As others have indicated, net worth isn’t necessarily the right qualifier here, and there are lots of other factors at play (one’s age and ability to accrue significant funds after the outlay, the amount of net worth that is composed of the primary home, among others).
That said, however, regardless of how many place values are in someone’s net worth, I would posit the following conditions be true after subtracting the discussed amount:
A financially secure retirement is extremely likely (i.e. sufficient funds for lodging, food, healthcare, long-term care, transportation, etc.)
Financial responsibilities for any other dependents can be fulfilled (including offering the same level of educational gift to younger dependents, in the case of college COA)
Ongoing financial needs are met, which includes continued savings for retirement if those continued contributions are needed for the financially secure retirement, disability insurance to cover the financial risks of job loss due to health in the years between now and expected retirement date, etc.
If those three conditions are met, then I think it is entirely up to the family as to whether or not they want to spend the remainder, a portion, or none of their net worth on a given expense. Mind you, the above is based on what I consider to be needs for survival. But once one’s needs are covered, then the rest is discretionary, and one can choose to spend in accordance with one’s values. But to be clear, paying more than necessary for education or any need is discretionary.
If those three conditions are NOT met, then I do not think that the expense is wise (particularly, as in the case of colleges, where there are often excellent options which are significantly more affordable).
People should not underestimate how significant the average net billed costs are for families at the various income ranges shown here. So although one might be envious of families whose net billed costs are relatively low, $18k for a family earning $80-120k pretax is not an insignificant portion. To cover one’s needs requires a certain amount of money, no matter one’s income or education level. The lower a family’s income, the less disposable income they have (if, indeed, they can meet all of their needs, which many cannot).
I’d definitely say this was us—bought an expensive house in a HCOL area to use public schools through high school. High property taxes, too. And D22 chose an in-state public (UCLA) and it’s been great for her.
With S26, he’s likely to have better luck OOS (he has high test scores and UC transcript/record that is less stellar than his sister’s was, due to some bullying/mental health stuff sophomore year of high school).
Definitely tempting to sell the pricy house now that we don’t need the school system anymore… but we like it here for other reasons (close to my parents, a good quality of life, good access to health care, single story… basically a good house to get old in). We can pay full price for what S26 chooses and we believe a high quality education is worth it so we will make it happen. But it isn’t inconsequential to us, financially. It is a lot of money, no matter which way you slice it. We are lucky to be able to make that choice, we recognize it as a choice, and do not feel even remotely upset that we don’t qualify for aid or that private education costs what it costs.
But I fully get why others might see it differently.
I’m not aware of the specific study you are referring to, but many studies have found that contentedness is correlated with relative position of income in social reference group, more so than absolute income. For example, someone in finance making $500k per year might not be content with his/her income/lifestyle, if many of their finance friends are making $1M+ per year and spending as fast as they make it.
This comparison effect has become more influential in recent decades, with the advent of social media. Social media extends comparison group to persons you vaguely knew at one point who seem to have better house/car/vacations than you do and never seem to have anything negative in their lives. Or in some cases, videos of persons on Youtube/TicTok driving Lamborghinis and riding on yachts. Even this forum contributes to the comparison effect. All of above are likely to distort a person’s perception of what is typical income in US (median individual is ~$50k) and what is typical spending for persons in US. To quote Theodore Roosevelt, comparison is the thief of joy.
This is closely related to why I have been saying “The parents need to be the adults in the room”. This might be almost too obvious to say, but the parents really need to think about this before the end of their oldest child’s junior year of high school.
Admittedly one of my daughters was as much of “the adult in the room” as any parent could be, and the other got the point rather solidly once she graduated university and started her first job. I do not blame an 18 year old high school senior for being oblivious to this issue. The parents on the other hand…
Again, a very good observation and one that tracks closely to my own experience. Due to some outside activities I send a lot of time with families who have high school age kids and often hear about the college admissions journey. Your comment aligns with what I often hear from families in the public schools in my area. For many it is unfamiliarity with the system, they come from places where all of the schools are public and they naturally equate the cost of college to what a UC costs without research which often isn’t done. They get little help from their school counselors as well because public schools in CA are very focused on getting their kids into the excellent UC and CSU systems.
From the private school families the comments are much rarer. I hear parents say they aren’t paying that much but it’s not a surprise.
We did exactly the same thing with similar results. We had to do without some things early on (the “needs remodeling” house that we purchased didn’t get a remodel for 15 years) but one added ‘benefit’ was the cost of education was built into are family budget from the beginning so the budget impact of a “Middlebury” didn’t hit us as hard. With only one now in school the cost is mostly baked in and we have forgotten about those things that we gave up earlier
We actually live in an area where there are multiple good private K-8 options basically in our community. Like the K-8 we actually ended up using is directly next to the Jewish Community Center we use for our gym and in the early days used for a lot of the kids’ athletic programs (we’re not Jewish but it is the sort of JCC where that doesn’t matter). It is basically in the hospital and universities area, so lots of the parents are not from the area originally, but are professors, doctors, and so on. Makes for a bit of turnover, but pretty cool diversity in terms of families from all over.
By the time we got to S24’s private HS, that was located farther away in one of the top local suburban school districts, and in fact a good number of the parents of kids at the private HS also lived in that school district. So, yeah, they were not doing our sort of geographic arbitrage.
Yeah, from an outsider perspective, the public university situation in California is so great that I sometimes find it a little hard to sympathize with the parents or kids who seem to think it is somehow a big problem that a very good student in California might have to go to an option that is not Cal or UCLA, but would still be flagship level in a majority of states. I get that some parents and/or kids struggle with the peer competition aspect of this, but objectively these are still great outcomes, and a bargain at in-state rates.
And of course they have been investing in that system all along, so if they are discontent with the payoff at that point, well, that’s their business, but again from an outsider perspective that’s actually a great payoff. I guess part of it is people feel like Cal and UCLA just keep getting harder for admissions, which is true, but I also think all the other public options keep getting better. Again, maybe not a satisfactory answer from a peer competition perspective, but I think a lot of Californian kids are getting great, world class, educations that way.
My kid goes to a school founded as a teaching college. It’s still a teaching college. She’ll graduate with a BA and a teaching license, and we have been very pleased with the quality of the education. The campus itself dates largely from the 1960s, is made mostly of cinderblock with small windows and no flourishes. Buildings are kept in good repair, but have not been updated. My daughter’s dorm is the standard on campus: 11x15 rooms which are doubles, no AC, no elevators, bathroom down the hall shared with 23 other girls. In the cafeteria you can get burgers and fries, or visit the pasta bar, and there is also a salad bar. The cafeteria workers are nearly all students, which you can totally manage just as long as all the workers show up already knowing how to use a commercial fryer and a steam table, and how to disinfect and drain a Hobart (which most of them do, because they worked food service jobs all through high school.) We are paying full sticker price and it’s substantially less than $30k/yr. Your kid could enroll too!
But if my student’s school is too basic for you, maybe your kid can attend a nearby LAC such as St. Olaf. It’s a CC forum favorite because the classroom experience is outstanding: small class sizes, professors with PhDs from top universities who have a passion for undergrad education. Gorgeous old buildings set on a hill, you should see it in the fall: collegiate Gothic heaven. And the food! And the happy, collaborative students! Your child will graduate able to sing old protestant hymns in 4 part harmony. Your grandchildren will be beautiful!! And all this for well less than $60K/yr.
But what about all the education and amenities plus the chance to rub elbows with money and influence and tap into a nation-wide alumni network? And, um.. erm, assortive mating? For that there is MIddlebury, and it’s going to cost you $90K+
There you have it……Elite private schools are luxury goods. There is nothing wrong with elite schools being Luxury goods, especially since there are so many great schools and the elite schools educate such a small amount of the population. An interesting part for me is that they spend as much of their budgets on financial aid as they do and how they deploy it.
I agree with you that CA has a magnificent in-state system in the UCs and CSUs. A lot of CA kids are quite romanced by OOS options, though, especially if the top UCs or CSUs are out of reach. Many, many families will pick Boulder or Oregon and their hefty OOS price tags, over UCs or CSUs in less desirable locations or with commuter school reputations/realities. This happens despite the fact that every UC, including Merced and Riverside, ranks higher and is priced better than many of those options. Is it worth it to live in a fun college town like Boulder or Eugene vs a cowtown like Merced? Most seem to think so. Another flavor of the Middlebury question that families have to make a values call on.
People may think that one or at most two state universities in a state are “flagship-worthy”. Of course, California’s huge population means that it has nine in the “flagship system”, rather than two with ~100,000 students each. To the extent that people think that way, less selective other state flagships may be seen as “better” than UCM, UCR, or UCSC, for example.
Maybe many with money do. But not every college student in California comes from family money.
Of course not every family has the money to make that choice and I’m extremely grateful for the high quality offerings at Merced and Riverside. But the topic is about how people evaluate how much to spend. And those in CA with enough money to have a choice seem to go for OOS schools in more interesting locations
And to be fair, I had serious wanderlust at that age, so I can see a kid seeing the value in the going away to college experience, even if from a pure educational value perspective, that wouldn’t make sense.
It is an interesting point you make about all students being subsidized at Mbury. Mbury is an outlier in this. Running the group of 4-yr colleges with 2000-4000 undergrads, only Mbury, Williams and Wellesley have operating expeneses per student above direct costs. Smith, Vassar, Colorado College, Colby are about $80k/ student. Colgate, Mt Holyoke, Denison, Bucknell, Holy Cross, Lafayette are in the 60s. Skidmore, Oblerin, Wesleyan, Pepperdine are lower. Just calling out the names that get mentioned on CC a lot.
I do think there are additional benefits from use of capital assets like land and buildings that are not fully captured in operating budgets. But yes, this is a variable and typically only the wealthiest private LACs provide a large operating subsidy.
I actually think this is a more straightforward reason to maybe take a close look at these colleges than generic rankings or “prestige”. Not as the only factor, of course, but highly resourced colleges do tend to buy things students might benefit from under the right circumstances.
By the way, I think there are at least more research universities that would technically show an operating subsidy, but that is in part because typically they get a lot more research grant funding as a percentage of their operating budgets. For that specific line item, one might wonder how much that really translates into more relevant spending on undergraduates specifically.