<p>We’ll see some other colleges “matching” these “generous” aid policies. </p>
<p>How will they do it? By announcing the change, then tinkering quietly with their admissions criteria so that, while still being “need blind”, they don’t spend too much. How can they do this? Easy. Two things make it feasible: zip code demographics combined with other less obvious stuff on the application, and changing emphasis on ECs. For instance, a HS summer abroad is a good indicator that fin aid may not be necessary. So are some expensive ECs like serious tennis (just guessing here).</p>
<p>Nop, I’ll repeat 3rd times I wouldn’t switch my place with these families. We’ve been worked extremly hard from $0 assets to today’s middle class place. Yes, we are fortunate to give the chance or rather we seek the every oportunity to work, to earn money to save up every penny for kid’s education…However, as Bay pointed out, I just don’t believe all these family never had a chance…I stand by the point I made in #527 and #536, I misinterpreted the Pell Grant because I saw it from following links provided by a college site, these are two ‘merit based’ scholaship funded by government that only Pell grant recipants are eligible for.</p>
<p>AnotherNJmom, it’s obvious that you’re not happy. It is also a given that you’re entitled to your opinion. </p>
<p>Setting aside the frustration, what is that you’d be proposing as changes to the system? </p>
<p>Are you expecting the same system of free public education that you probably benefitted from through K-12? Are you expecting the private schools to offer deeper discounts that the discount they already give to EVERYONE, including the full paying families? </p>
<p>Again, this is impossible. The marginal tax rates in the US may be higher than some prefer, but unless they are 100+%, the net disposable income cannot be less. It just can’t.</p>
<p>If you consider other tax credit/rebate programs (federal or state) that phased out if the raise push his income over the phase out line. see the hyposis example in #529.</p>
<p>Didn’t know there were so many tax experts on CC, especially “experts” with intimate understanding of the tax issues in brackets other than their own. Has anyone here ever heard of Lafflers (sp?) curve?</p>
<p>I do our taxes, have been for many years and ANJ is completely correct. Why on earth do you think she’s worked up about this? As am I. We are not hallucinating the predicament we find ourselves in. It is real. It is indeed unfair and undermines silly old notions like work ethic and frugality.</p>
<p>I’ve been at a lower income most of my life. I know how easy it is to dismiss the “whining” of those at higher income and characterize them as selfish and greedy. A change of circumstances in your life can be quite a mind expander.</p>
<p>So, to repeat, there is no way phase outs at the national, state and/or local level will rise to the point of a 100% or greater marginal rate. Some folks can hit rates over 50%, though. Worse, these are lower income folks.</p>
<p>and, to followon nmd: even with a 50% marginal tax rate (federal + state), an additional $10,000 of income will produce an additional $5,000 in taxes due, leaving an increase of disposable income of $5,000 for the year. Of course, that disposable income will also result in an efc that is higher by $2,350 ($5k disposable times 47%). After deducting the increase in efc, the hypothetical family is left with $10,000-$5000-$2350=$2650. </p>
<p>Now, of course, one could question whether it is worth it to work hard to earn an additional $10k (or whatever amount) which results in a net increase of wealth of only $2650 (literally, ‘26 cents on a dollar’), but that is a result of progressive taxation, and a topic for another thread. :)</p>
<p>And, yes, mammall, I know Arthur Laffer’s work. It was he who postulated that a 100% tax rate means zero incentive to work, and, thus, zero taxes collected by the government – which is exactly why the marginal rate cannot be 110%.</p>
<p>And to further complicate the decision… it can make a difference which spouse is earning the additional $10,000 if one spouse earns wages above the FICA cap, and the other below. For 2008, FICA taxes of 7.65% are assessed on wages up to $102,000, with only a 1.45% Medicare tax on wages above that cap. I do know of some families that fall into this situation. </p>
<p>Anyone have some ideas for Amber on what Tier 1 colleges would be most like to match Harvard and Yale’s aid? My initial thought is consider whatever schools have the highest endowment per student. Then I’d also consider schools where the 25-75 percentiles are the furthest from your scores. They would seem most likely to have the motivation to match other offers to lure you to their school.</p>
<p>my guess is that the only college that will match H & Y will be Princeton. No one else has the endowment size and competitive need to do so. For example, while Stanford might have the money, they already lose the cross-admit battle to H&Y, so S doesn’t have a competitive need to play their new finaid game.</p>
<p>Of course, if the family that gets an additional $10k of income is already paying full freight with a hefty efc, the increase in efc means nothing, and the increase in take-home income is the full $5k. </p>
<p>Like others, I’m having a hard time with the idea that an increase in income means lower take-home income. Since tax laws do change from year to year, I’d be curious to see how two different years of income compare when you, say, run both 2006 and 2007 incomes through the 2007 TurboTax, and where the additional tax hit comes from.</p>
<p>Wow, near 38 pages of postings on this thread. I guess money is at least as important as fit. I think I shall stop reading it, though. I am getting palpitations worrying about financial aid for my D and this thread isn’t helping any. Sometimes it is better to remain ignorant for a while. </p>
<p>One thing I have been wondering though, my oldest went to an expensive private (graduated). My middle is at an inexpensive public. My youngest is applying to expensive privates. On the fafsa it does not differentiate between the type of college the other sibling is at. How much stock do the privates put in that? I reported the cheap college #2 is at on the profile, if I recall.</p>
Yes. I know quite a few family with H earned much more than W. H at least $150k ish (consultant self employ kind). W most around $60k (W2 earnning). W quit job, stay home take care house, kids, husbanc. Because after tax they felt not worth it. Not necessary that they have college bound kids.</p>
<p>Now assume H earn $120k (w2 form) and the W $70k (w2 form), with a college bound kid. They would pay $50k COA after tax money. Obviousely the W bring home money is not enough to pay the COA. What ever the gap (between $5k ~ $15k based on 40~50% tax rate) they have to fill in from H’s earning. Thus W quit the job. They now all need pay is H’s 10% earnning, which is $12k according to the new FA policy. The taxable (federal+state income tax, social security, medicar) portion of H’s earning stay the same, because u can count it as the first $120k family income the rate are the same w or w/o W’s income. However since total family income is now lower, they may qualify for some tax rebate programs (last I heard federal tax education credit phase out around $120k. in NJ property tax rebate phase out around $200k, depends on year.). Plus the money saved in W’s working cost (gas, lunch, etc.)…If there is still incetive for W to stay on job? May be this is really this society or economics need right now, since the job market is saturated? </p>
<p>My point is in college FA game, both the ‘give’ and ‘receive’ sides got the break at the tax (the tuition part is tax free). Why people who actually pay out of pocket with no break at the tax. [sarc on] Because the former only paper money involved without actual transaction (the money never leave school’s pocket)? But the later actual money changed the pockets (from parent’s pocket to school’s pocket)? [sarc off]. Yeah, these ‘well off’ (note not wealth family) middle class deserve pay even more.</p>
<p>For someone who complains pay for tax on $3k-$4k’s study-and-work earning with a ‘full’ FA package. And smart as you are, do you realize among for an COA amount of $50k (with tuition $39k) the actual full fare parent pay is 39k * 1.5 (50% income tax) + 11k (other cost, subject to tax in FA as well) ~= 70k.</p>
<p>Yes, my kid benefit from the public education from 1-12, but we’ve been paying the property tax for the school funding. It is not cheap if you live in NJ. And last time I checked our town’s public school, over 95% are from local funding, which means funded by local property tax…esentially in this country middle and upper-middle classe has to pay for every thing without much of break from common resources.</p>
<p>In a scenario like this the double equal income family (where H and W earned about the same) felt the most ‘hurt’. (now there is another quesion if the tax law shall promote the ‘equilibity’ in a family relationship?)…Of course I know it is very difficult for tax law structed to as detail as this. But still the thought.</p>
<p>Indeed. We’re down about 90K in income since my husband lost his job last year. What have we learned? A fine appreciation of rice and potatoes. Good, cheap, belly-filling food. And that we miss being able to go places and do things. No more train trips into the city, or movies on a rainy Sunday afternoon. And we worry a lot more. What if the car breaks down, what if the furnace goes, what if I get sick and can’t work? And I’m left with things to just feel bad about, like not being able to give my youngest the orthodontia her siblings were priviledged to receive.</p>
<p>Of course there are people who have it a lot worse so please don’t take this for whining. It’s just that we never appreciated just how well off we were before. If anyone thinks it’s easier to make less money why not quit working?</p>
<p>ANJM, if I’m following you correctly: I think that the lower-income parent quitting work in order to bring down the COA to 10% of the higher-earning parent’s income would only apply when there’s a student at HYP. Is that what you were getting at? If that’s the case, then there’s still the (very big!) chance of the student ending up at at a school which will expect a lot more than 10% of household income as the family contribution. I suppose you could gamble that your kid is going to get into HYP, quit your job the year before applying, and then have a lower family income to report on FAFSA and Profile. Not a bet that most families would take. Maybe the right approach is to wait until the kid is admitted to HYP and <em>then</em> quit your job. You have to pay for the first year (maybe two?) at full freight, but then it eases off. Hmmm, this seems too obvious; I wonder how the FA people will handle the wave of parents losing their jobs among their sophomore class each year, lol.</p>
<p>It might still be worth it for some families to drive down their income, depending on where their child wants to go, where they’ll likely end up, what kind of need-based and merit-based FA the schools on their list award. Problem is, you need to place your bet a year in advance of your child’s senior year, and who knows what will happen? Their list of schools might change, the institution FA policies might change. If you can really save a lot of money by cutting out commuting costs, a separate work wardrobe, all those things that parents are urged to consider when figuring out if they can stay home with a preschooler, and if your tax situation with various rebates means the gamble would be cheaper for you, more power to you. </p>
<p>Parents paying COA*1.5 to account for 50% marginal tax rate: in that case, everything that we buy, not just college tuition, costs 1.5x (really, less than that–that’s a marginal rate, after all) as much as for people in lower tax brackets. Of course, my mortgage costs less (I get to write it off, and at a higher rate), and it costs me far less to put money into my retirement fund than someone who has a lower tax rate. $10k a year, writing it off at that 50% tax rate, comes out as only $5k out of pocket; families with a low EFC might have to pay a full $10k out of pocket to save that same $10k.</p>
AFAIK, the tuition portion of FA is tax free for both ‘give’ and ‘receive’ side. But taxable for parents who actual need to pay. The other portion is not tax free for ‘recieve’ side and the full freight parent.</p>
<p>I diddn’t say all low-income parent quitting work in order to bring down the COA to 10%. Just quipping the if the policy is ‘fair’ (may be not the right words) or if moral. Believe or not I’ve seen people in my working place and in my friend’s working place they counted the working days every month, in order to get they monthly pay check under certain level, so their family can qualify for some social benefit. Surly they ‘deserve’ for the FA according the running standard here, right? And ppl think upper-middle class made it easy, deserve to pay ‘more’, just give a few examples those ‘upper-middle’ classes can instantly drop to ‘lower’ income braket according to college FA standard. If one of them chose not to work…The life and the path to make it there, is not easy. But if you have the desire, most of you can make it work. Some of today’s low income students could be tommorrow’s ‘upper-middle’ classes easily, when you made there, hope you keep the same tone as of today, my grandkids could be in the position to ask for ‘FA’ (hope this never happen. If they are anything like my kid, that won’t happen).</p>
<p>To be honest we never expected someone else will pay our kid’s college education. If he is good enough to earn some ‘merit’ scholarship, then we may save some cost. Otherwise we prepare to pay the college education wherever he chose to go…The education always been first priority in family. Thats why we stopped our little family plan right there (as I mentioned in another thread, one kid), because we know college education going to be the majore cost for raising kids. That and the american dream motivate us worked hard and long, save every penny for all these years.</p>
<p>MomOFour, sorry to hear that your husband lost the job last year with no choice. I don’t take it as whining. All these years me and my husband have been lived in constant worry about the lay off. Happened to us couple of time (fortunately we are able to find one rather quickly). All the places you missed going, we rarely go even when we both on job. Family movie on weekend, maybe no more than once a year; Both of us have been working in city, never been to a broadway shows though; clothes buy off discount rake in low end department store; cutting cupon for grocery; etc. etc. … constant worry about the job security, mortgage of the house, etc.</p>
<p>Now, your post really give me the perspective. Since our kid got EAed to a ‘need-based’ school, may be we shall enjoy our selves more when we could. Buy some lucious goodies, go some expansive cruise, buy couple of new cars or pay off mortgages, etc. Not to worry lay off, or may be just take a long relax vacation after all these years exhausted chase of working for money.</p>
<p>MomOfFour, how gracious you are. You could seethe at me for whining when we are not in a serious financial situation but instead you’re gentle and inclusive in your post. We’ve also gone through the tough experience of sudden job loss and I know what it is to suddenly be the one pulling the wagon on my own. Our kids were much younger so the financial pressures weren’t as great but it was very tough. I have a feeling you’re very much up to the challenge, though, and will somehow make this an overall positive experience for your family. </p>
<p>Part of why my H and I struggle so much with paying full freight is the residual post-traumatic stress of his job loss years ago. We know it can just swoop down on you and strike when you least expect. It left its mark on us, made us very fixated on savings.</p>
<p>I don’t think anyone thinks this, I think its more a feeling that college cost prospects are daunting at almost every income level. I don’t want to speak for mammall, but I think we are in a similar situation - we pay full freight for an Ivy. I have two more kids coming up to college age. Even though we make decent income now, I admit we obviously didn’t plan well enough - not that we could have saved the (gulp) $900,000 in pre-tax dollars needed to put all 3 of our kids through private college while also contributing to a retirement plan. But that’s because for most of our marriage, our income was never near what it is now.</p>
<p>Good luck to you and your family. The good news is that for some reason, most things seem to work out okay.</p>
I think I shall stop reading it, though. I am getting palpitations worrying about financial aid for my D and this thread isn’t helping any. Sometimes it is better to remain ignorant for a while. </p>