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Bostonian

"financial aid" for upper-income families

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Regarding tuition, Harvard magazine

http://harvardmagazine.com/2011/05/reenacting-early-action says

 

In conjunction with the announcement, the College released the tuition, room, and board costs for the 2011-2012 academic year: a total of $52,560, an increase of 3.6 percent from $50,724 this year. Undergraduate financial aid will increase 1 percent, to $160 million. (Since 2008, the College has borne the full cost for undergraduates from families with incomes of $60,000 or less; from that level to $120,000, the annual cost scales up from 1 percent to 10 percent of family income, and remains at that upper level for those with incomes up to $180,000.)

 

Peer institutions have announced diverse tuition and financial-aid strategies for next year. Princeton—citing the economy and its own strong endowment and fundraising results—will raise undergraduate costs 1 percent (its lowest increase in 45 years), to $50,689. Yale, on the other hand, raised its term bill 5.8 percent, to $52,700, while boosting its financial-aid budget 8 percent (to $117 million) and redirecting that aid: students from families with incomes of $65,000 or less (formerly $60,000) will now receive full scholarships, while those with incomes from $130,000 to $200,000 will now pay an average of 15 percent of their income (up from 12 percent previously); those in the cohort between these ranges pay about 10 percent of income.

 

<end of excerpt>

 

If Harvard costs $53K, and if a family making $180K is only expected to pay 10% of that ($18K), I wonder what the families making a bit more than that, say $200K, are supposed to pay -- the whole $53K? If the college bill rises by $35K when income rises only $20K, that is effectively a more than 100% marginal tax rate imposed by the college -- on top of federal and state income taxes.

 

Looking at a Harvard financial aid web site http://www.fao.fas.harvard.edu/icb/icb.do?keyword=k51861&pageid=icb.page244023 , I see this:

 

'Is it true that families with incomes of between $60,000 and $180,000 will have an average expected parent contribution of 10% of their income, regardless of the number of children or of other extenuating circumstances?

 

While students from families in these income ranges will typically find that their expected parent contributions are roughly 10 percent of their family’s total income, we will continue to take individual circumstances into consideration in our assessment of their financial need. Our financial aid policy is to scrutinize all sources of income and expenses for all families applying for financial aid, and those families with unusually high medical or sibling educational expenses may find that they are expected to contribute less than this percentage of their income, while those with extraordinary wealth will find that they are expected to contribute a higher percentage. Factors such as family size, health care costs, sibling educational expenses, and other non-discretionary expenses that place a drain on family finances are considered carefully in our assessment of a family’s need for assistance, and there is no income cut-off for our need-based scholarship eligibility. Currently there are a number of families with incomes greater than $200,000, who because of extenuating circumstances, receive need-based financial aid.'

 

<end of excerpt>

 

If only families with income of $200K in "extenuating circumstance" get financial aid, I infer that a typical family earning $200K IS expected to pay $53K, while a family earning $180K pays $18K. This is ridiculous but consistent with a "punish the successful" philosophy held by many institutions. A family with income around $180K may be better off reducing its income while the children are in college.

 

I put "financial aid" in quotes, because I really regard the tuition policies of the Ivies as price gouging.

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>>If only families with income of $200K in "extenuating circumstance" get financial aid, I infer that a typical family earning $200K IS expected to pay $53K, while a family earning $180K pays $18K.

 

To me, it's punishing the dual income professional family...seems that somebody doesn't want the female engineer, doctor or lawyer to bring home that much bacon.

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(Since 2008, the College has borne the full cost for undergraduates from families with incomes of $60,000 or less; from that level to $120,000, the annual cost scales up from 1 percent to 10 percent of family income, and remains at that upper level for those with incomes up to $180,000.)

 

Does this mean they don't use the FAFSA? Or the EFC?

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THat is right, they don't unless you are eligible for federal aid. For whoever is eligible for Pell Grants, that becomes part of their aid package. But if your income is 60k, that doesn't come into play and the institution's own financial aid policies do. EFC doesn't mean much. All it means is that you can't get subsidized loans or Pell Grants for more than your EFC, You can get any nin-governmental aid anyone wants to give. Our EFC is 22K but my daughter had not a single institution expect us to pay that much. They all gave her aid for more. She is ending up attending a state institution that is giving her full tuition scholarship so we will end up paying about half of our EFC,

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>>If only families with income of $200K in "extenuating circumstance" get financial aid, I infer that a typical family earning $200K IS expected to pay $53K, while a family earning $180K pays $18K.

 

To me, it's punishing the dual income professional family...seems that somebody doesn't want the female engineer, doctor or lawyer to bring home that much bacon.

 

On the other hand, a family with an annual income of $200K is in the top 3% of American households for income. I should be so "punished."

 

Financial aid given to high income families would mean less for more needy families.

 

Pegasus

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On the other hand, a family with an annual income of $200K is in the top 3% of American households for income. I should be so "punished."

 

Financial aid given to high income families would mean less for more needy families.

 

Pegasus

 

It's not good statistical use.

 

The fams here that make 200K are usually dual income engineer/computer scientists who are mid to late career and don't have a pension. Quite a bit of their after tax income has to go to retirement, so the 200K doesn't go anywhere near as far as it does for the police/firefighter/teacher families who are over 200K with a generous pension. Total compensation package and cost of living needs to be included, not just pension.

 

When I moved here from Missouri I doubled my salary, but after cost of living and taxes, my after-tax income decreased. My relatives here in NY who make 60K do better than those at 100K - why? taxes take substantially away from the higher income private industry folks who dont have retirement, while those under 60K have fantastic retirement packages and pay little in taxes. So the 100ker who saves for retirement and medical care in retirement is expected to use that to pay for college, while the 60ker who spends every dime and has a guaranteed check for life gets college for free due to his 'low' income which is really very high compensation if pension and lifetime medical were factored in.

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My children have been accepted at Harvard, Princeton, and Yale, and they all have this policy. With two children at Harvard, we pay ten percent of our income, total, for both of them. These schools started this policy of reaching out to middle class families before the economy tanked, and they've stuck with it even though their endowments have taken a hit.

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