<p>I think the idea of a ‘doughnut’ hole is that at the schools with generous aid, if you are at a lower income, there is enough aid to make it affordable, and if you are very high income, you have enough so that you can pay the listed price without financial aid. But there is a place between those two levels at which you are making too much to qualify for aid, but not so much that you can afford the listed price. That is the idea of the ‘doughnut hole’. The claim is, which I think is incorrect, is that at these colleges, the student population is made up of very poor families or very rich families. The ‘middle’ income families aren’t represented because they can’t afford it. </p>
<p>ucbalumnus is making the point that it is around 200K that you start getting into the income range at which you don’t qualify for much aid at these elite colleges and posing the question of affordability for that income level.</p>
<p>For other schools, there really isn’t a doughnut hole, because they just don’t give much need-based aid. So as you start going down in income, it just becomes less and less affordable at these schools, and there is no doughnut hole. I think this is one of the biggest misunderstanding of college financial aid. Most schools just don’t give out a ton of aid. Just look at the ‘net prices’ by income level in the IPEDS database.</p>
<p>carly135, I added up all your numbers, threw in some additional ones (using oldfort’s estimates and adding in $25,000/year in health insurance) and came up with less than $140,000 a year in expenses. Income and state taxes of $100,000/year still leaves you with $60,000 to either save for college or pay towards tuition. Granted, that won’t pay tuition at the Ivies for two kids simultaneously. And if this is the first year you’ve earned that much money, that’s a different situation. But if you’ve been earning about $300,000 for more than a few years, it is really really hard for me to be sympathetic to your situation. You should have had plenty of money to save for college, and plenty of money to pay back loans. </p>
<p>fireandrain - how did you come up with $60K extra money? My total estimates is 98K, and after tax income is around 138K, that would leave only around 40K for others. Health insurance really wouldn’t be that much, most employed people are paying 200-400/mon for insurance premium.</p>
<p>The problem with the OP’s question is that it assumes that people who currently make 200 K have been making it for 18 years. When our kids were in elementary school, we made around 70 K a year. We now do fairly well, but all of the increases have been in the last three years – so the assumption that we have had piles of money sitting around for the last 15 years but we foolishly used them to polish our Ferrari instead of saving for college simply isn’t true. Now that we’re doing well, a fair amount of our emphasis is on saving for retirement.</p>
<p>I’m more worried about the fact that an adcom might say “Gee, given how wealthy these people are, how come their kid’s activities appear to have consisted entirely of working and babysitting?” Um, that would be because until quite recently, we couldn’t have afforded a fancy summer program, etc. </p>
<p>While I knew “most schools don’t give out a ton of aid,” I never really understood that for these schools “there is no doughnut hole.” I just thought the doughnut hole was really a wide gap, of which the size of the gap is a function of the school itself, that is, the doughnut hole (or swath, really) was just wider for the schools with less endowments, or really wide for the locals and lesser know schools. I didn’t realize there just wasn’t a doughnut hole for those schools. You have explained what we’ve experienced with our several kids. </p>
<p>I do think yours is an important point that needs to be reiterated, as I’ve been a reader of CC for a long time (only began to post recently) and I never saw this explained before.</p>
<p>"I’ve seen numerous folks on CC who say there is no way they could trim their lifestyles of expensive cars and vacations. That’s their business, of course. But if they then say that they really can’t afford to pay for college, they shown own that choice. "</p>
<p>Most people I know do not say that. They were raising their family and as they made more more money, as the kids got older, they would buy in the best school district, nicest area, convenient to commute for work, best deal they could get. The problem is that houses, as a rule, the bigger they are, the nicer they are, the better neighborhoods they are in tend to cost more. There is a bit of the keeping up with the Jones, in that you do have to maintain your property the way others in your neighborhood do. If you buy a nice house, your furnishing, decor, and most importantly, upkeep tends to be commensurate. You buy a big house, it’s hard to cut down on those utility bills. A big family room pretty much needs a big tv. No not “need” really, but when you consider you are living there, raising your family there, it’s your life there, you do want the house to be nice and flow. And bigger and more expensive, generally means more costs in other ways. I have a big house, and the hallway lights alone, are what my son’s small apartment has in terms of lights. You don’t get junky old appliances in a nice kitchen. So it’s very easy to get drawn into this vortex. I know I was. </p>
<p>The answer, of course, is to stay put when you get a raise, and bank the excess. But many of us don’t. </p>
<p>CPT- but increasing your standard of living when your salary increases DOES NOT MEAN that the cards are stacked against the affluent (or nearly affluent) when it comes to paying for college. It just means that a family has made choices in the past which will make paying for college complicated (loans) or difficult (finding affordable, no loan options). Compared with the options available to the poor or just above poverty line (have your kid get into Harvard or Princeton or another free/low contribution options where the school meets full need, no loans; otherwise, suck it up and pay for your local U with loans while the kid lives at home) it seems like a better set of choices, no???</p>
<p>I am fully sympathetic to the difficulties of paying for college for the $200K crowd if you live in a high tax/high commuting expense area. I am less sympathetic to the idea that poverty is a win-win in the college payment struggle. </p>
@ucbalumnus The only way I can think of a way to pay this much for a regular size family may include monthly payment on expensive smartphones. I pay $116 for a family plan of 4 unlimited voice/text/data including tax, but each $600 phone would add $25 per month for 2 years. While I choose an entry level smartphone listed at ~$200 and discounted at $100 regularly ($24 for loyal customer like me). I don’t know since when a luxury phone becomes essential for some people. </p>
<p>@Momzie Those who made $200k may make a lot less 18 years ago, but whatever money they saved 18 years ago will worth a lot more today. The point is one should start education saving early on and those with higher current income would feel less burden to keep up the amount. I read an article this morning suggesting to save $250 per month per kid since birth. That may be a burden for those making less than median income level but one may catch up when their income increased.</p>
<p>This is actually what we did - set up two savings accounts (back in the UGTM days) the month that my D was born. I think we started with $25 or $50 per account and then slowly increased it as our incomes increased. Looking back, it was one of the best things we did, financial-wise.</p>
<p>Potatoes are something that is really easy to grow, and they taste * so much* better than even the organic ones in the stores.</p>
<p>Our cell plan is about $110 a month, for cell service for 3 people( including unlimited data), our internet is $25, don’t have a landline or cable.</p>
<p>oldfort: carly said her family makes $300K per year. I added up all her numbers, added in taxes, health insurance, etc., etc., and got that number. Did it more or less in my head, though.</p>
<p>We do not eat potatoes, only on rare H’s request I woudl give in. It is pretty much waste of money, very little nutritional value. The same goes for bread, pasta, rice. If anybody wabts to cut, you better spend a bit more but consume more nutrients for your money so that you are not consuming just for calories.<br>
And again, I support my local farmers and we go to farmer’s market a lot…but not for potatoes. </p>