hear that they would be penalized for having the money in the kids' names. My siblings aren't rich, but they, too, scrimp and save and would probably be given a high EFC because the college will expect that all kids' money to be used for college. My brother had been putting "grandma's $$ gifts" in each kids' account so that the kid can buy a car to use for college. colleges will expect that money to be used for college -- not a car.</p>
<p>I support merit scholarships because so many people find themselves in your shoes. Many are not extravagant but they live in an expensive area (or recently have received a higher income) and the system expects them to be able to afford 25-50K per year for their kids' college costs.</p>
<p>Again, how are you defining middle income???</p>
<p>
[quote]
Number of American millionaires reaches record; Median income at $43,200 according to Federal Reserve
[/quote]
<p>I expect most people define median income to about what the Federal Reserve found to anywhere as much as 3x median income or $130,000</p>
<p>Middle income seems to be perceived as whatever you make, I know few people who consider themselves well off, and fewer who consider themselves poor.</p>
<p>People who have zero EFC, who are looked on with envy by some, probably have an annual income of much less than that for a family of 4.
I agree though with above posters that one of the most annoying fallacies is to save in students name.
That only is a good idea if you have 100% of the costs for your student for all four years of school. Otherwise by far it is preferable to save in parents names.</p>
<p>it's hard to really define "middle class" by income alone. My parents, who like many other "seasoned citizens," own their homes outright -- so their modest income goes a lot further than someone who earns the same amount and has to pay a mortgage or rent.</p>
<p>This is just my opinion but I define middle class as having enough money to pay the mortgage, upkeep and expenses of a normal sized home, have 2 decent (not luxury) cars, being able to feed/clothe a few kids (with normal stuff), have a retirement of some sort, some long term/short term/emergency funds, and have some (not a ridiculous amount) discretionary money.</p>
<p>But what is a normal sized home?
What are normal expenses?
If median income in the us is $43,000 I don't think we can say that 4 x that income is still middle income no matter where you live or what you consider "normal"-
Upper middle maybe if you live in a high COL area, but I know people who have moved out of our area, because they just can't afford it anymore
We are planning to retire to Mexico ourselves ;)</p>