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.
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.