Ran across this article in NPR on colleges that are making a bigger effort to target middle-class families with aid. Mentions Colby College’s “Fair Shot Fund”.
Colby seems pretty generous (maximum parent contribution of $20k for those making less than $200k), but I can never quite get what “typical assets” are. For Colby, it looks like all assets including home equity are assessed at 5% (just running numbers through their NPC), so families in high cost-of-living locales likely break that $20k pretty fast.
My daughter got into a school that showed 88% of people at my income got $38K - and my daughter got $0.
I asked why - what are normal assets?
They said 2x your income - which isn’t a lot - especially at $200K.
It was 2021 so three years ago and I asked Cornell about assets - and they said if you have a million dollars in assets, you’re not getting aid anywhere. They are not everyone - so they can’t speak for everyone - but that’s what they said.
Unfortunately, today $1 million in assets isn’t a ton.
But flat out ask Colby financial aid what they consider normal assets. They have no reason not to tell you.
Yep, I tried the NPC just to see what I could get. You can move assets around and definitely get to their $20k number. But a ballpark of 2x income makes sense and is all I was looking for. Thanks!
Your starting point was helpful - thanks! I ran the NPC a few times and there’s cap at 2.5x income. Your ratio of 2 was a useful guide to help understand how college’s think about this (asset to income ratio). I didn’t need the exact number for Colby - just an understanding of what might be meant by “typical assets”.
What is interesting is to try their NPC and watch the huge increase when you exceed 2.5x. At exactly 2.5, the NPC shows $20k parent contribution, but when you go even a dollar over that, it jumps up dramatically.
We are experiencing this real time here. My pay has dramatically increased in the last year and we went from a NPC result of what I considered “reasonable” tuition at most colleges to basically sticker price everywhere. This is super frustrating. It’s like schools assume if you now make x you have always made x and should have been saving accordingly. Very unrealistic assumption imo.
The assumption is that if you stick with your former standard of living even at your higher income, you have just “found” an extra XYZ amount of earnings to pay for college. And the assumption is that at a higher income your ability/willingness to take on debt (or your kid taking out the government capped loans) is higher. And that taking a HELOC if your salary is higher is less risky. Etc. All of the above.
There are a lot of reasons why families can’t pay or don’t want to pay or shouldn’t pay for what a college thinks they can afford. So apply accordingly.
I remember when my spouse and I were buying our first house and we were SHOCKED at what the realtor and the bank said we could afford. Shocked. We would have been house poor from day 1 if we’d bought what the formula said we could. So we ignored the formula, bought something several levels down, and never looked back. Two years later I was laid off from my job; then a major auto plant near us announced they were closing and real estate values plunged 25% almost overnight.
You know your own financial picture better than anyone else.
Yes. We have seen a lot of this. I know of lots and lots of cases of families that could not afford to attend expensive private universities, including universities that claim to meet full need.
However at least among the people I can think of they have all been able to find universities that were affordable and that were a good fit with a good program in the student’s intended major. The students who had the stats to get accepted to the big name expensive private universities also had the stats to get merit aid at very good more affordable universities.
And in quite a few cases doing very well at the very good more affordable universities, often ranked somewhere between about 50 to 150, led to graduate work at the big name expensive private universities – but when the graduate work is either a one year master’s degree or a fully funded PhD the cost of the expensive private university matters less.
Perhaps in some ways the system in the US might appear to be messed up, but there are so many very good universities that academically strong students seem to be able to find something that works out for them. At least that is what I have been seeing.
There are “regular people” with two incomes and one income goes entirely to college- first into the 529, and then while the kid is in college, for tuition. So yeah- “found money” in the sense that if the original budget stays intact, anything beyond that is “found”.
And then there are people going broke on half a million a year…if you’re earning 500K but living like you make 900K, it won’t take long for the numbers to catch up with you.
We had the same experience buying our first home over two decades ago. Bought way less house than many others at our income level. We joked that we were living in the kind of house that someone at our income bracket lived in if they were also trying to save at least 20% of their income beyond paying a mortgage.
We made the same determination with college budgets. Every school in the country would have been full price for us, and that wasn’t how we were going to spend our money. We set a budget of what we were willing to spend on college that wasn’t reliant on what FAFSA or any individual school might say we could ‘afford’. It was a budget that still gave our children plenty of choice when it came to colleges that offer generous merit (> 50% off COA with top merit), and they all went merit hunting very successfully.
Not all kids can get merit, so I think it’s important to point out that community colleges and state schools, including those to which a student can commute, are strong choices. Sure, many kids want the full “college experience,” but it’s not a necessity. There is more than one path to a degree, and I have known many adults over the years who did not have degrees from known schools but who were successful. Minimizing college debt to the extent possible is wise.
Our story exactly. We were advised to run NPC for a variety of schools just to see where projected aid would land, so we ended up having the “MIT thinks we can pay 90k per year, but you know we cannot conversation early on”. He was slightly disappointed, but had not yet set his heart on any elite college. Our son worked hard with a nonprofit college advisor to help him find a good match that would provide generous merit aid based on his stats, academic interest and sport recruiting. I think he may have found his perfect match, all things considered.
