One thing worth remembering is that the original Tiger Mom book came out at a time when a lot of the public discourse around parenting was about “participation trophies” and the coddling of American youth, so the book was a direct rebuke to the silliness of that particular moment in time.
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Check out home values in Menlo Park and Palo Alto. I’m not kidding – there are definitely people who own $5 million homes but are living on fairly modest retirement savings because they had normal jobs and bought their homes before the boom times.
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Or in many cases their home is the main retirement asset if they haven’t struck it rich in a startup. Plenty of families move away to cheaper parts of the country for precisely that reason as soon as the last kid has left for college. I had a colleague who retired in the early 2000s. He’d bought his house in Los Altos for $15K in the early 1960s, right out of college. When he left he sold it for $2M, a 130x gain. And it’s easily doubled again in value since then.
I continue to find it ironic that I left my poor, depressed home town as soon as I could because there were no jobs there, and my kids have to leave Silicon Valley because there are too many jobs (and too few affordable houses) here.
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Right, but I was specifically reacting the original reference to “a rich parent, on any coast or in between.”
In very high cost of living cities on the coasts, such as Menlo Park or Palo Alto, I understand it is normal to have so much of your household net worth in home equity.
But in between, such as in Cleveland, this is much, much less normal.
As I pointed out, I think this can cause upper middle class parents in different areas to talk past each other quite a bit on some issues. How much can we comfortably afford to pay for a college without borrowing against our home or seriously depleting retirement savings? How, if we so choose, can we help our kids buy their own first home, and how much will that cost? What sorts of assets are they likely to inherit if we do or do not help in these ways?
I think the housing situation alone can help explain a lot of the anxiety and sense of scarcity that some upper middle class parents feel, and as we have been discussing that may contribute to some tigerish inclinations. But if so, plausibly more of that is happening in very high cost of living coastal areas because of how different this housing situation really has become in those areas.
Of course there was always some difference, but it used to be much more in scale with upper middle class salary differences. Now it is very much not.
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I find it ironic that people with a $5 million dollar asset consider themselves too cash poor to pay full freight for college. Presumably you save some, you cash flow some and the rest is a home equity loan. So you net $4.8 million when you sell it instead of $5 million (minus mortgage of course but the argument is that these houses have appreciated far above what could be afforded now so presumably mortgage is relatively low). . Most people in this country - and I’m talking well-off people - would be deliriously happy to net 1/10 that amount.
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I expect those people crying poverty with valuable houses have mortgages. The wealth needed to pay cash for a $5 million house would be, guessing here (because sadly I have no direct experience), $15 or $20 million? Those people aren’t complaining about being full pay.
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I agree if the house was worth that when they bought it. But we are hearing about people who bought the house when it was worth much less and now home equity is making them ineligible for need-based aid where they might get a little otherwise based on income. My point is having assets of that magnitude rightly makes you ineligible for need aid, as the marginal cost related to the size of the asset is small. I think this is uniquely a California issue, where real estate is out of control, with maybe a bit seen in NYC and possibly around DC? But not an issue for the vast majority of us. Our homes may have appreciated but on the order of a couple hundred thousand, not millions.
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Rationally I complete agree with you.
That being said, I have kicked around online personal finance discussions quite a bit, and there are certain people, even quite wealthy people overall, who really dislike being in debt, or adding more debt rather than paying off their existing debt as soon as possible. Again, personally, by both training and natural inclination, to me everything is just cash flows, and if I am comfortable with the cash flows I don’t care if I finance something with some debt. But these people really have a strong aversion to it.
So whether it is rational or not, I think for at least a decent chunk of people, the idea of borrowing more against their home to pay for college feels very risky, and possibly even unfair. And that I think can help explain some of the different attitudes different people sometimes have about college costs, even if rationally they seem to have equivalent means available.
Speaking of my version of rationality, even if you did have a strong aversion to debt despite having a lot of home equity available, to me the logical next step would then be to chase merit.
But again, just based on what I encounter online, some parents instead think, “So if I am going to go into more debt to pay for college, it better be worth my sacrifice, and the only schools where it is worth my sacrifice are [very short list].”
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Be willing to move for opportunity and affordability has ever been the way.
Not being willing to move/change is the issue (with both college lists and affordable housing).
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I agree 100%. I read this stuff and I’m like cry me a river.
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So that’s a perfectly reasonable decision, if that works for you and your family. But if you have, say, $2.5 million in home equity, which makes you ineligible for need-based aid, then I don’t think you can complain about not getting that aid and I don’t think you can complain that the colleges expect you to use some small percentage of those assets to pay for college. Even if you borrowed the entire amount against your home - i.e., you’ve saved absolutely nothing (unlikely) and can cash flow absolutely nothing - which seems equally unlikely, if nothing else you have reduced food & water & extracurricular costs once the kid leaves home - then you end up with $2.1 million in home equity at the end instead of $2.5 million. In reality it’s probably more like $2.2 or $2.3 million. Most people will never have a fraction of these assets. Now again, not wanting to borrow against your house or take loans or whatever is a perfectly reasonable decision. My home equity is some very small fraction of the numbers we are bandying about, but significant to me with essentially no other assets, and I said from the very beginning that I was not willing to tap into it for college. So I get it. We got need-based aid, tightened our belt and cash flowed a bunch, and despite an income considered low income by many apparently (but not in reality) we managed to save about a year’s tuition (at our need-based cost, not full cost). We could have merit-chased, but were at a level where a meet full need school was a better deal in most cases. But several of the schools my D22 applied to would have been a mix of merit & need, had she ended up at one of those schools. So yes, if a person with extremely high assets prefers not to borrow, and doesn’t otherwise have the cash, merit-chasing is a perfectly reasonable strategy. I’m not saying people SHOULD borrow against their house - regardless of income/equity, etc., - I’m just saying if you’ve got assets such that the colleges consider you full-pay then you can’t complain that they expect you to use those assets.
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You’ve got several tropes (all cry worthy) going on at once.
1- Our house is worth a gazillion dollars which makes us ineligible for aid.
2- We WOULD be eligible for aid but we own a vacation property and that makes us look like we have a lot more assets than we actually have. I mean, are we supposed to give up the ski vacations in Aspen to pay for college?
3-The aid formulas don’t take into account that we have a LOAD of credit card debt and just paying the minimum every month is a real hardship.
4- I stayed home to be a fulltime parent until my kids got to HS, so our current income doesn’t reflect the fact that we haven’t been earning that much until the last three years.
5-We inherited money from a grandparent which is bloating our assets-- if you didn’t count the inheritance which is mostly in Microsoft stock in a brokerage account, we’d really not have all that much money.
Where is the world’s tiniest violin when you need it?
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Is this one too large? Found smaller one:
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Hilarious!
By the way, although the baseline CSS approach assesses net home equity at about 5%/annually, some CSS colleges in their need formulas actually do something like reduce the assessment rate for home equity, cap the amount of assessable home equity (perhaps using bank mortgage rules related to income), or don’t assess home equity at all. This is one of the major possible explanations for why different peer colleges might give significantly different need awards (if you in fact have a lot of net home equity of course).
And again some parents hearing that will think cool, we can seek out colleges with need formulas that work better for us.
And then given human nature, other parents hearing that will complain that not every college they might desire for their kids has such a formula.
But a fairly typical situation for Bay Area parents with kids going to college now is that they bought their house in the early 2000s with a large mortgage that they’ve never managed to pay down unless they were lucky enough to work for a tech company that gave them shares and those appreciated hugely. And they often barely have any savings beyond home equity (perhaps even using a HELOC to supplement income) because of the large mortgage and high cost of living. I think what you’re overlooking is that for many of these people who have UMC incomes in nominal terms, their monthly cashflow already looks dire, before the college bills hit.
So as an example, say you bought a mid range house for $1.5M in 2005 that’s now worth $3M and after refinancing a few times you still have a $1M mortgage. At age 50, do you want to tap more home equity to pay for college (when incidentally you may then be borrowing more every month just to pay the interest)? That’s basically making the decision that you have to move and downsize in property size or location when you retire. And more importantly, if you get laid off, you will be forced to sell immediately.
Some may be comfortable with that financial risk, others won’t be, and we know lots of people who’ve used refinancings or HELOCs to pay for college (now very painful at 8%+ interest rates!). However, unwillingness to pay full freight is also why there’s more angst about the uncertainties of UC instate admissions than getting into East coast privates for many UMC CA families.
None of it’s a tragedy, these are still very lucky people, but it sure does give them something to complain about 
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I don’t know if Tiger parenting is the norm among upper middle class parents, but I do know many of these parents will sit around the table and brag about their kids’ accomplishments while bashing their spouses and complain how much they hate their jobs only to want the very same things for their children.
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The word “mold” here makes me wonder if this is more of an immigrant culture thing. Shortly after my first kid was born, my husband’s parents (Former Soviet Union) sat me and H down to have a talk about how our duty from now on was to literally “mold” (they used that word) our just-born son into a successful adult. They felt we should immediately choose a successful career for our son, and set him on that path by encouraging that interest from birth and making sure he had every advantage tuned to that specific career path. Naturally, “Doctor” was their suggested career path.
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An American investment banker was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellowfin tuna. The American complimented the Mexican on the quality of his fish and asked how long it took to catch them.
The Mexican replied, “only a little while. The American then asked why didn’t he stay out longer and catch more fish? The Mexican said he had enough to support his family’s immediate needs. The American then asked, “but what do you do with the rest of your time?”
The Mexican fisherman said, “I sleep late, fish a little, play with my children, take siestas with my wife, Maria, stroll into the village each evening where I sip wine, and play guitar with my amigos. I have a full and busy life.” The American scoffed, “I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat. With the proceeds from the bigger boat, you could buy several boats, eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing, and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then LA and eventually New York City, where you will run your expanding enterprise.”
The Mexican fisherman asked, “But, how long will this all take?”
To which the American replied, “15 – 20 years.”
“But what then?” Asked the Mexican.
The American laughed and said, “That’s the best part. When the time is right you would announce an IPO and sell your company stock to the public and become very rich, you would make millions!”
“Millions – then what?”
The American said, “Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siestas with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos.”
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Well, yes, in terms of the former Soviet Union, this is certainly cultural, although a bit “old school.” But you had to do this - kids had to specialize early in many cases. If you want a science career, you went to one kind of school, if you want a humanities career, you went to a different kind of school. Such kids would be educated in different ways and their paths beyond high school would be different as well. For those going into technical professions, there was also another path which often included an “incomplete” high school education followed by a technical school (so you would leave high school two years early to shift your education into your chosen profession - if you were university bound then you did two more years of high school). In terms of medical school, that was built into college. So, in general, you did have to choose these things early on because it would impact your educational choices even before you enter college. And there were few opportunities to change your mind later.
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