Can we just say “upper income” when we are talking $300-500k/yr (or more)? I am cracking up at the idea that $300-500K is somehow 'upper middle income". 
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They’re no longer upper income after they full pay for college.
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Disagree - even $200K is upper income - and that they can pay in full - is what matters.
But to your point, if they want to stay upper income in your mind, they won’t choose that college.
Everyone has a choice…
It doesn’t take much net worth (which produces additional passive income) to be a top person in the US. But again, this board distorts views because it’s often clearly high wealth people (relative to the top x %). $2.5 million today - not really a ton of money. $1 million and you’re top 5% (less than two years ago).
- People with the top 1% of net worth in the U.S. in 2022 had $10,815,000 in net worth.
- The top 2% had a net worth of $2,472,000.
- The top 5% had $1,030,000.
- The top 10% had $854,900.
- The top 50% had $522,210.
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I saw this in college. One of the greatest movies of all time.
I do believe in tipping.
Less than 4% of households in the US make at least $300,000 (and less than 2% of individuals). (I can’t find 2024 numbers so this might be slightly higher now but still a very small number.). The median household income is still under $75k. While I’m sure it’s often a struggle for a family making $300-500k to pay $90k per year possibly across multiple kids the assumption is that kind of income allowed for extensive savings the previous 18 years so it’s not like you have to come up with $90k out of your income each year. Nonetheless at 4% of the overall population I don’t think that demographic is going to be a major effect on the demographic cliff one way or another.
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Remember the $90k is after tax. It’s the equivalent of about $120k $140k in earnings (depending on their deductions, state/local income tax FICA) etc.
And after 2025, when the TCJA expires, probably 50% chance this group will have to pay the alternative minimum tax. Of course, they’re also subjected to the Net investment income tax on investment income as well.
If they have 2 kids full pay at an elite school, their 300k income nets them $30k-$50 k per year after tax. Not sure if colleges still make adjustments for multiple kids.
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That holds for anything and everything a high income person chooses to buy. We wouldn’t say that a high income person is somehow no longer high income because they purchased:
or
or
so why all the fuss about paying for college somehow making high income people no longer high income?
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If you want to purchase a $50k car, it’s $50k regardless of how much income you make.
If some people got a car for free and others had to pay full price, would the $50k car still be $50k?
That’s why the comparison of paying for college and cars/boats are not the same.
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For the high income family, the COA of any meets full need school is always the cost. Just like a car!
They (like every other family) can also look for ‘cars’ that cost less…even if that lower cost isn’t the COA but rather the “after market discounts” offered to them. Those lower costs can be because of their income, their academic stats/scores, the fact their parent works for a company that gives discounts out to employees or offers a ‘company car for free’, etc etc etc.
And…even that $50k car is “cheaper” for the high income family - it is less of a percentage of their income, they most likely get a better interest rate if they finance it, and their insurance is also likely a better rate.
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Some people do get a car for ‘free’ aka someone else pays for it. Doesn’t have anything to do with the people who still need to pay for their own car.
And none of those issues makes $300-500k/yr less high income.
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Again if someone makes more than 96% of the population in the US and failed to save a significant portion of what is needed for college then I have no advice. But that doesn’t make you low income - just not very smart about money. Which seems unlikely for someone making that kind of money (though not impossible!). Arguably, actually, the fact that they’ve been able to save and grow that money for a decade or more actually means college costs them far less than someone who actually lives paycheck to paycheck who couldn’t save a significant amount - all that free money you made just because you could afford to park $10k a year into a 529!
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Are you assuming that all families who make $300k - $500k have made that for at least a decade?
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If they haven’t been making that income long, it should be even easier to move the ‘new’ income into the paying for college choice. If they haven’t had the income long, they are used to living on less.
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Do you think that every time someone makes a purchase: McDonald’s, a hotel room, a car, Panera, some should pay more based on their percentage of income?
For you, this sandwich is $10.
For you, this sandwich is $20.
This thread got heated pretty fast.
I don’t give a rip about the proverbial “everybody else.” I just give a rip about helping my kids find the right college that’s a good fit for them. Don’t care one bit about the high income category.
I also kind of don’t care about the college demographic cliff. Yes, some colleges may end up closing as a result. That’s the way capitalism works. Some of them will end up like Blockbuster video while others will become Netflix.
It will all come out in the wash.
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California is trying to go in that direction for electric utilities. Your bill will be based on your income. Hope it doesn’t pass, but it’s the mentality of many.
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It was only a matter of time, but very predictable.
Actually, we all make those choices everyday.
I don’t eat at McDonalds because I don’t see the value - so my cost at McDonalds is $0. Same goes for Panera. So, my Panera and McDonald costs are $0…and everyone else’s have skyrocketed out of control at $10-20 per order.
I am very aware of how I make economic choices, and am always making a “do I value ‘X’ enough to pay the price I’d have to pay for it”.
I buy organic fruit so a package of strawberries out of season can easily run me $10 or more. Other people buying conventionally grown strawberries and only buying them when they are on sale at their specific grocery store doesn’t actually effect my decision tree on fruit purchasing.
Those on food stamps are getting a subsidy on their fruit. I am happy to know that those who have less are getting assistance to have access to foods that are good for them. Quite frankly, I wish they had even more assistance for that and got more money in food stamps.
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Yes and based on this logic, there’s only one demographic group who may not be able to afford an elite school education for 1, 2, maybe 3 of their kids - the donut hole family.