JZDucol, I would love to meet the 225K “working poor” family in California who is contemplating a 200K after tax bill for college. Can this family buy a home in Atherton? No. But the 225K family isn’t buying an apartment on the Upper East Side of Manhattan or a home in Winnetka, IL either.
But to suggest that this hypothetical family is “working poor”-- wow. get out much?
I have said this in other threads. As far as college tuition is concerned, private or public OOS schools who believe $200k+ for an undergraduate degree is somehow ‘value’ in whatever context they choose, have lost the plot. My wife and I are the ‘donut’ parents, our kids are Caucasian Midwestern females with decent grades who come bottom of the totem pole in terms of admissions. Increasing number of parents like us are looking abroad, but each to their own.
Sorry.
" making $225k, who is almost working poor…"
We’ve had years of threads protesting that 250k+ is poor, that the nice house in the sweet safe neighborhood is somehow equal to scraping by.
IF the poor family (IF) could find a $500 rental (let’s call it a fam earning 60k,) they’d have 54k left, not including taxes or any other expenses.
If 250k spends 5000/mo, that leaves them a freaking 190k. Someone can get precise, figure taxes, etc, but who’s really “poor?” SMH. Or are they accumulating discretionary expenses cuz, after all, they do have more available?
I used 250k, cuz it was stated. Obviously, proportions of available funds drop as income does.
I read both Krueger studies. You should do the same before shouting at me in ALL CAPS. Although based on the OP’s subsequent posts, that’s a sidebar from the current discussion.
I’m not ready to describe Californians making >200K as working poor, but we do have a problem with “disposable income” which is the source of most college payments. The wording is confusing but 225K sounds like pre-tax, and the 200K college payments are post-tax.
So 225K becomes -> ~167K (assume cumulative 26% rate via AMT since just about everybody I know in this salary range pays AMT) minus ~10% state -> ~144K. Ok, that’s still comfortable. (ok, don’t butcher me on the exact tax calculation; I’m no accountant - I just play one on tv). If you owned your house… then there is that 1.25% property tax on your >800K home.
Just looked it up now and a 2 bdrm in a middle range town (redwood city) is ~4.4K/month. Let’s say it’s roughly 50K a year. That 144K is now 94K. 401k (2 people) -> 36K so total is 58K. (one can argue this amount, but we shouldn’t argue the wisdom in saving) Still not poor, but… we still haven’t counted insurance, cars+maintenance, food, utilities, cellphone plans, cable bill, annual donations to schools (over 1K per year per child in some areas)… Plus the area is so expensive, all service companies charge higher prices.
Again, this “lifestyle” does not put one in the poor house, but it does limit disposable income significantly. If one lives in a place that is close to the employment centers in the bay area (for example) that’s very pricey… otherwise, a long drive (>1hr) that increases other incidentals. So, a complete SWAG is ~25-35K of disposable income a year? State schools are within budget, but of course $0 of FA, and the affordability of privates depend heavily on whether you put good portions of that 35K into 529s during the previous decade or two.
I’m a little uncomfortable with the “tiers” being used in a way where 2nd and 3rd tier schools are “not worth the price”. I believe, if it resonates with your child, it is priceless. A lot of people have stories like this but mine is a Stanford PhD grad I know (in one of the bio science majors) who didn’t do that well in HS. For ugrad, she went to a small LAC (known for partying back in the day) in MI, where she found herself, and turned her academic career around. If a school does this for my child, you betcha I’m willing to pay >$50K. Plus the quality of profs/programs at many schools have risen over the decades that the dropoff between the tiers is not a roadblock, but perhaps just speedbumps at the worst.
But since life has no guarantees, I wouldn’t mind lowering that price to make the cost/benefit/risk matrix make sense. So while I’m in support of the ideas here, l’m leery of us falling into the trap that rankings set for us…
And the 60k family’s food, cell and cable, etc, are pretty much the same, no break at the market for a smaller paycheck. They likely don’t drive an expensive car with higher monthly, insur and maintenance, right. No donations to schools. Doubt they’ve been n contributing much to a 529. But there’s a difference between what the discretionary choices are, in the first place.
This is OT on this thread. But we’ve seen the complaints. OP has every tight to pick colleges they can afford.
I lived in CA a long time, know how nutso housing is. I commuted. (And more than an hour around greater Boston.) No it’s not easy. But the 60k family/~45 after taxes, isn’t getting off easy.
@chippedtoof Indeed, I was just giving an example to show how misguided private college tuition scales for different families can be. The high tuition and idea of social engineering behind it don’t really take into account of geographical variations and other factors.
Lol, just for clarification on the first sentence of #64, no I’m not in that income group; I’m just a bad writer who lives in California 
@lookingforward You’re right of course. But if we reduce the californian’s income to 120K… vs S Dakota 60K… who would get need-based FA and who wouldn’t? Yet who’s life-style would get most impacted if their child went to an OOS private?
I think 60K wouldn’t hit AMT and I believe their cumulative tax rate would be more like ~15%, while the 120K would be more like 20-25%… plus state tax, gas tax, etc in california makes it hard. I think the californian’s discretionary spending is less than one would think. For instance, our cars until recently all had over 160K miles and we’re maintaining them ourselves for the most part to help save our budget. It’s not surprising why so many californians bug other states by retiring/relocating elsewhere.
I thought real estate in the bay area was seriously demented in 2000. It is much much much more psychotic now.
(EDIT: I think this is on topic in the sense that the OP is from California, but I’ll stop here anyway. College tuition is out of control for reasons that go deep on multiple fronts. Consumers should indeed show their preference with their feet/dollars, but I give lower tier privates some leeway since it’s not an easy road to provide their learning environment.)
But there are vast parts of South Dakota where there is not a single commutable education option past 12th grade-- what part of California has that issue?
Wow. Head out to work and check back in at lunch and KABOOM! Glad all are finding the topic interesting enough to discuss and did NOT anticipate anything like this.
Now, back to my obsession, and my very bad analogy…
Nobody really pays MSRP for a new car. Yet it seems these schools expect me to do exactly that. In other words, the price they’re charging is definitely above what any of us see as market value and for all the reasons you all have thoroughly discussed. So, maybe I’m putting the cart before the horse (I just can’t stop w/ the bad analogies) and need to have S18 apply to several of the Tier 2 or 3 schools and see which wants him most. Which is going to come off the MSRP? That’s the college we’re driving off the lot.
There is some number, some percentage of the MSRP that everyone is expected to pay. The true value? Maybe, but we’ll never know because no one tells you what that number really is.
There are a lot of people who pay full price for college. Lots of them. Even at Harvard and Princeton. Look at the common data set for any school and it will tell you how many are billed full price. Those people may have 529 accounts or take out loans, but they are billed the full tuition.
@rwmannesq I think looking outside the state produces options which feel like they give you more bang for the buck. (the profs, administration, grounds keepers all have to be paid enough to live around the college, so it would logically be cheaper to look in lower cost areas… given that the demand for those schools are the same)
Our family had LMU on our list before. We liked it and believe that they are a good school, but felt there were other options elsewhere in the country. If your S is willing to lower the priority on California weather or proximity to home, then there should be private school options willing to lower the effective cost for you. If you are looking for specific recommendations, then I think we would need more detail on your S’s stats. Another way to do some research is the results list from the 2017 3.0-3.4 thread, where there are some examples of stats vs acceptance that may help you.
@chippedtoof: Re: #73
And therein lies the rub…
Part of the “value” to us is of course the location. For reasons not related to this thread, we need him to go somewhere within a couple hours’ flight from the Bay Area and he wants a city environment. That narrows it down to Bay Area, San Diego, LA, Portland, and Seattle. We’re willing to build in a premium due to those cities costing more. However, my internal sense of “bargain” demands that we don’t pay the sticker. In fact, my take is I don’t agree with their sticker prices. We can afford these schools at their stated sticker prices, but I don’t see those prices as fairly representing the worth of the schools.
So, if he applies to all the schools he ranks similarly on his list, and if ANY of those schools want him, they can reduce their price (even a minimal amount) and we’ll all be happy. I’ll get my obsession for bargain fulfilled, he’ll get into a fantastic school, and the school will get very good money and a great student.
I guess I’m just a little offended they see themselves as worth the same price as like USC or Stanford, etc.
“So UOP (Stockton), USF (SF CA), etc. He isn’t going to get merit based assistance or loans. He’s just an average kid. UC’s are way too big and impacted, CSU’s are a possible consideration but generally also too large, etc. And I just keep coming back to how in the heck do these middle tier schools charge the same as Stanford, USC, etc.? It’s obviously because they can, but is that our fault? And their sales pitches are pathetic. I’m paying Lexus prices for a Toyota package?”
If you want to pay Toyota prices for a Toyota you gotta look a little harder at the dealers. UCs Merced and Santa Cruz plus Cal States Humboldt, Stanislaus, Bakersfield, Sonoma, Monterey Bay, and Channel Islands all have enrollment sizes in the same ballpark as UOP or USF. I bet somewhere in those eight colleges you can find a good program that your son would enjoy and for in-state (Toyota) prices.
Having gone through this with 2 kids (and 4 years on CC), the colleges charge this much because they can. Attend any prospective student event at NYU (to pick on one institution…but many others are just like it) and you will meet literally hundreds of parents who are willing, able, and absolutely dying to give a University $70,000 a year for four years. So-called “desirable” schools can fill their classes 5 times over without giving any financial aid.
I paid sticker price for my car. I buy a new car every 12-13 years, I know exactly what I am looking for in terms of mileage, safety, repair record and maintenance, etc. I could have gotten a “deal” on another make or model; I could have waited for the next model year; I could have just bought something further down on the Consumer Reports list of “best cars with the following features”.
But I didn’t. I know from experience that given how long I keep my car, it was “worth it” to me to get what I wanted, even though it meant forgoing the opportunity to negotiate.
I’m fine with that. Saving 2K on a car that doesn’t meet my needs doesn’t work for me. Saving 3K on a car which will need expensive repairs in year 5 or 6 is a false economy. Saving 5K on a car which doesn’t drive well in the climate I live in (snow, cold, and lots of winter salt) is a bad deal in my opinion.
OP- since you love the “dealer” analogy, maybe this works for you. We were full pay for our kids and it was “worth” every penny. Not every private college at the same price was worth it to us-- and there were many that the GC’s wanted to put on the list which I took off. Not worth it. Which doesn’t mean it wouldn’t be worth it for someone else- just that based on the needs of THAT kid, and the intended (or suspected) course of study, and what made the kid tick, there were better options which cost less.
Not every “bargain” is a bargain. My kids could have gotten free tuition at a bunch of places and we carefully evaluated whether any of these were on par with some of the expensive options (some yes, some no). And if our kids had been less serious about academics, then we’d have approached the entire exercise differently.
But we told all of them- 8 semesters and then we’re done. You can change majors as many times as you want (and one of them took us at our word- started at astronomy and ended up somewhere in the P’s moving thoroughly through the alphabet) and you can do a semester abroad or not. But our contribution is 8 semesters. Anything else is on you. You failed a course and need to pay for summer session? Wow, too bad. Figure it out. You want a special program junior year but won’t get full credit or need to stay extra to finish your senior thesis? Gee, that sounds expensive.
I know lots of people who “encouraged” their kid to pick the cheapest option (when they could afford more- but just didn’t want to) and their kids ended up on the 6 year program, or ended up with a “General Studies” degree because after 7 years of horsing around their advisor needed a way to get them graduated and out of town. That’s fine. But that costs more than paying a premium for an 8 semester 'in and out" and then having your kid launch.
We told our kids that we were paying for an academic experience. They want to major in beer pong? Great- withdraw from college (while you could still get a partial refund) and get a job on a cruise ship. Sorority taking up so much time you can’t study? That’s what jobs as camp counselors or event planning are for.
To me, these discussions with your kids about what you intend to pay for (not how much- that’s a different conversation) are an important way to actually save money. Not negotiating off the “sticker price” but making sure your kid knows what you intend to pay for- an education. Exposure to big new ideas and learning from influential people in the field. Apprenticeship of some kind- research with a professor, working in a lab being supervised by post-docs, editing a professor’s book and getting to see how knowledge takes shape. That’s worth paying for in my book.
Fancy athletic facilities? You can get a job at LA fitness for the summer and get all the fitness you want for free.
We were extremely blessed (and I realize it even more now) that our son got into one of the best, and least expensive, options on the table - the University of Florida. There are several schools in Florida, actually, where he would have been just fine.
It would take a school like MIT or Stanford to motivate me to the $65K point.
To me it’s great that people have that option; just do it intentionally and with as much knowledge as possible.
IMHO universities charge what they do because it’s the going market rate, and certain costs are relatively fixed. Throw loans in the mix (other people’s money) and it is easy to get carried away. But that’s a simplistic view no doubt.
@Scipio: Thanks for the post! We’re scheduled to tour CSU Sonoma tomorrow, and UC’s Merced and SC are on the list. However, they’re kind of the opposite in as much as I consider them to be the Lexus ES model at less than Toyota prices (I’ve really got to stop w/ this analogy!) Those schools are bargains for sure and I have ZERO complaints about any of them. Your list added Humboldt and Stanislaus to my radar and I thank you.