<p>Baseballmom’s post #58</p>
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<p>Baseballmom’s post #40:
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<p>My post, #54:
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<p>I rest my case.</p>
<p>$125k a year is a wealthy lifestyle.
I can’t believe someone earlier compared going to Harvard like getting a Rolex. If only wealthy people went to Harvard, America may become a greater aristocracy than it already is.</p>
<p>cangel and xiggi-I agree with all you’ve said!</p>
<p>Don’t get me wrong–I am a strong supporter of funding of public education K-16 although I choose to send my D to a private HS because I have the means to do so.</p>
<p>I’ve been in two out of three of the income brackets we’ve talked about (poor & middle-class, although I’ve just discovered today that I may be rich 
) and education has been my ticket, so I know from experience the benefits of financial aid, particularly loans. I can hardly think of a better way to spend government funds than education for our children–ok, food, perhaps!</p>
<p>“So, the $125k family pays the full tab. They’re used to it!”</p>
<p>I don’t have any clue where you are getting this. The average financial aid offer for a $120k family at Princeton is $17.3K - and not one penny in loans. In other words, more than the a full scholarship awarded to a poor student to a local state university (who would still have loans to take out, and, in many cases, family income to make up.). If that isn’t an advantage to upper middle class students (and I almost gag calling them that) and their families (who are also likely accepted at a greater rate, or at least the stats would suggest such), I don’t know what is.</p>
<p>marite-all you’ve done is cut and paste, then made a statement without making a supporting argument.</p>
<p>marite’s post
“I feel I am paying what I am able to afford and what many other families cannot.”</p>
<p>My question is this: If you can afford $80K per year for college, why are you borrowing the money?</p>
<p>Mini, inasmuch as your figure is correct, the information regarding financial aid for families in the upper quintiles is usually followed by a small asterisk. </p>
<p>The asterisk alerts that a large percentage of students from families with high incomes who are eligible for grants have one or more siblings also attending college. </p>
<p>This does not change the fact that even high income families DO receive aid. It does, however, represents a reasonably mitigating factor. Two tuitions of say 40,000 each are a large portion of the after-tax income of an AGI of $120,000, even after reducing them by the financial aid.</p>
<p>I’ve cut and pasted because all of a sudden, you claim that <em>I</em> am talking about the rich getting soaked. Your line of argument baffles me, as does your ignorance of how much middle and upper middle class families get in financial aid from private colleges.</p>
<p>Mini has it right. The $125k family gets $17.3k at Princeton and similar amounts at its competitors. That’s not being soaked.</p>
<p>If I were earning $40k, no bank would allow me to borrow what I am borrowing (which is a great deal more than $80k since I have two loads of full fares to pay off). I am upper middle class (and once was not) and can afford to take out loans to supplement what we’ve saved for our kids college education. My kids do not get financial aid. I could have sent them to our state U and come out financially ahead. I made the choice to send my kids to $40k per year colleges. It’s a choice, not an entitlement. I do not feel soaked.</p>
<p>To illustrate the differences between having one or two students in college at the same time, let’s take the example of a family of 4, living in Mass, income of $125,000 from two wage earners, oldest parent is 50, family paid 30,000 in income taxes, $9,562.50 in Social Security, and has 150,000 of assessable assets for Fafsa. </p>
<p>The EFC with two students in college is $26,964.39 </p>
<p>The EFC with one student in college is still $25,803.49</p>
<p>I did notice that xiggi ( well it was pointed out to me)
after I was so pleased with myself that we had our kids 8 years apart and wouldn’t be paying tuition at the same time
our outlay will be much higher than if they were in school at the same time.</p>
<p>marite–My argument is with the calculation of the EFC. I think it is flawed. It would likely spit out that your family could afford $80K per year, which is not correct or you would not borrow the funds.</p>
<p>Consider this: When you take out a mortgage, the bank calculates the amount of money you can afford to pay annually for housing based upon your income. It is a cash flow type calculation.</p>
<p>The EFC is a similar figure,in that it is supposed to represent the annual amount of money a family can affort to contribute to education, but takes into consideration liquid assets in addition to income.</p>
<p>The EFC for the hypothetical family we’ve all been talking about is $30K and the family’s income is $125K (assuming no liquid assets).</p>
<p>I feel the EFC is an unreasonable amount. That’s all I’m saying.</p>
<p>I didn’t research every single comment I made here, and I don’t think I have the stamina or knowledge to hold my own too well with most of the 1000+posters on CC, but I can tell you that every middle to upper-middle class family that I know has an EFC that is simply out of reach. Yes, some get scholarships or merit aid, and have multiple kids, etc., but the bottom line is they are ALL borrowing the EFC along with the loans in the financial aid package! The one’s with kids at the state university are borrowing $20K which is less than their EFC.</p>
<p>I think everyone has a problem with their EFC
ours is $15K- after meeting basic and I mean basic expenses I dare say that 15K takes more of a hit than one twice as much for a family that makes twice as much
( believe me- a family making half of $125K still has to borrow to make that EFC)
But it is our choice- we would be paying out the same amount if D attended an instate university or a private school- and again nothing if she simply went to work or to CC where costs are manageable with a part time job
I assume the same is true for other middle class families who despite making triple the national average income- I fully accept as middle class- education at least higher education is something they are willing to pay for</p>
<p>"The asterisk alerts that a large percentage of students from families with high incomes who are eligible for grants have one or more siblings also attending college. </p>
<p>This does not change the fact that even high income families DO receive aid. It does, however, represents a reasonably mitigating factor. Two tuitions of say 40,000 each are a large portion of the after-tax income of an AGI of $120,000, even after reducing them by the financial aid."</p>
<p>Again, grant the point. But from the college’s perspective, why should that make a difference? In each case, a family had 17 years to be planning for payment for the two kids. What difference should it make to them whether the kids go simultaneously or sequentially? It still has to be paid, out of SAVINGS from the same income, or LOANS based on future income of the same. Hence, as you noted, the EFC differences between one and two kids in college are remarkable small, at the $125k income level.</p>
<p>Either way, the $17.3k scholarship that the wealthy $125k a year family is getting is still more than the full scholarship that the poor kid gets at the state university. Of course, the wealthy family can choose not to pay, and go elsewhere (which is why Princeton is offering this “merit aid”); the poor one will be less likely to have a choice.</p>
<p>Of course, there is the community college (though if you want to be a nurse, at some places admissions odds are more difficult than HYP.)</p>
<p>“The EFC for the hypothetical family we’ve all been talking about is $30K and the family’s income is $125K (assuming no liquid assets).”</p>
<p>To have an EFC of $30,000, the family could have about $225,000 in liquid assets. Each $100,000 of additional liquid assets will trigger an additional $5,640.</p>
<p>EFC is NOT a measure of what you can afford without borrowing money. Private colleges do not assume–and I have not assumed-- that they MUST bankroll students from middle or uppermiddle class families so that these families need not borrow any money, or cut down on their expenses, or save for their children’s college education, etc… </p>
<p>There is a totally different argument to be made about public universities which should be affordable for all residents of a state. It so happens that my state U is one of the most expensive in the country and out of reach for many families. It should not be that way. But we have had a succession of governors and legislatures that have deliberately starved the higher education sector for fear of incurring the wrath of taxpayers. </p>
<p>In your example, a family with a $125k income would have around $100k after tax. An EFC of $30k would leave it with $70k. It would be tight, but as Mini would remind us, it would still be over the national median. And colleges would assume that some of the EFC would come from college savings (a reason we need to borrow is that our college savings funds tanked a few years ago, but that is another story).</p>
<p>“Hence, as you noted, the EFC differences between one and two kids in college are remarkable small, at the $125k income level.”</p>
<p>Yes, as it should be. The EFC is slightly higher for 2 because two chidlren live outside the home. However, the cost of two tuitions is substantially higher and the EFC is only split in two. You’d have to focus on the disposable income after paying the various taxes AND tuition to understand the true impact of the second tuition. </p>
<p>Families that have large spending habits that do not generate tax offsets are the ones that get crushed when facing the EFC “surprise.”</p>
<p>PS For what is worth, a large part of the EFC discussion is not that realistic for schools costing 40,000 and more because few of those schools use the FM to calculate tne net Cost of Attendance. The IM and CA methods can yield very different numbers -some better but usually worse.</p>
<p>"Families that have large spending habits that do not generate tax offsets are the ones that get crushed when facing the EFC “surprise.”</p>
<p>Absolutely true. If they were expecting to pay the tuition (either one or two) out of disposable annual income, they are in for a rude surprise (unless they bought a house in California 10 years ago, simply remortgage, and end up with two Ivy League educations essentially for free.) Or they decide on the Movado instead of the Rolex. Hardly strikes me as a tragedy.</p>
<p>Baseball mom, you would most likely be shocked at how generous your bank can be in calculating what you can afford to pay for a mortgage… likely not a number you’d feel very comfortable with unless you don’t like to eat or put gas in your car. The bank doesn’t give a fig about how comfortable you are with their calculation… if you agree to their terms and you don’t pay, they kick you out and sell the house to cover the loan. Pretty simple.</p>
<p>Folks with higher incomes who have made the choice to consume vs. save have some options available to them when their kids get to college-- you can use your assets to finance a loan (the home equity deal); you can sell your assets to pay your EFC (cash in that bond from grandma); you can tell your kid to live at home and commute (essentially opting for your form of shelter vs. the schools-- presumably a lower out of pocket cost); take out loans to finance your EFC. Or-- people with higher incomes can choose to save vs. consume and have additional options.</p>
<p>But-- there are choices involved. Same as retirement-- you can spend every penny now and hope that your kids can cover what social security can’t, or you can save and have more options once you retire… it’s a choice.</p>
<p>Since this thread started with Harvard’s endowment, it’s worth reposting the link to its Financial Aid office website which contains a graph showing that some families making as much as $200k get some financial aid. In addition, the website mentions that 1/5 of families with incomes above $130k get financial aid. </p>
<p><a href=“http://www.fao.fas.harvard.edu/fact_sheet.htm[/url]”>http://www.fao.fas.harvard.edu/fact_sheet.htm</a></p>
<p>just curious, does Harvard view home equity as a component of savings?</p>
<p>Princeton’s on line calculator does not include home equity for primary residence. In addition, the calcualtor had fields to enter medical expenses and private precollege tuition expense…</p>
<p>I believe Harvard does not include the primary home in the assets. I don’t know about the other costs.</p>