right arrow
Make sure to check out our July Checklists for HS Juniors and HS Seniors. Consult these quick resources to get you started on the process this month.
GUEST STUDENT OF THE WEEK: ehales3 is a rising sophomore at Cornell University. As a high school student, she always thought that she wanted to study in a more urban environment, but has grown to love Ithaca and all that it offers. ASK HER ANYTHING!
As we work to adjust to the current reality, make sure to check out these dedicated COVID-19 resources: our directory of virtual campus tours, our directory of extended deadlines, as well as the list of schools going test optional this fall.

Full Pay Families Pay For Aid & Scholarships??

CupCakeMuffinsCupCakeMuffins 1156 replies113 threads Senior Member
Is this true? Is this the reason behind high cost?

“At private colleges, you should ask, “What is the school’s tuition discount rate?” These discounts are actually tuition dollars that families or students pay that are redistributed – for very good reasons – to support students with high financial need or to attract students with special talents. “

https://www.google.com/amp/s/theconversation.com/amp/5-ways-to-check-a-colleges-financial-health-127908
edited February 8
32 replies
· Reply · Share
«1

Replies to: Full Pay Families Pay For Aid & Scholarships??

  • vonlostvonlost 19266 replies15812 threads Super Moderator
    It's not true at some private schools, where even full-pay students are subsidized by income from the endowment.
    · Reply · Share
  • TomSrOfBostonTomSrOfBoston 15766 replies1055 threads Senior Member
    edited February 8
    @vonlost Those would be to colleges with mega endowments like $10 billion or higher. There are only a handful of those.
    edited February 8
    · Reply · Share
  • homerdoghomerdog 7767 replies119 threads Senior Member
    It depends on the school. I know at Bowdoin, the money spent per student is even higher than full sticker price. And I believe they use their endowment for need based aid. I read a report from Kenyon that said a pretty big percent of tuition revenue was funneled back into need based financial aid so it was clear that a family paying full price at Kenyon was indeed funding need based financial aid for other families.

    My guess is that, in general, schools with really large endowments don't redistribute tuition dollars to families will get need based aid. I guess it's good to know. If it bothers a family paying full price then they would consider where their money is going but a good point is made that diversity is a good thing and it benefits the full pay kids too.
    · Reply · Share
  • Mwfan1921Mwfan1921 5335 replies89 threads Senior Member
    edited February 8
    @vonlost Those would be to colleges with mega endowments like $10 billion or higher. There are only a handful of those.

    While spending per student is certainly linked to endowment, there are schools with less than $10B endowments where spending per student is greater than all in costs.

    Bowdoin, for example, spends more per student than COA.

    Here is a link that shows 6 of the 10 LAC NESCACs where per student spend > COA, and some of them have <$1B endowments. https://bowdoinorient.com/2019/04/12/how-does-bowdoin-spend-its-money/



    Wrt the article that OP posted, it is important to look at the financial health of any school on your kid's list. At some schools, the full pays do subsidize those receiving aid.

    There's a great blog called higher ed data stories. There is an illuminating analysis of average discount rate by school (one measure of financial health), posted on Mar 27, 2019. It uses 2016 data from IPEDs which is still the most recent data available.


    edited February 8
    · Reply · Share
  • TomSrOfBostonTomSrOfBoston 15766 replies1055 threads Senior Member
    @Mwfan1921 The per student endowment at Bowdoin is very large.
    · Reply · Share
  • CupCakeMuffinsCupCakeMuffins 1156 replies113 threads Senior Member
    edited February 8
    Is this for real?

    https://www.google.com/amp/s/www.forbes.com/sites/prestoncooper2/2017/02/22/how-unlimited-student-loans-drive-up-tuition/amp/

    Several recent studies have found evidence that other federal student aid programs drive of tuition increases. A 2015 study found that a dollar of subsidized (non-PLUS) student loans increases published tuition by 58 cents at a typical college, with larger effects once reductions in institutional financial aid are taken into account. An NBER paper issued last year concluded that changes to federal student loans are more than sufficient to explain tuition increases at private nonprofit colleges. And a 2014 analysis found that for-profit colleges eligible for federal student aid charged tuition 78% higher than that of similar but aid-ineligible institutions.
    edited February 8
    · Reply · Share
  • homerdoghomerdog 7767 replies119 threads Senior Member
    I guess as long as parents take out Parent PLUS loans to send their kids to pricey private schools, the schools can keep charging what they want. When schools hit a ceiling where parents no longer want to take the loans because they are too big, they won’t get those students. For elite privates, though, I’m not sure this will matter. They will always get students they want. Some elite schools don’t offer parent loans since all need based financial aid are grants and no loans are offered.
    · Reply · Share
  • CupCakeMuffinsCupCakeMuffins 1156 replies113 threads Senior Member
    edited February 8
    @homerdog If paying families would go elsewhere and cost would need downward readjustment to keep getting paying students then how are those colleges going to fund financial aid?
    edited February 8
    · Reply · Share
  • KnowsstuffKnowsstuff 7248 replies34 threads Senior Member
    @CupCakeMuffins. It's eye opening...... I have read similar articles
    · Reply · Share
  • homerdoghomerdog 7767 replies119 threads Senior Member
    lol @CupCakeMuffins I certainly don’t have all of the answers. It’s a pretty complicated issue. I do know more and more families around here who have gone the no loan route, either sending kids to a public school they can afford or to a school that gave them merit. I bet that trend will continue.

    Like I said, elite schools either use endowment for financial aid and/or they will always have plenty of full pay families because families deem it “worth it” to go to those schools.
    · Reply · Share
  • CupCakeMuffinsCupCakeMuffins 1156 replies113 threads Senior Member
    homerdog wrote: »
    lol @CupCakeMuffins I certainly don’t have all of the answers. It’s a pretty complicated issue. I do know more and more families around here who have gone the no loan route, either sending kids to a public school they can afford or to a school that gave them merit. I bet that trend will continue.

    Like I said, elite schools either use endowment for financial aid and/or they will always have plenty of full pay families because families deem it “worth it” to go to those schools.

    Nobody has all the answers but with your logic, either most schools would've to stop giving aid or close shop.
    · Reply · Share
  • homerdoghomerdog 7767 replies119 threads Senior Member
    edited February 8
    @CupCakeMuffins I guess I’m not clear on what your question is. You’re curious why the cost of college keeps rising and wondering if parents taking loans are pushing up tuition rates?

    Or you’re concerned that some of the money paid by full pay families helps pay for financial aid for families who need it?
    edited February 8
    · Reply · Share
  • ucbalumnusucbalumnus 83284 replies739 threads Senior Member
    Is this for real?

    https://www.google.com/amp/s/www.forbes.com/sites/prestoncooper2/2017/02/22/how-unlimited-student-loans-drive-up-tuition/amp/

    Several recent studies have found evidence that other federal student aid programs drive of tuition increases. A 2015 study found that a dollar of subsidized (non-PLUS) student loans increases published tuition by 58 cents at a typical college, with larger effects once reductions in institutional financial aid are taken into account.

    So even if $3,500 of subsidized federal direct loans increases tuition by $2,030, that is very little of the $55,000 or so list price tuition at the private universities and LACs that people on these forums focus on.
    · Reply · Share
  • CupCakeMuffinsCupCakeMuffins 1156 replies113 threads Senior Member
    My concern is rising cost. It makes it unaffordable for everyone, no matter what is their EFC.
    · Reply · Share
  • TomSrOfBostonTomSrOfBoston 15766 replies1055 threads Senior Member
    I don't see why this is a revalation. Boston University proudly announced that they awarded $300 million in institutional aid last year. They have an endowment of $2 billion. In a good year the endowment will produce $100 million of spendable income. Even if all that went to student aid, which it does not, where do you think the other $200 million comes from? Full pay students!
    · Reply · Share
  • PurpleTitanPurpleTitan 13627 replies32 threads Senior Member
    "My concern is rising cost. It makes it unaffordable for everyone, no matter what is their EFC."

    Costs are rising on the top end because the demand for the elites are insanely strong and come from all over the world. And demand is insanely strong because of rising inequality in the US and rise of the upper-middle-class/rich all over the world where they didn't exist before. Getting rid of subsidized federal loans will barely make a dent in the COA of the Ivies/equivalents.

    If you really cared about affordability for everyone, then I'm sure you'd support free college for everyone. Of course, the funding would still have to come from somewhere: Taxpayers
    · Reply · Share
  • ordinarylivesordinarylives 3212 replies45 threads Senior Member
    Discount rate includes merit scholarships. So wealthy family whose kids got merit are subsidized by maybe less wealthy family whose kids didn't!

    Are you afraid you might be paying toward somebody else and don't want to? What's the point?
    · Reply · Share
Sign In or Register to comment.

Recent Activity