College affordability - Printable Version

College affordability - Printable Version

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College affordability - Roberton3 - 06-08-2017

The NY Times has an interesting table about college affordability at https://www.nytimes.com/interactive/2017/05/25/sunday-review/opinion-pell-table.html

Stanford shows up as having the lowest "net price" for a student from a middle-income family.Â Harvard is second-lowest.

This makes an important point that too often gets lost in the noise about the cost of college.Â At this point, the "expensive" schools are expensive only if you come from a pretty well-off family.Â For middle-income (or low-income) kids, those schools are often a lot cheaper than the state schools (according to this table, the net price a middle-income student would pay to attend Kal is more than twice what it would cost to attend Stanford).

Re: College affordability - Mick - 06-08-2017

Couple of thoughts:

1)Â In 2009, I saw a presentation that said that the discounted rate that virtually anyone could get from virtually any private institution essentially made the cost of public school and private equivalent assuming that (a) one attended public school for five years and private school for four years and (b) that you worked the fifth year after graduating from private school.Â Seemed pretty compelling, and I know a number of people who have attended some very expensive schools for very little money, some at rates that are below public school rates.

2)Â I have a friend whose daughter is attending one of the top eight schools on the list with an endowment north of $1 mms. per pupil.Â He's suffered a set of health- and business-related reversals that are breathtaking.Â He's essentially lost everything; house, retirement, savings, job (for two years), wife had two bouts with cancer during that time.Â His daughter's well-heeled school claims that no student graduates with more than (low level) of debt.Â That may be true, but the girl's parents have fearsome levels of debt associated with her education.Â They've tried everything to get the college's financial administration to budge, to no avail.Â Six months after he lost his job, he spoke with Financial Aid, who literally told him "sell your house."Â So he sold it.Â Today, he lives check to check and he's more than half-a-million dollars in negative net worth and he has about $20k in liquid assets.Â The college will lend him money, but won't give him a dime in financial aid, because he and his wife make $190k annually.Â That they live in Silicon Valley with the attendant costs is immaterial.

Re: College affordability - CTcard - 06-08-2017

(06-08-2017, 01:26 PM)Roberton3 link Wrote:The NY Times has an interesting table about college affordability at https://www.nytimes.com/interactive/2017/05/25/sunday-review/opinion-pell-table.html

Stanford shows up as having the lowest "net price" for a student from a middle-income family.Â Harvard is second-lowest.

This makes an important point that too often gets lost in the noise about the cost of college.Â At this point, the "expensive" schools are expensive only if you come from a pretty well-off family.Â For middle-income (or low-income) kids, those schools are often a lot cheaper than the state schools (according to this table, the net price a middle-income student would pay to attend Kal is more than twice what it would cost to attend Stanford).

An interesting list in many ways.

The elite private schools tend to do well on the cost for middle income individuals largely because they have the resources to offer lots of financial aid. The more average private schools tend to be the worst on this list, as they have nowhere else to turn to keep the lights on.

It used to be that the (top) private schools had high sticker prices with steep discounts based upon income - essentially the wealthy students subsidizing the poorer; whereas public schools had much lower sticker prices and little financial aid - essentially tax payers subsidizing everyone. The second part of that has largely broken down in recent years with retreating state subsidy of universities and the top public schools are moving towards the price policies of private schools. The biggest losers on that development tend to be upper-middle class families (or perhaps lower-upper class families(?), but I rarely see that term used).

On that same list, the public schools on the lowest costs for middle income students come in at:
#10 Florida
#13 William and Mary
#19 Michigan
#21 UNC
#28 UC - San Diego
#29 UC - LA
#30 UC - Berkeley

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I do wonder about exactly how the calculate the cost for a student with a family income of $48-75K per year. Most schools have significantly different aid for different levels within that range. I assume it is really the cost at the middle of that range.

Re: College affordability - Farm93 - 06-08-2017

(06-08-2017, 01:49 PM)Mick link Wrote:Couple of thoughts:

1)Â In 2009, I saw a presentation that said that the discounted rate that virtually anyone could get from virtually any private institution essentially made the cost of public school and private equivalent assuming that (a) one attended public school for five years and private school for four years and (b) that you worked the fifth year after graduating from private school.Â Seemed pretty compelling, and I know a number of people who have attended some very expensive schools for very little money, some at rates that are below public school rates.

2)Â I have a friend whose daughter is attending one of the top eight schools on the list with an endowment north of $1 mms. per pupil.Â He's suffered a set of health- and business-related reversals that are breathtaking.Â He's essentially lost everything; house, retirement, savings, job (for two years), wife had two bouts with cancer during that time.Â His daughter's well-heeled school claims that no student graduates with more than (low level) of debt.Â That may be true, but the girl's parents have fearsome levels of debt associated with her education.Â They've tried everything to get the college's financial administration to budge, to no avail.Â Six months after he lost his job, he spoke with Financial Aid, who literally told him "sell your house."Â So he sold it.Â Today, he lives check to check and he's more than half-a-million dollars in negative net worth and he has about $20k in liquid assets.Â The college will lend him money, but won't give him a dime in financial aid, because he and his wife make $190k annually.Â That they live in Silicon Valley with the attendant costs is immaterial.

#1 - Requires a student to make the money grab after school.Â There are some out there that want to pursue careers with low incomes and that whole 5th year math would not really help.Â Stanford and a few others help with big easy to understand discounts to the full tuition rates, but many other private schools offer a good value for those that qualify for financial aid.Â It is too bad that many true middle class US HS students (40-100K in Household Income) don't know or understand that they really shouldn't compare any of the schools based on the full sticker price.

#2 - So this hard on their luck family is now pulling in income that puts that in the top 3% of US households?Â It sounds like a dramatic drop in wealth, income and health, but based on your description they were likely in the top 1 or 2% of households prior to the events.Â Yes, I realize $190K in Silicon Valley is middle class, but on federal formulas that's still a high standard of living.Â UCB's subsidized tuition for all approach would likely have been good for them if attending a college was purely based on finding the lowest cost school as their assets and recent FAFSA type earnings over the last few years were going to be more than your average family in the US.

In both cases, attending a school shouldn't be driven by that type of cost model anyway.Â When I hear smart HS students talk about college in those type of investment terms I feel they are applying a return on investment financial model to a window of time that likely will yield their most important life experiences.Â The tuition financials are really a small part of the deal, when assessing the overall value of the most selective universities.Â

Re: College affordability - Nan3cy - 06-08-2017

When are wealthy c.al alums going to tumble to the fact that given the state of state subsidies (or lack thereof) UCB needs an endowment, and they should pony up to help increase it? $46K in endowment per student? Yikes.

Re: College affordability - Mick - 06-08-2017

(06-08-2017, 02:19 PM)Farm93 link Wrote:#2 - So this hard on their luck family is now pulling in income that puts that in the top 3% of US households?Â It sounds like a dramatic drop in wealth, income and health, but based on your description they were likely in the top 1 or 2% of households prior to the events.Â Yes, I realize $190K in Silicon Valley is middle class, but on federal formulas that's still a high standard of living.Â UCB's subsidized tuition for all approach would likely have been good for them if attending a college was purely based on finding the lowest cost school as their assets and recent FAFSA type earnings over the last few years were going to be more than your average family in the US.

Re: College affordability - Snorlax94 - 06-09-2017

College (un)affordability is a major problem. I think it's one of the biggest problems in America today, contributing to income inequality and a difficult outlook for debt-ridden millennials.

I think the article's use of cost for "middle income" Americans is very misleading. In 1993, Stanford's tuition+room+board was $22,850 and the median income in the US was 33,178, so a year of Stanford would consume about 69% of a median person's income. Now, tuition+room+board is about $64,447 and the median US income is $56,516, so a year of Stanford would consume about 114% of a median person's pre-tax income. That is a staggering increase. Now, I know the article says it costs only $4-5k for middle-income households, but I'd like to see their assumptions and how they calculate that. If you live in the Bay Area, you have high taxes and high expenses (not to mention medical expenses and even utility fees are much higher than they were in 1993, even in inflation-adjusted terms).

Plus, although the federal aid formula does not include the home you're living in as part of the assets you can use to pay for your children's tuition, Stanford (and many other schools) do count your home as part of your assets.

I have two kids, assuming their best admit is to a private college, I estimate tuition+room+board will be $80,000 a year by the time they graduate from high school. Many schools expect parents to contribute 10% of their net worth as their contribution each year. Because my kids are more than 4 years apart, basically, I will be expected to contribute up to $800,000 for 8 years of college. And that assumes each one graduates in 4 years.

Even if my household income was, say, $80,000, but I bought a home in the Bay Area, colleges will expect to consume $800,000 of my net worth so long as everything I have -- including all my home equity -- was a million or more. If that's all I had saved -- if I had under-contributed to 401ks expecting my home to be my retirement nest egg -- I'd be in trouble, and potentially lose my home to send my kids to college.

And that's assuming you're someone who had the opportunity to buy a house in the Bay Area before the market went insane. If you graduated in the last 5-10 years and didn't work at a high-paying tech company, you may never have the chance to buy, and so you wouldn't even have that home equity for the colleges to consume.

This isn't a criticism of Stanford specifically, but the increasing cost of college is a terrible problem in America. And the aid packages for low and "middle" income Americans is very misleading.

Re: College affordability - FarmBoy - 06-09-2017

My family had a pretty big reversal while I was a Sophomore. Parents declared bankruptcy and were being sued for more than everything they had. Prior to that, my parents had several million in assets and a self owned business. Stanford responded to these changes and provided a pretty good financial aid package for me. I ended up graduating with about $17K which was not tiny in 1999 terms when my starting salary was about $45K a year, but certainly manageable.

Re: College affordability - Mick - 06-09-2017

(06-09-2017, 05:48 AM)FarmBoy link Wrote:My family had a pretty big reversal while I was a Sophomore. Parents declared bankruptcy and were being sued for more than everything they had. Prior to that, my parents had several million in assets and a self owned business. Stanford responded to these changes and provided a pretty good financial aid package for me. I ended up graduating with about $17K which was not tiny in 1999 terms when my starting salary was about $45K a year, but certainly manageable.

That's basically what I was getting at.Â My friend's family was literally in the same boat, though he hasn't declared bankruptcy yet.Â Stanford was generous (and in my view normal for an institution with an endowment its size), the other institution was not, and the kicker was that the other institution regularly advertises that their students don't graduate with any debt.Â True on its surface, because it rarely extends loans to students, but parent loans are its chief financing tool.

Snorlax's comments are also 100% accurate.Â In fact, if you go back further, my senior year in high school was 1979.Â The regular student loan that anyone could get was $2,500 which was about what San Jose State would cost, inclusive of room and board.Â SCU was $6,800 when I started in 1980, $8k when I left in 1984 all in.Â Nominal household income in 1980 was $16,671, so private school tuition was about 40% of nominal household annual income and CSU costs were about 1/4.

Re: College affordability - CTcard - 06-09-2017

(06-09-2017, 04:03 AM)Snorlax94 link Wrote:the aid packages for low and "middle" income Americans is very misleading.

It is not entirely clear to me why you say this - is it the home equity issue you cited?

Quote:Plus, although the federal aid formula does not include the home you're living in as part of the assets you can use to pay for your children's tuition, Stanford (and many other schools) do count your home as part of your assets.

Stanford caps how much of home equity can be considered as an asset. This article (below) seems to mention that cap as both 1.5 times annual income and 1.2 times annual income, though I think it is the former. At any rate, I think it is fairly normal to have for a family earning under $100K and kids going to college to have home equity over 1.5 times annual income, so this shouldn't put those living in wealthy areas at much of a competitive disadvantage versus those in more average areas (which to some is a criticism).

https://www.insidehighered.com/news/2007/02/22/aid

Quote: In 1993, Stanford's tuition+room+board was $22,850 and the median income in the US was 33,178, so a year of Stanford would consume about 69% of a median person's income. Now, tuition+room+board is about $64,447 and the median US income is $56,516, so a year of Stanford would consume about 114% of a median person's pre-tax income. That is a staggering increase.

About three quarters of the way down the page linked below, there is some data on Stanford's historical sticker price in both nominal dollars and inflation adjusted dollars. Unfortunately, this is only tuition and not room and board. My impression is that room and board has risen at a similar but somewhat smaller rate - though I don't have figures.
Inflation adjusted, the rise was about 57%. Part of that is simply an increase. Part of that is that Stanford (and all colleges) are increasingly using tuition from wealthier families to subsidize discounts for less well off families - and I am sure most of those wealthier families don't feel overly wealthy with respect to the cost of Stanford.

http://college-tuition.startclass.com/l/4518/Stanford-University

Re: College affordability - stupac2 - 06-09-2017

The financial-aid wars really kicked up steam while I was at Stanford. In 2005 I got almost no aid, maybe $10k out of the $45k sticker and mostly in loans. So I blew my savings knowing that being poorer would look better and that my brother was starting college the next year which would help too. After that I was on the hook for ~$15k a year, after the cheap loans and grants, which was about what my parents were giving me, so it worked out. Ended up with ~15k in loans that got paid off in <5 years.

Also, Mick, without knowing your friends' actual financial situation, I find it a bit hard to be too sympathetic (aside from the cancer part, that blows and I hope they've recovered) because:

1) Medical expenses are capped now, it's no longer ruinous.
2) $190k is significantly more than my wife and I make, and we're managing just fine with a mortgage and a kid. If we made that we'd be able to spend $30k/year on college without much issue.

So, I dunno. I'm always really skeptical about the "woe is me" financial stories from white-collar types around here, it just doesn't jive at all with my experience. I frequently see posts on /r/bayarea from people who make more money than I do saying that it's just impossible to own a house and raise a kid in this area on normal salaries and am like, uh, what do you spend your money on? It reminds me of [url=http://"https://www.theatlantic.com/magazine/archive/2016/05/my-secret-shame/476415/"]this article[/url], which should be titled "I Am Really Bad With Money and it Caused Me PROBLEMS." Yeah, funny how that works.

Re: College affordability - fullmetal - 06-09-2017

stupac, you did well, and you made good decisions.

However--

Mick is allowed to feel bad for his friend even if his friend's situation might be self-inflicted.Â And we are allowed to feel bad for Mick for carrying the emotional burden of seeing a friend in deep financial distress.Â There may be very good reasons why Mick's friend is in debt, and healthcare may figure prominently in several of those reasons.Â I don't think anyone here should try to win the Suffering Olympics.Â

Re: College affordability - stupac2 - 06-09-2017

(06-09-2017, 09:05 AM)fullmetal link Wrote:stupac, you did well, and you made good decisions.

However--

Mick is allowed to feel bad for his friend even if his friend's situation might be self-inflicted.Â And we are allowed to feel bad for Mick for carrying the emotional burden of seeing a friend in deep financial distress.Â There may be very good reasons why Mick's friend is in debt, and healthcare may figure prominently in several of those reasons.Â I don't think anyone here should try to win the Suffering Olympics.

Well, sure, that's fine. I'm just saying that it's not entirely obvious that this is really a case of insane college prices.

Re: College affordability - Papa John - 06-09-2017

The UC system (not just talking about C.al), has its Blue and Gold Opportunity Plan for California residents. In a nutshell, if your total family income is < $80k you don't pay tuition and fees. And there are other grant sources to further reduce the cost--books, housing, transportation, etc.--of attending a UC campus for students who have a lot of financial need.

I'm not sure how well this is advertised amongst Cali high schoolers and their parents, but I know folks who have taken advantage of the B&G Plan to send their kid to a UC that they would not have otherwise been able to afford.

Re: College affordability - Mick - 06-09-2017

(06-09-2017, 09:42 AM)stupac2 link Wrote:[quote author=fullmetal link=topic=16963.msg194615#msg194615 date=1497024320]
stupac, you did well, and you made good decisions.

However--

Mick is allowed to feel bad for his friend even if his friend's situation might be self-inflicted.Â And we are allowed to feel bad for Mick for carrying the emotional burden of seeing a friend in deep financial distress.Â There may be very good reasons why Mick's friend is in debt, and healthcare may figure prominently in several of those reasons.Â I don't think anyone here should try to win the Suffering Olympics.

Well, sure, that's fine. I'm just saying that it's not entirely obvious that this is really a case of insane college prices.
[/quote]

To be clear...my friend is not seeking sympathy or whining about his condition.Â He had a business, it did okay for years, it did well for a few years, then the business tanked.Â It happens.Â His complaint is that for two years, his income fell to $50k and lost all his assets (liquid and otherwise), but his daughter's university refused financial aid in the first year of his $50k income because he had assets.Â They told him he needed to liquidate before they would give him financial aid.Â And as I stated in a prior post, his family has about $2,700 per month after rent/medical/education payments.Â And the college is about $70k a year all in, not $30k.Â Remember, their total budget for food, clothing, auto repair (on their twin 135k mile vehicles), utilities and all other incidentals is $2,700, so the $6,000 per month that the college costs isn't quite in the cards.Â And that doesn't even speak to retirement, which is not an option for them.

He finds it incongruous that the university brags "Our generous financial aid program allows undergraduates to graduate from xxxx debt free" when that isn't really the case.

Re: College affordability - Farm93 - 06-09-2017

(06-08-2017, 11:10 PM)Mick link Wrote:[quote author=Farm93 link=topic=16963.msg194594#msg194594 date=1496956747]
#2 - So this hard on their luck family is now pulling in income that puts that in the top 3% of US households?Â It sounds like a dramatic drop in wealth, income and health, but based on your description they were likely in the top 1 or 2% of households prior to the events.Â Yes, I realize $190K in Silicon Valley is middle class, but on federal formulas that's still a high standard of living.Â UCB's subsidized tuition for all approach would likely have been good for them if attending a college was purely based on finding the lowest cost school as their assets and recent FAFSA type earnings over the last few years were going to be more than your average family in the US.

Well, $190k is the top 4% for the USA, not top 1% or 2% or 3%.Â And it would be a high standard of living in Detroit or Topeka or Biloxi...not so much in silicon valley where the two of them make the $190k.Â Color me impressed by how you blithely dismiss 'the events," you sound just like he describes their financial aid counselors.Â Personally, I wouldn't have the stones to do that to a couple who'd lost everything, but that's just me.

So here's their situation: $190k less $70k in fed/state/FICA/SDI taxes.Â High, because they don't have mortgage or property tax deductions.Â So after tax, they have about $10k/month.Â They rent a shithole for $4k leaving $6k.Â Their payments on all of their college loans are $2,700 per month, leaving $3,300.Â Medical insurance, deductible and payments are another $600, so now it's $2,700 per month for all expenses for two adults plus the youngest child.Â They don't qualify for medical aid.Â Happily, they make enough to fund his life insurance, because, well, ya never know.
[/quote]
My point was to apply the same approach a Financial Aid office would in that case.Â So thanks, I guess.Â This is about formulas, though that's easier to perform on a chat board than if I was living in that situation.Â

The individual situation, outside of the financial, sounds awful, for sure.Â Just doesn't matter in the case of the federal formulas.Â A school may or many not have their own funds for unique financial hardships that fall outside of the federal formulas, but there are lots of tough stories out there.Â The financial part of the story, even as outlined, is still so much better than most USA families and really even better than most in the SF Bay Area as median household income in most Bay Area towns is well below $190K.

The formulas say they were doing well a year or two ago and are doing well now.Â Lots of very wealthy families can look poor for 12 months, so the financial aid formulas usually look at assets now and income over the last few years.Â Their losses (health and financial) likely make it hard as clearly their standard of living is less than it was before.Â Still most families in the USA are not going to afford a $4000/mth house of any type even pre-tax as median household income sits in the $50-60K range pre-tax.

This family is now in that zone where public schools are a financially sensible choice.Â They earn too much for typical working and middle class financial aid, and apparently no longer have enough assets to not worry about paying full freight tuition.Â Sounds like when the started the process they might have been in the zone wealthy enough to not be worried, so that change in assets is also a factor to them as drops in living standards are hard.Â Their real struggles are also hard for others to appreciate, like say a financial aid officer with a household income well below $190K.

Re: College affordability - BostonCard - 06-09-2017

Right.Â As long as income is a factor in tuition, individuals will be incentivized to game the system to minimize the amount of income they show, and the more people game the system, the more the system tries to identify and close loopholes and cases where people game the system.Â Unfortunately, sometimes legitimate financial hardship looks not all that different from someone trying to game the system.

I am sure the financial aid officers have heard every story in the book about how and why the office ought to re-evaluate the aid offer.Â Unfortunately, some of them are true.

BC