So in the bizarro world of college financing i find this scenario.
1.parents earn 100k-150k combined which qualifies them for $0 in need based aid.
2.in order to afford private ABC university, jr must take out $15-20k in student loans per yr.
3.understanding the “return-to-aid” policy at abc university, basically
jr. is taking out loans to send someone else to college.
Are you saying that the full pay families are paying so colleges can give grant money to other students? First of all, Jr. isn’t taking out “$15-20k” in loans. Jr. can only take ~$5500/ year on his own. Jr’s parents would have to borrow the rest. Secondly, if Jr. is getting a degree, he’s getting what the parents are paying for. If the family doesn’t like how the college spends its money, they can choose one of the ~3,000 other colleges in the US.
correct
loans: Private student loans usually have an annual limit equal to the cost of attendance minus other financial aid. Most private student loans have aggregate loan limits of $75,000 to $120,000 for undergraduate students and higher limits for graduate and professional students. These aggregate loan limits usually include all student loan debt, including both federal and private student loans. - See more at: https://www.edvisors.com/college-loans/terms/loan-limits/#sthash.ziCxmbKw.dpuf
Not necessarily. Many colleges claim that full pay doesn’t cover the actual cost of the education, so if that’s the case full pay students are only actually paying for part of what they get. Students who get need-based grants are paying for even a smaller part, but a good argument can be made that those students are not being subsidized by the full payers. For private schools, the difference is made up by endowment support, alumni contributions, etc. For public schools, tax dollars are also in the mix.
thats the myth…or that the financial aid comes from “the endowment”
step back for a minute: is it likely that ALL these schools have existed for 100 yrs(or more), each
charging less than the cost of attendance,… and they can continue on as viable institutions?
…seems unlikely to me.
its not a secret that 1/3 of full pay Ca. tuition receipts goes to financial aid.
I’m pretty sure ca. isn’t a unicorn in this.
Yes, the UCs revealed a few years ago, that they significantly raised tuition (going from about $8k per year to about $13k per year) so that they could provide more need based aid (using a portion of the increase from full-pay students. Those under a certain income were already getting Cal Grants to pay tuition. This new increase help fund Blue And Gold Promise.
It was quite controversial at the time because many $90k-110kish families soon found themselves unable to send their own kids to the schools that their taxes were being used to provide free tuition to families earning less then them. And those who were stretching to pay the new higher rate, were really funding some add’l aid for those earning less.
To the OP…It would be foolish for a full-pay student (or parent) to borrow the costs to attend those schools, particularly knowing that a portion is aid for others.
as i learn to navigate the world of college tuition, i’m just blown away sometimes by the way things operate.
.this situation doesn’t apply to me. but i’d be ticked off if i found out that
my kid was required to take out student loans to pay someone else’s tuition in order to attend
a particular school.
I dont have an answer for this, but have the opposing viewpoint. A recent job loss and the highest in state cost in the nation, mean that my student wouldnt be able to attend any good college without a scholarship. Without a doubt we’ll qualify for need based, but I hope high GPA and high SAT score will translate to merit based offers. Would rather take aid on that basis than on need however I’m glad its an option.
@flyer18. Sorry about ur loss.been there. a lot of times these things all depend on
where your standing.
Those students are taking out loans, too. Just saying.
I fit into criteria 1. I will not, however, fit into criteria 2 or 3. We had the money talk very early in high school with our son and he has always known the importance of merit aid. He will attend a state university that offers high aid for his stats along with Bright Futures. That along with our saving means there will be little to no loans required. Attending a private university is a choice not a requirement. If you don’t like the way they work, nothing compels you to play along.
@delilahxc i agree. i wouldn’t allow my kids to take out those kinds of loans.
But we hear a lot about a “student loan crisis”, about kids being crippled by large ed. loan balances.
i wonder how much of that crisis is due to these kinds of tuition policies
It is in part. But I think a bigger part is the prestige chase. I’ve read so many threads (so many) where a student (or sometimes a parent. Or a teacher or counselor) fell in love with a school seemingly oblivious to its actual cost. I think we need to stop putting schools on pedestals and we need to be honest with our kids about finances. Students who HAVE to go to NYU or Yale or wherever!!! It doesn’t matter what it costs!!!
Yes, actually, it does. That’s a very large part of the student loan problem, in my opinion.
Well, I didn’t say that ALL schools do this, or that ALL claim to do it, but I’m pretty sure that there are some schools with huge endowments and wealthy donors (or more generous government support) that are able to fund 100% of their financial aid budgets without pulling from the revenue provided by full pay students. Likewise, I’m pretty sure that there are schools without huge endowments and wealthy donors that count on full pay students to fund their merit and need-based aid programs. If a full pay student objects to being treated like a cash cow, he/she can decline to apply or enroll.
At the state college where I work, it is generally believed that we charge out-of-state students a tuition that is higher than the actual cost, so that they can help subsidize the in-state students (since the State is of little help there).
^ That isn’t a secret. All state colleges that I know of operate that way.
It’s the open market. If you don’t like the price shop elsewhere. You get to pay a premium for private and OOS schools.
@colfac92 . That seems legit to me. state colleges are funded by the taxpayers of their state (I think).
…now, should your in-state kid have to take out loans to pay the tuition for an out of state student?
like they say, the road to hell is paved with good intentions.
@romanigypsyeyes, yes, not a secret, but not shouted from the rooftops either.
@stMachine, actually in some states, the “state” colleges (like mine) receive only a very small percentage of their funding from the state taxpayers, and are mostly tuition driven (and thus really not much different from many private collages). But no, in-state students shouldn’t be subsidizing out of state students at a public college…
Just pointing out that using tuition from certain students to subsidize other students is not unheard of.