Flabbergasted by friends' lack of awareness of college costs - UPDATE in post #440

[eternalsummer]

I think the information about loan default rates is highly underutilized in screening colleges. The data is readily accessible. Most defaults are concentrated in the for-profit/online sector. Other institutions with high default rates are those that serve more non-traditional, part-time students. Student loan default rates, in general, are quite low especially when you consider that it’s an unsecured loan. Until the feds took over the lending, private lenders were guaranteed profits even if there were defaults.

 

I didn't know private lenders weren't allowed to lend to undergraduate students, I thought they just chose not to.  I wonder why the government doesn't allow  a higher rate of borrowing by undergrads if it is financially profitable?  It just makes no sense to me.  I hadn't really considered the issue much before this thread.

[Tsuga]

Do tell me more about myself/my experience. I find it ever so enlightening.

 

I'm not telling you about your experience. You said your parents had no income and no credit. I applied the word destitute.

 

And then I go on to tell you about other people's experiences.

 

The disconnect is that you seem to think we're denying what happened to you. But that is not the case. We are denying that your experience can be generalized to most of the people complaining* because they are in a different situation. You were poorer and it was also a different time.

 

*Complaining in this thread, that is. OP wrote about a family that was middle class that hadn't saved.

Edited February 9, 2018 by Tsuga

[Tsuga]

Also, watch out for loan terms. Even good schools can sell off their loans. The University of Washington sold mine. Shame on them. Then the loan companies will actually try to get you to rack up fees. It is a total racket.

 

 

 

schools expect us to be able to pay close to $1,000,000 for our kids to attend college.

 

They can't expect that if you haven't made well over a million dollars over the same period of time so I don't find that laughable, personally. Eight kids is going to be super expensive.

 

We are expect to pay full tuition. $100k per kid. That seems reasonable to me because we are in the top 10% income bracket, top 5% if you combine, and even when I made less, we were still in the top 25%. You have to know you're going to pay.

 

I agree with the OP... this should not come as a surprise. $12k/annually for tuition for a state school, $40k for expensive privates. If you make $100k per year, why shouldn't you live on $60k and spend $40k on a private school? When the average salary for people our age is less than what we have left over if we send our kids to Harvard! When you live with such good fortune amidst such poverty, shouldn't you be proud of paying and not begging?

 

People are so funny. On the one hand, they complain about the poor not being able to feed their kids, but then when it comes to buying a luxury education for their own kids, they complain about the price.

 

To me that is the point of the OP... yes it's expensive but get your Google-fu on people, and figure it out.

[eternalsummer]

While I think college costs are ridiculous, esp. compared to 15 years ago, I don't think it's unfair or unreasonable to expect parents who make a lot of money to pay a lot of money for their kids' education.  I don't expect other middle class people or poor people to subsidize my kids' college expenses, and I'm happy to subsidize other kids' college expenses through taxes.

 

So for me, it's not that it's a surprise that I'd have to pay full or almost full price for something - hell, I pay full price for health insurance and full price for utilities and full price for food and full price for taxes and a million other things; I don't think college should be different.

 

For me, the surprise (and my oldest is 12, not 17, so I am looking ahead somewhat) was just that A. it costs so enormously much almost everywhere now and B. undergrad loans are capped at $5-6k/yr.

 

 

If I had to hazard a guess, I'd say that what happens is people figure, well, it will work for my kid more or less like it worked for me. Tuition at the University of Kansas in-state was like $3k/yr when I went there (I was out of state and it was maybe $12k/yr) and living off campus was allowed, cheap, and easy.  You could take out stafford loans, work part time and full-time in summers, and pay tuition, largely speaking, even if you got no aid at all.  The OOS National Merit scholarship was an automatic full ride and they gave you extra cash just for existing.  It was great.  When I looked into it a year or two ago, in-state tuition had tripled and out of state had doubled; the NM scholarship OOS is now like $10k, which doesn't cover half of tuition even. 

[Sneezyone]

I didn't know private lenders weren't allowed to lend to undergraduate students, I thought they just chose not to. I wonder why the government doesn't allow a higher rate of borrowing by undergrads if it is financially profitable? It just makes no sense to me. I hadn't really considered the issue much before this thread.

When I was a student, under FFEL, my loans were through Wells Fargo and they could sell them if they wanted to. When the Feds (during the Obama admin) got rid of private lenders as originators and started direct lending, they were basically cutting out the middle man. I consolidated mine with the feds so no private lenders. Banks can still lend but it’s under their own terms which generally require much higher lending standards. It’s not part of the federal loan program (so no FAFSA determination) and there’s no federal guarantee behind it.

[eternalsummer]

Right, but their lending standards are higher presumably because they have to have higher lending standards in order to not lose money on the loans, right?

 

I mean, if they could make money loaning average undergrads going to State U for a degree in psychology $20k/yr for college, they'd do it, surely.  

 

 

[Sneezyone]

Right, but their lending standards are higher presumably because they have to have higher lending standards in order to not lose money on the loans, right?

 

I mean, if they could make money loaning average undergrads going to State U for a degree in psychology $20k/yr for college, they'd do it, surely.

Yes. It’s still an unsecured loan. They can’t repossess your education so there is more risk of default. It’s essentially like credit card lending only the federal pool includes lots of people who’ve had no income verification at all. Edited February 9, 2018 by Sneezyone

[eternalsummer]

Right, that makes sense.  In that case I don't think it's that awful for parents to say they won't pay the EFC in some circumstances, even if they technically can.  I don't think they should expect someone else to pay it for them, but I don't think they're morally obligated to pay it, either.  If a bank sees the loan as financially risky or not necessarily worth the investment, I don't know why parents should be required to make the investment against their own judgement.  Of course for some parents it is a choice they make, in much the same way that they might decide to pay for a fancy wedding or a house or a nice first car, but I don't see it as a requirement, necessarily.

 

 

You would think it would be different from credit card lending in that there is in theory a return on the investment (I've read a zillion responses here that basically say any degree is worth the $ because you're employable at something, etc.) while with credit card debt from a vacation to Hawaii there's no ROI, but banks must see them similarly.

[Arcadia]

You would think it would be different from credit card lending in that there is in theory a return on the investment (I've read a zillion responses here that basically say any degree is worth the $ because you're employable at something, etc.) while with credit card debt from a vacation to Hawaii there's no ROI, but banks must see them similarly.

Credit card lending might be more profitable to a bank (no idea about credit unions). For example Wells Fargo’s APR for credit cards is 12.40% to 22.40, while their student loans APR is 4.11% to 12.99% when I put in UCB as the college for the loan. Going by compound interest, banks do make back the principal they loan out on credit cards much faster.

 

My former secretary was unknowingly making minimum monthly payment on her credit card which has a APR of 22%. When her colleagues help her compute how much interest she is paying, she ended up paying off that credit card amount very fast.

[8filltheheart]

My point was that the way FA formulas work is based only on a single yr's snapshot.  If we had 4 kids in college at the same time, our expected contribution would plummet.  When kids don't overlap in college, they don't really impact familial contribution.1 or 8, colleges don't really care.  When they do overlap, they do impact parental contribution quite a bit, 60-60 is a common expected contribution for 2 in college at the same time (120% compared to 200% is a huge discount.)  Last yr on CC there were quads posting whose parents made over 200K with over $1 million saved for retirement. They were all accepted to (I think) Princeton where their individual cost was $15K/yr.  Those 4 kids will go to Princeton 4 yrs for $240K.  If those kids had been 4 yrs apart each, the parents would have paid that much for 1 for 4 yrs and close to $1,000,000 for the 4 kids to attend college.   Huge difference.

[JanetC]

So I offer my experience as a counterpoint because apparently I'm a unicorn that no one actually believes exists.

Well, perhaps not a unicorn, but certainly an endangered species.

 

When did you graduate college? You have a 7th and 4th grader according to your signature. Have you walked any high schoolers of any family income level through the college admissions and financial aid cycle in the last couple years?

[regentrude]

My point was that the way FA formulas work is based only on a single yr's snapshot.  If we had 4 kids in college at the same time, our expected contribution would plummet.  When kids don't overlap in college, they don't really impact familial contribution.1 or 8, colleges don't really care.  When they do overlap, they do impact parental contribution quite a bit, 60-60 is a common expected contribution for 2 in college at the same time (120% compared to 200% is a huge discount.) 

 

Actually, the number of dependents does go into the FAFSA formula, so having younger siblings at home does reduce the EFC.

But I agree that multiple kids in college at the same time makes a big impact.  We had one year of overlap only.

Oldest will graduate this June, and the FAFSA got us a huge jump in EFC because only youngest will be in college and no further siblings. It's pretty much my entire income. We went back over the calculation because we first thought we'd made a mistake entering numbers. Alas, nope.

Edited February 9, 2018 by regentrude

[suzanne4]

My kids are also spaced out (age), and we don't qualify for need based financial aid. My oldest two are going to colleges that many on this board would say are a very poor "fit" for them.  They are definitely academically capable of going to schools where the average scores are much, much higher. My son received the only full tuition scholarship at his small private school that he chose for a very specific major, and my daughter received a full ride at her very low ranked state college.  It's tough to read these boards sometimes. I leave feeling like they are in a terrible place, especially my daughter, who wasn't as sure as my son about what she wanted to study. Then I have to remember they will graduate without loans, and that they can go on to graduate school if they want.  For each of them, there was really only one affordable option. They had already taken most of what they could at the local CC.  They have good attitudes though, and I hope they aren't resentful as they get older. I also hope that we can find affordable options for the younger ones.  It's not easy. I don't even encourage them to apply to most schools because I know that financially we can't do it.  My daughter only applied to one school. My son had applied to three because his program is extremely competitive.  He was accepted into all three, but only one was affordable, thanks to his scholarship. I know there was some luck involved in that, and that's why I am nervous about finding places for the next ones. 

 

[8filltheheart]

Actually, the number of dependents does go into the FAFSA formula, so having younger siblings at home does reduce the EFC.

But I agree that multiple kids in college at the same time makes a big impact.  We had one year of overlap only.

Oldest will graduate this June, and the FAFSA got us a huge jump in EFC because only youngest will be in college and no further siblings. It's pretty much my entire income. We went back over the calculation because we first thought we'd made a mistake entering numbers. Alas, nope.

 

It does impact FAFSA, but we have not seen much of an effect on what we have actually received in terms of FA offers.  I don't know if it is the effect of the CSS or what.  But, our parental contribution hasn't changed much between kids. 

 

My kids are also spaced out (age), and we don't qualify for need based financial aid. My oldest two are going to colleges that many on this board would say are a very poor "fit" for them.  They are definitely academically capable of going to schools where the average scores are much, much higher. My son received the only full tuition scholarship at his small private school that he chose for a very specific major, and my daughter received a full ride at her very low ranked state college.  It's tough to read these boards sometimes. I leave feeling like they are in a terrible place, especially my daughter, who wasn't as sure as my son about what she wanted to study. Then I have to remember they will graduate without loans, and that they can go on to graduate school if they want.  For each of them, there was really only one affordable option. They had already taken most of what they could at the local CC.  They have good attitudes though, and I hope they aren't resentful as they get older. I also hope that we can find affordable options for the younger ones.  It's not easy. I don't even encourage them to apply to most schools because I know that financially we can't do it.  My daughter only applied to one school. My son had applied to three because his program is extremely competitive.  He was accepted into all three, but only one was affordable, thanks to his scholarship. I know there was some luck involved in that, and that's why I am nervous about finding places for the next ones. 

 

Don't let it bother you in the slightest.  Up above someone asked why we wouldn't take 1/4 of our income to put our kids through college?  First off, b/c we can't bc we don't have the ability to, and second, we are not willing to take out any loans.  My older kids have all gone to very avg schools at very low cost.  Our oldest graduated from a university that is currently RNP according to USNWR.  He has a fabulous career and is the process of being promoted to a pretty darn decent level for someone at his career yrs.  Our ds who is currently a sr at Alabama has been getting extremely positive feedback from his grad school applications.  (He just called and told me that his top professor choice for the program he is interested in at UMich sent him an email last night asking if he wanted to Skype and that when he had reviewed ds's application he was (in ds's words) "blown away.") Attending an UG school that is very low ranking in physics does not appear to have negatively impacted his grad applications.

 

Our current 10th grader will be living at home and commuting to a directional U.  She'll be fine as well.

 

Not a popular sentiment on this forum, but I agree with the sentiment that you aren't where you go; you are what you do.  It has been true for our family.

[suzanne4]

Our contribution would have been over one third (closer to one half) of our income. It's crazy.  Even with top merit scholarships, the private colleges are out of our reach, financially.  

[eternalsummer]

There are private colleges that give full rides.  Not many.

[8filltheheart]

Our contribution would have been over one third (closer to one half) of our income. It's crazy. Even with top merit scholarships, the private colleges are out of our reach, financially.

you are correct. I am exhausted (babysitting all my grandkids this week!) I took the 40% in that post's example and mentally converted it to 1/4. Gah!! For us it is somewhere around 1/3.

[Tsuga]

My point was that the way FA formulas work is based only on a single yr's snapshot.  If we had 4 kids in college at the same time, our expected contribution would plummet.  When kids don't overlap in college, they don't really impact familial contribution.1 or 8, colleges don't really care.  When they do overlap, they do impact parental contribution quite a bit, 60-60 is a common expected contribution for 2 in college at the same time (120% compared to 200% is a huge discount.)  Last yr on CC there were quads posting whose parents made over 200K with over $1 million saved for retirement. They were all accepted to (I think) Princeton where their individual cost was $15K/yr.  Those 4 kids will go to Princeton 4 yrs for $240K.  If those kids had been 4 yrs apart each, the parents would have paid that much for 1 for 4 yrs and close to $1,000,000 for the 4 kids to attend college.   Huge difference.

 

I understood your point:  like if you'd have had octuplets, you'd have had 1/8th the EFC, and so on, even though it's the same income and same amount of children. And that doesn't seem fair.

 

But tons of things work like this: daycare doesn't give family discounts to non-simultaneously enrolled children.

 

And you could also say, how come some families get more tuition aid just because they have more kids? That isn't fair, either. Surely you don't think that other Americans should get the cash-out value of any aid you got over and above the aid that would be received by a family with the average 2.1 children?

 

In addition, family size is counted in the EFC. # of dependents counts.

 

Side note:  Princeton tuition is nearly $50k per year for tuition and fees only.

 

Re: not taking out income:

 

 

 

 

First off, b/c we can't bc we don't have the ability to,

 

Imagine what it feels like to make a mere $65k annually and and still have an EFC. They would be below what your post-Harvard costs would be the baseline and they still have to pay for community college.

 

Most Americans already live on $100,000 minus $40,000 = $60,000. It wouldn't be fun and I don't enjoy living on $65k either, god knows I've complained about it on this board, but I don't know what you mean by "we don't have the ability to". Obviously it is possible to live in the United States on $60k per year, though I agree that substantial sacrifices are necessary. However, it seems like sending eight kids to an elite private school might be worth it.

 

https://wallethacks.com/average-median-income-in-america/

 

The EFC you presented for your kids, eight spread out, would be higher than the average income in the United States. You were asked to pay about $31,250 per kid per year. We know that EFC doesn't go above a quarter of your income, as you alluded to in the most recent post. Or perhaps there were savings from inheritances involved, I have no idea, but the point is, the money was there in some way and your follow-up posts validate that.

 

The median income in the United States in 2017 according to the Census, was $31,099. So you had three times that left over to play with. Three times the individual salary, and 1.75 times the median household salary.

 

I agree with everything you are saying here about choices, responsibility, but I don't see how you can think that making four times the average salary (and I think only your DH worked outside the home during much of that time as you had young kids in the home) allows you to claim that you can't pay.

 

I have also read your posts here and it does not strike me that you live anything close to a lavish lifestyle. So either something in the math is off, or something is off in how you entered the data to the EFC, or you are really pooh-poohing the notion of how the vast majority of Americans live. Like a good 75% of salaries are below $65k. (https://seekingalpha.com/article/4109731-united-states-income-brackets-percentiles-2017).

[eternalsummer]

Having many times the average number of kids is living a lavish lifestyle, imo (I say this as someone with soon-to-be 7 kids and likely more after that).  They don't cost a ton of money, we could live on $50k/yr if we wanted to probably, but they do cost more than 2 kids.  Hard to rent a 2 bedroom apartment with 7 kids.  In many places it's not even legal to rent a place smaller than 5 bedrooms with 7 kids, and there aren't a lot of 5 bedroom rentals out there that aren't those obnoxious McMansions, so you're looking at probably $2500 rent minimum vs $600 rent minimum.  They also cost proportionally more to feed (so food expenses are twice or three times an average family) and health care costs two or three times as much, and clothes, and all of it. 

 

That said, I could make it work on $50k/yr in a low-moderate COL, I think.  The difference for our kids vs a kid with parents making $50k/yr is that we will not pay our EFC for college and a kid with poorer parents doesn't have a substantial EFC to worry about.  Our kids are lucky enough to be pretty bright on the whole and will probably make it into regional universities with decent merit aid or even maybe some OOS publics or, if lucky, a decent private with substantial merit aid; I'll help them achieve that end as much as possible (certainly more than my parents helped me, which was nada). 

 

[GoodGrief]

Our EFC was about 1/3 of our income at the out-of-state public flagship university (over 40,000 annually), and well under 10% at the private with generous aid (under 10,000 annually...slightly higher the second year when we went from 2 college students to 1). In addition, the private figured travel and health care costs into the formula, which the public did not. That is the reason I encourage people with kids who are candidates for admission to avoid dismissing certain privates out of hand because of fears of cost. Granted, the number of privates with that level of need-based aid is small, and one must have a back up plan.

 

And there are extras at the private that my daughter who attended the state school simply did not have, and that reduce some of those living expenses further. Copious amounts of quality free food, for one, apart from the dining plan. My current student rarely pays for snacks or meals outside of dining hall hours. Free laundry. Free club sports, with paid travel to competitions. Expenses covered for international travel to her humanitarian club's project site. Financial support for summer internships. Free or exceptionally low cost quality entertainment. Free college shirts and jackets. Lots of interesting and accessible campus job opportunities. The convenience of having housing open during all breaks, including the long winter break (saves travel costs for those who want to stick around.)

 

All this to say that there are so many variables when it comes to fit and affordability. I don't think that the extras at the private are worth taking out huge loans for...not at all. And one needs to be realistic about whether one's student is a realistic candidate for admission before shelling out the big bucks for the apps. There are great educations to be had in a variety of settings. But sometimes it makes solid financial sense to go with the private.

Edited February 9, 2018 by GoodGrief

[8filltheheart]

I understood your point:  like if you'd have had octuplets, you'd have had 1/8th the EFC, and so on, even though it's the same income and same amount of children. And that doesn't seem fair.

 

But tons of things work like this: daycare doesn't give family discounts to non-simultaneously enrolled children.

 

And you could also say, how come some families get more tuition aid just because they have more kids? That isn't fair, either. Surely you don't think that other Americans should get the cash-out value of any aid you got over and above the aid that would be received by a family with the average 2.1 children?

 

In addition, family size is counted in the EFC. # of dependents counts.

 

Side note:  Princeton tuition is nearly $50k per year for tuition and fees only.

 

Re: not taking out income:

 

Imagine what it feels like to make a mere $65k annually and and still have an EFC. They would be below what your post-Harvard costs would be the baseline and they still have to pay for community college.

 

Most Americans already live on $100,000 minus $40,000 = $60,000. It wouldn't be fun and I don't enjoy living on $65k either, god knows I've complained about it on this board, but I don't know what you mean by "we don't have the ability to". Obviously it is possible to live in the United States on $60k per year, though I agree that substantial sacrifices are necessary. However, it seems like sending eight kids to an elite private school might be worth it.

 

https://wallethacks.com/average-median-income-in-america/

 

The EFC you presented for your kids, eight spread out, would be higher than the average income in the United States. You were asked to pay about $31,250 per kid per year. We know that EFC doesn't go above a quarter of your income, as you alluded to in the most recent post. Or perhaps there were savings from inheritances involved, I have no idea, but the point is, the money was there in some way and your follow-up posts validate that.

 

The median income in the United States in 2017 according to the Census, was $31,099. So you had three times that left over to play with. Three times the individual salary, and 1.75 times the median household salary.

 

I agree with everything you are saying here about choices, responsibility, but I don't see how you can think that making four times the average salary (and I think only your DH worked outside the home during much of that time as you had young kids in the home) allows you to claim that you can't pay.

 

I have also read your posts here and it does not strike me that you live anything close to a lavish lifestyle. So either something in the math is off, or something is off in how you entered the data to the EFC, or you are really pooh-poohing the notion of how the vast majority of Americans live. Like a good 75% of salaries are below $65k. (https://seekingalpha.com/article/4109731-united-states-income-brackets-percentiles-2017).

 

Wow.  That post is full of offensive assumptions.  First, I have NEVER stated that is wasn't fair. I stated that our familial contribution is ridiculous b/c it is that amt x8 and on our income it is a ridiculous amt of $$. It is almost a decade of take home pay. The rest of my comment was tongue-in-cheek.  (I posted above you that 1/4 was not an accurate statement.)  And, our familial contribution has pretty much remained the same even as our older kids have graduated from college and are no longer dependents.  FAFSA's main purpose is to determine Pell eligibility, not how colleges calculate costs.  So, a FAFSA generated EFC is not equivalent to parental contribution except at a very small number of schools.  (Regentrude, is UChicago one that uses FAFSA instead of CSS?)

 

Having 8 kids was purely our decision and as Eternalsummer stated, that in and of itself is a lavish decision.  It is a choice we would never change, but equally, it means our kids do not get to live the lifestyle they would get to live if we had only had our oldest 2.  (At this point we would have been emptynesters for yrs since our 2nd is 26 vs. facing our youngest still being in college beyond our retirement age.)  No begrudging ANYONE who can attend top schools b/c our kids can't afford it.  My posts in this thread are absolutely NOT about complaining.  They are simply discussing the process as the way it currently works.

 

In terms of our expected contribution, to attend schools that cost that much is a choice we won't make.  Our kids do not even have the option to attend schools that expect us to pay that much.  I don't know how families of our size live off $65,000/yr.  I am certainly glad we don't have to, and I make no apologies otherwise.  I like our lifestyle (which is far from lavish, but it is comfortable), and I am not going to forfeit it (or the existence of multiple of our kids) simply to afford college educations at expensive schools. Not even sure why that is a comment.  

 

In terms of "allowing me to claim we can't pay," I find that comment extremely offensive.  I don't need your permission to make a factual statement about our family's circumstances.  There is no way we could somehow find $2500/month to pay for college.  Our max budget for our kids when they are looking at colleges is $10,000/yr.  If they want to take out student loans, that extends their budget to $15,500.  That is what we can afford.  And honestly, our kids know that is realistic, and they are grateful that we can help them that much.  With that amt, they can live at home and commute and still earn their degree.

 

In terms of pooh-poohing how the vast majority of Americans survive off of $65,000.....please show where I have ever stated anything even close to that?  

 

Edited February 9, 2018 by 8FillTheHeart

[regentrude]

  (Regentrude, is UChicago one that uses FAFSA instead of CSS?)

 

No, U Chicago requires the CSS profile. But we always had to fill out the FAFSA as well.

DS' school only requires the FAFSA.

Edited February 9, 2018 by regentrude

[JanetC]

the money was there in some way and your follow-up posts validate that.

 

Kinda, sorta, maybe? The EFC formulas are whack - they are based on typical family budgets in 1960 (the most current census data available when writing the higher education act of 1965) and adjusted by the social security cost of living adjustments (which are based on senior citizens spending and on tweaks to the formula to keep the "entitlement budget" from growing too fast, not on the living expenses of nonretired families).

 

It is extremely hard for a family to figure out if the college financial aid office is returning a number that actually makes sense. The tax breaks for education change, the economy and stock market change, the cost of housing, the size of your raises while you have kids in college, the health of various family members, etc. None of this is easily predictable. What you can predict isn't accounted for in the FAFSA or Profile.

 

Even smart people can't see the future that clearly. I know I've told this story about how my friend wound up broke and had to move in with her mom with her husband and three kids in tow due to her husband's bet on higher education that did not pan out. A combination of the 2008 recession plus the deaths of her mother- and father- in-law hitting at the exact wrong time did her family finances in.

 

Yes, maybe it makes sense for me to sell or borrow against a big chunk of my assets to meet the cost of  a college. Maybe it doesn't. It would probably take expert analysis from a financial aid advisor to say for sure. And a strong life and disability insurance policies just in case. And the economy holding out.

 

The odds of ordinary families figuring it all out are stacked against them. They often fail to realize how important it is to run net price calculators and build a college list before fall of senior year, and when financial aid offers come out in March it's too late to apply elsewhere. The financial aid offer may even make it hard to figure out what is free money, what is debt, what is a one-year commitment and what is a four-year commitment, and so on. Colleges may be using enrollment management firms to try to set a price to extract the most amount of value from me without losing my child's enrollment.

 

I hear you that the formulas are harsh and unfair to low income students. They absolutely are. They also extract "gut check" amounts of funds from people who live "comfortable but not extravagant" lives. Some of us check our guts and say "no, that's more risk than I feel comfortable with." You can look at the number of parent and student loans in default to see that families often lose their bets.

 

It doesn't do any good to wish that you were just a little richer or a littler poorer -- college funding is going to hurt unless you are very wealthy. A little over the national median isn't going to cut it. With a bit of luck and hustle and flexibility as to which college you actually attend, you can get your costs down. It definitely takes planning and research, though.

[Hoggirl]

"Somewhere" I have heard that one should *generally* expect their EFC to be approx 25% of their gross income if that is between $80,000 and $100,000, and about 33% of gross income if it is over $100,000. Does that sound about right?

 

Family size is a very personal choice. I'm an only with an only. That afforded me (and our ds) more choices than those from larger families might have. But, there are "costs" to that as well. I am always slightly envious of those who have multiple siblings.

[Tsuga]

Wow.  That post is full of offensive assumptions.  First, I have NEVER stated that is wasn't fair. I stated that our familial contribution is ridiculous b/c it is that amt x8 and on our income it is a ridiculous amt of $$. It is almost a decade of take home pay. The rest of my comment was tongue-in-cheek.  (I posted above you that 1/4 was not an accurate statement.)  And, our familial contribution has pretty much remained the same even as our older kids have graduated from college and are no longer dependents.  FAFSA's main purpose is to determine Pell eligibility, not how colleges calculate costs.  So, a FAFSA generated EFC is not equivalent to parental contribution except at a very small number of schools.  (Regentrude, is UChicago one that uses FAFSA instead of CSS?)

 

Having 8 kids was purely our decision and as Eternalsummer stated, that in and of itself is a lavish decision.  It is a choice we would never change, but equally, it means our kids do not get to live the lifestyle they would get to live if we had only had our oldest 2.  (At this point we would have been emptynesters for yrs since our 2nd is 26 vs. facing our youngest still being in college beyond our retirement age.)  No begrudging ANYONE who can attend top schools b/c our kids can't afford it.  My posts in this thread are absolutely NOT about complaining.  They are simply discussing the process as the way it currently works.

 

In terms of our expected contribution, to attend schools that cost that much is a choice we won't make.  Our kids do not even have the option to attend schools that expect us to pay that much.  I don't know how families of our size live off $65,000/yr.  I am certainly glad we don't have to, and I make no apologies otherwise.  I like our lifestyle (which is far from lavish, but it is comfortable), and I am not going to forfeit it (or the existence of multiple of our kids) simply to afford college educations at expensive schools. Not even sure why that is a comment.  

 

In terms of "allowing me to claim we can't pay," I find that comment extremely offensive.  I don't need your permission to make a factual statement about our family's circumstances.  There is no way we could somehow find $2500/month to pay for college.  Our max budget for our kids when they are looking at colleges is $10,000/yr.  If they want to take out student loans, that extends their budget to $15,500.  That is what we can afford.  And honestly, our kids know that is realistic, and they are grateful that we can help them that much.  With that amt, they can live at home and commute and still earn their degree.

 

In terms of pooh-poohing how the vast majority of Americans survive off of $65,000.....please show where I have ever stated anything even close to that?  

 

 

Well if you were just joking, never mind, and I'm sorry. I completely missed where you were joking about income statements and your ability to pay. That statement, taken seriously, would be really insulting to people who don't even make as much as you had to pay, not to mention who live on that amount.

 

 

In my mind, I wasn't assuming--I was extrapolating from your general discussion of finances. Between the cost of college, the number of children, the percentage of income and EFC, I did not think I was making huge leaps. To my mind I was working within a reasonable expected range of incomes all of which seemed reasonably consistent. It is not like there are not people making $120k who complain about paying for college. In the context of this discussion, that made perfect sense.

 

But if you were simply positing tongue in cheek, obviously none of those statements were meant to be taken seriously, and my post looks ridiculous.

 

So, again, I'm sorry.

 

In my defense, I have paid or saved a quarter of my income or more to pay for my children's education (pre-school, extra curricular, or college savings) or my education (student loans, tuition, etc.), for most of my adult life, so it did not strike me as remotely facetious. To me, the quarter number is a reasonable number and the financial goal is to get high enough that it doesn't make a difference in how much you eat. So your numbers just didn't seem jokey or off to me.

[Tsuga]

It is extremely hard for a family to figure out if the college financial aid office is returning a number that actually makes sense. The tax breaks for education change, the economy and stock market change, the cost of housing, the size of your raises while you have kids in college, the health of various family members, etc. None of this is easily predictable. What you can predict isn't accounted for in the FAFSA or Profile.

 

...

 

Yes, maybe it makes sense for me to sell or borrow against a big chunk of my assets to meet the cost of  a college. Maybe it doesn't. It would probably take expert analysis from a financial aid advisor to say for sure. And a strong life and disability insurance policies just in case. And the economy holding out.

 

...A little over the national median isn't going to cut it. With a bit of luck and hustle and flexibility as to which college you actually attend, you can get your costs down. It definitely takes planning and research, though.

 

Exactly. You cannot count on your health, future income, stocks, scholarships, society at large, or even staying alive, as you point out. You have to save everything you possibly can and when you get within a few years of college, start putting those funds in safer stocks.

 

I think the only thing people can plan is savings. It's not realistic to think you can figure it out a year or two before. When you have a kid, you have to save the maximum amount you can every year. Even that won't be enough for middle class families, but it should be enough if you are in the top 25% (so, above $75k for a household in an average COL area).

 

And it doesn't make sense to lower your EFC by not saving. It will be made up by high-interest loans, not by aid, unless you are poor.  I think that's the big mistake people make. They think "if I'm poorer, I won't have to pay as much". That's sort of true, if you count taking out loans as "not paying".

[creekland]

I would be curious as to how successful Questbridge students are once they arrive at their schools. I, too, believe it's an awesome program - in theory. But, I wonder how it plays out. Being academically qualified to attend an elite school is only one aspect of whether or not a student will have success.

 

I would love to know the stats as well, but don't have time this morning to google them to see if they are online anywhere.  We don't get many high stats kids so Questbridge is pretty rare at our school.  I can think of one student who was in it, but I haven't heard from her since she graduated (high school).

 

Wow.  That post is full of offensive assumptions.    

 

FWIW, I didn't take it as offensive as much as a calculated "these are the facts with this sort of info for a generic salary" type of thing.

 

I think you're awesome in helping your kids find schools that are great fits for them, super inexpensive given their stats, and then sharing with others how you did it.  I know you often list their schools as "lesser," but really, that's only true for those who think a "good" school has to be in the Top 20 or bust (or similar).  The VAST majority of the world doesn't think that way - including most employers.  There is a difference in schools, but what's a good school for one could be a terrible school for another (student or major or whatever fit aspect is considered).  Success in life can come from pretty much any school - as can failure.

 

If one is looking at pure number ranking, any 4 year school in the Top 200 is in the Top 10% of schools out there.  I hardly consider that shabby.  Top 400 is Top 20%.  That's not shabby either.  Employers generally look for schools they like (without consulting a magazine) and the individual application in front of them.

[Jazzy]

My oldest is a junior, and the entire process seems odd to me on the financial end.

 

I totally understand giving grants or free tuition to low income families. Those students do deserve access to higher education. However, the practice of pricing college according to a family’s income doesn’t make sense to me.

 

When I go buy a car or a house, there is a given price that we can choose to pay (or not) as we see fit. The seller doesn’t say we want x% of your income and y% of your assets. I don’t undertand why we find that practice acceptable when it comes to college tuition.

 

In some ways it feels like there are value judgments being made against families at certain income levels. To those who didn’t save, we say you shouldn’t have taken that vacation, shouldn’t have had so many kids, shouldn’t have bought a big house, etc. But then for those who did save or invest wisely, we say well you have more so you should pay more.

 

We don’t (and shouldn’t) make those value judgments at lower income levels.

 

Why not just set a standard price for everyone above a certain basic income level?

 

Also, even if I did find tiered pricing appropriate, the price seems way too high. 30-40% for one student is a large chunk of a family’s income. That is more than most families spend on housing, basic living expenses, etc. And if a family is budgeting according to the recommended amounts - 20% taxes, 10% retirement, 10% giving, 25% housing, 5% transportation, etc. - they can easily end up in a place where that 30-40% for college costs for one student IS unaffordable or extremely unwise.

 

It just seems to me that prices across the board (even at state schools) are way too high and are being justified with this tiered pricing system that pits different income levels against each other. I also question basing college pricing on an EFC. Some parents choose not to contribute to funding college, and those students are left with few options.

 

I know there is a big push for free tuition and it makes sense at certain income levels. I just wonder why there isn’t more pressure to reduce prices across the board for everyone. This would give families at all income levels more options and would give students without family help more of a chance to take care of college costs on their own.

 

A friend clued me in to the cost of college a few years ago. I was shocked! The state school we went to had quadrupled in price.

 

So I went into the process understanding that college was way more expensive than most people realize. (And I’ve been sure to tell all my friends about it.) But I am just now beginning to understand the tiered pricing structure. It seems very odd to me.

Edited February 10, 2018 by Jazzy

[Arcadia]

So I went into the process understanding that college was way more expensive than most people realize. (And I’ve been sure to tell all my friends about it.) But I am just now beginning to understand the tiered pricing structure. It seems very odd to me.

If you haven’t run the EFC forecaster, you might want to try those now while you have your income tax return. I haven’t finish my income tax filing yet due to waiting for a form so I used last year’s tax return figures as an estimate. The two numbers (Federal Methodology (FM) and Institutional Methodology (IM)) returned by CollegeBoard were higher for me than the number returned by FAFSA4caster.

 

https://fafsa.ed.gov/FAFSA/app/f4cForm?execution=e1s1

https://bigfuture.collegeboard.org/pay-for-college/paying-your-share/expected-family-contribution-calculator#

[regentrude]

My oldest is a junior, and the entire process seems odd to me on the financial end.

 

I totally understand giving grants or free tuition to low income families. Those students do deserve access to higher education. However, the practice of pricing college according to a family’s income doesn’t make sense to me.

 

When I go buy a car or a house, there is a given price that we can choose to pay (or not) as we see fit. The seller doesn’t say we want x% of your income and y% of your assets. I don’t undertand why we find that practice acceptable when it comes to college tuition.

 

I do not think this is an accurate representation.

College cost is what it is. There are some programs for low income families to help them get a college education; that is positive for society, and society has decided to fund those programs through publicly funded grants, loans, and work study. I don't think anybody finds fault with that.

 

For many schools, parental income does not matter beyond determining whether a student is eligible for tax payer funded aid or not; many schools do not have funds of their own to offer families money to bridge the gap. 

Some schools have a large endowment and can choose to assist families with incomes above the threshold for federal aid. I do not see anything wrong with that; they can certainly decide that they want to help promising students from families that do not qualify for tax payer funded aid. But that's not the same as setting different prices based on family income.

 

And, to take the example of housing: there are programs that assist low income families in obtaining housing, because society has decided that it is beneficial for society to do so (that this assistance is woefully inadequate is another matter). 

 

 

I just wonder why there isn’t more pressure to reduce prices across the board for everyone. This would give families at all income levels more options and would give students without family help more of a chance to take care of college costs on their own.

 

There is. And it's done pretty much exclusively on the backs of the faculty who are expected to teach more students with fewer resources and flat pay. Or who are expected to work as adjuncts without benefits and protections, because that is cheaper than hiring tenure track faculty. Plus cuts in vital service departments like IT, which means more work for the IT specialists, longer wait time to get problems addressed. So, reducing the quality of working conditions for the people who actually do the teaching, and reducing the quality of the education are great ways to lower college costs. Oh, and cutting of public funding helps as well.

</sarcasm drip off>

Edited February 10, 2018 by regentrude

[bibiche]

 

There is. And it's done pretty much exclusively on the backs of the faculty who are expected to teach more students with fewer resources and flat pay. Or who are expected to work as adjuncts without benefits and protections, because that is cheaper than hiring tenure track faculty. Plus cuts in vital service departments like IT, which means more work for the IT specialists, longer wait time to get problems addressed. So, reducing the quality of working conditions for the people who actually do the teaching, and reducing the quality of the education are great ways to lower college costs. Oh, and cutting of public funding helps as well.

</sarcasm drip off>

 

Bu think of all the administrators who have been hired to help figure out how to do this.  :glare:  :banghead:

Edited February 10, 2018 by bibiche

[regentrude]

Bu think of all the administrators who have been hired to help figure out how to do this.  :glare:  :banghead:

 

and their salaries.

[kiana]

I would love to see moves to make the cost of education more affordable.

 

I am singularly unimpressed by the moves to make the cost of credentials more affordable. 

 

They are not synonymous, and credentials are far more easily measured. :(

[Jazzy]

I do not think this is an accurate representation.

College cost is what it is. There are some programs for low income families to help them get a college education; that is positive for society, and society has decided to fund those programs through publicly funded grants, loans, and work study. I don't think anybody finds fault with that.

 

For many schools, parental income does not matter beyond determining whether a student is eligible for tax payer funded aid or not; many schools do not have funds of their own to offer families money to bridge the gap.

Some schools have a large endowment and can choose to assist families with incomes above the threshold for federal aid. I do not see anything wrong with that; they can certainly decide that they want to help promising students from families that do not qualify for tax payer funded aid. But that's not the same as setting different prices based on family income.

 

And, to take the example of housing: there are programs that assist low income families in obtaining housing, because society has decided that it is beneficial for society to do so (that this assistance is woefully inadequate is another matter).

Yes, there are programs to assist low income families with housing and college costs. You’re right that I don’t find fault with that.

 

Re: your middle paragraph, and this could be where I’m understanding things wrong as I’m new to all of this, but the net price calculator consist of putting in your income and assets in order to determine the price you’re going to pay. How is that not setting a price based on income?

 

I don’t find anything wrong with colleges offering additional aid above and beyond tax payer funded aid. I just wonder why the focus is on offering more of this type of aid (income based) vs. making the price affordable, in general.

 

When a college sets a price for a specific family at 30-40% of income plus a percentage of assets, it typically isn’t affordable. That’s where you families taking on potentially risky loans, etc. I know those loans work out for some, but they can obviously be a tremendous problem for others.

 

I have heard people on various threads say things like, “Colleges expect you to use all available savings.†“Colleges consider all available college funds to be used for the first child.†“Colleges expect you to stop retirement savings.†Therefore, it suggests that those families should have no emergency fund, have no savings for subsequent children, and should stop funding retirement for maybe a decade or so in order to afford certain schools.

 

We had friends over whose daughter applied for Harvard and said that if she gets in, it will cost less than our state school. (I am happy for them, and I hope she gets in!) This family has fewer children than we have and a very similar lifestyle. When I looked up our price at Harvard, it was 3 times what he told me they’d have to pay. (And I honestly don’t begrudge them that at all, I just find this to be an unexpected part of the process.)

 

We’re using the same strategy for college that we use for house hunting - only looking at what we can afford. It seems a lot easier with housing because the price is the price, end of story, and is not dependent on how much we earn or how much we’ve saved. If I can’t afford a house it is because it is priced out of my range, not because I earn too much or have saved too much.

 

I just think this pricing structure makes things confusing and makes certain schools unaffordable for some families. I just wonder if there is a better way that would make prices truly affordable for more families and also for individuals who can’t rely on family support.

Edited February 10, 2018 by Jazzy

[regentrude]

Yes, there are programs to assist low income families with housing and college costs. You’re right that I don’t find fault with that.

 

Re: your middle paragraph, and this could be where I’m understanding things wrong as I’m new to all of this, but the net price calculator consist of putting in your income and assets in order to determine the price you’re going to pay. How is that not setting a price based on income?

 

The net price calculator basically estimates whether the student qualifies for federal aid (and, if the institution has funds for this, institutional aid) and then subtracts that aid from the college cost. (ETA: Not sure whether npc's include merit aid? )

It does not "set a price based on family income" - it estimates whether your family income qualifies you for taxpayer funded aid and, if available, institutional need based aid. The latter is minimal or nonexistent at many colleges except for wealthy privates. 

 

We have alumni donate funds for scholarships, and the alumnus might decide to endow a scholarship for students that meet certain performance criteria (merit aid) or for students with a financial situation that makes paying for college difficult for them (need based aid).

The net price calculator could tell a student whether he would qualify for a need based award, but that does not mean the school sets different prices. The school merely distributes its available scholarship funds according to certain criteria.

 

I am very grateful for the alumni who donated funds so that our students can benefit from this assistance. I am grateful for the alumni who donated to my kids' schools which makes it possible for them to receive scholarships (one has a merit scholarship, the other one a need based one). 

 

ETA: Somebody somewhere has to pay for the education. There is no "free". In this country, society has decided not to fund public post-secondary education to make it free to students (other developed countries have different priorities). On the contrary; in many states, the higher education budget is cut, cut, and cut. If the taxpayers are not willing to fund college, the only alternative is for families to pay. We could vote for lawmakers who see education as a priority. Yeah, not happening in my state and many others. But we are not allowed to debate this on this board because that is a political issue.

 

 

Edited February 10, 2018 by regentrude

[Tsuga]

My oldest is a junior, and the entire process seems odd to me on the financial end.

...

 

It just seems to me that prices across the board (even at state schools) are way too high and are being justified with this tiered pricing system that pits different income levels against each other. I also question basing college pricing on an EFC. Some parents choose not to contribute to funding college, and those students are left with few options.

 

I know there is a big push for free tuition and it makes sense at certain income levels. I just wonder why there isn’t more pressure to reduce prices across the board for everyone. This would give families at all income levels more options and would give students without family help more of a chance to take care of college costs on their own.

 

A friend clued me in to the cost of college a few years ago. I was shocked! The state school we went to had quadrupled in price.

 

So I went into the process understanding that college was way more expensive than most people realize. (And I’ve been sure to tell all my friends about it.) But I am just now beginning to understand the tiered pricing structure. It seems very odd to me.

 

It also means that admission is less merit-based. There is no free lunch and there is no free college. But we as a country could decide to fund university education for all children meeting a certain standard, rather than saying "if your family figures it out for you, and is lucky, you can get into the professional class".

 

I think this and health care are the number one reason that the US is now a more class based society than many countries in Europe. They have merit-based education and health care for all. "Free" is a silly word. Of course they pay, particularly the professional classes. But I'd rather pay into a merit-based system than a class-based system.

 

That said, the reality of our system is you pay. So I'm using my technical merit to ensure my kids go to school.

[Jazzy]

I don’t mind paying for college. We have saved what we could for our kids, and will do what we can to help them find options we can afford.

 

I just understand why families find the whole process confusing and get funny notions in their heads.

 

If a friend hadn’t told me a few years ago that I better check out college prices, I wouldn’t have known that 4 years of the state school I attended for $16k total (tuition, books, room & board for 4 yrs) cost more than the house we were living in at that time.

 

If the friend who told me Harvard cost less than the state school had said that just one year ago, I would have thought that’s how much the school costs. I wouldn’t have known to go look at the NPC. We live similar lifestyles so I would not have known that was the price for just his family. I would have assumed we were in the same category and that the high prices were for the “wealthy,†not people who had to sacrifice a small emergency fund, college savings for other children, retirement funding, AND get loans to meet the EFC.

 

I have been sharing the info I’ve found with all of my close friends and some acquaintances. A friend of mine whose son is a also junior was talking about the price of sending her oldest to a private Christian college. She said she didn’t have to worry about that with her 2nd because he was going to state schools. I said, “Friend, that’s the same price as our state schools.†She was truly shocked.

 

ETA: Sorry for all the typos!

Edited February 10, 2018 by Jazzy

[Frances]

Think of the families you know....around the Thanksgiving table, families with colleged aged students - we have some late career (first child at 30) that make $100k, with 401k, and others early in career (had first child at 18) that make 55k, with a final pension that will be 100k & also includes medical. Who should pay what when? No factor for stock market crashes. What happens is the 55k gets a lot of aid, even though the 100k has to cover their own retirement and cash flow the parent contribution for college. The determinations heavily influence the 100k family's retirement possibilities, and that has to be considered by the parents. National Guard, military service looks great to many. Redo the math factoring in the oop health care costs now, and in retirement.

Although the FAFSA doesn’t account for pensions, the Profile does. Generally speaking, the schools that meet full need do the most thorough examination of all family financial resources available. The FAFSA is a very blunt tool that is primarily designed to determine eligibility for federal financial aid.

[Frances]

Yes, there are programs to assist low income families with housing and college costs. You’re right that I don’t find fault with that.

 

Re: your middle paragraph, and this could be where I’m understanding things wrong as I’m new to all of this, but the net price calculator consist of putting in your income and assets in order to determine the price you’re going to pay. How is that not setting a price based on income?

 

I don’t find anything wrong with colleges offering additional aid above and beyond tax payer funded aid. I just wonder why the focus is on offering more of this type of aid (income based) vs. making the price affordable, in general.

 

When a college sets a price for a specific family at 30-40% of income plus a percentage of assets, it typically isn’t affordable. That’s where you families taking on potentially risky loans, etc. I know those loans work out for some, but they can obviously be a tremendous problem for others.

 

I have heard people on various threads say things like, “Colleges expect you to use all available savings.†“Colleges consider all available college funds to be used for the first child.†“Colleges expect you to stop retirement savings.†Therefore, it suggests that those families should have no emergency fund, have no savings for subsequent children, and should stop funding retirement for maybe a decade or so in order to afford certain schools.

 

We had friends over whose daughter applied for Harvard and said that if she gets in, it will cost less than our state school. (I am happy for them, and I hope she gets in!) This family has fewer children than we have and a very similar lifestyle. When I looked up our price at Harvard, it was 3 times what he told me they’d have to pay. (And I honestly don’t begrudge them that at all, I just find this to be an unexpected part of the process.)

 

We’re using the same strategy for college that we use for house hunting - only looking at what we can afford. It seems a lot easier with housing because the price is the price, end of story, and is not dependent on how much we earn or how much we’ve saved. If I can’t afford a house it is because it is priced out of my range, not because I earn too much or have saved too much.

 

I just think this pricing structure makes things confusing and makes certain schools unaffordable for some families. I just wonder if there is a better way that would make prices truly affordable for more families and also for individuals who can’t rely on family support.

Because Harvard is a meets needs school, it’s not surprising that it could cost a middle income family less than a state school, unless the state school has very generous merit scholarships. Many state schools have little need based financial aid available beyond that provided by the federal government. Also, unless both you and your friend’s children are accepted to Harvard and get financial aid packages and then compare them, I wouldn’t trust what a calculator and your friend tells you. Additionally, two families with similar lifestyles can have very different underlying financial situations. In general, the meets needs schools require the Profile which is a much more thorough accounting of your financial situation than the FAFSA. Some even require their own additional information.

[regentrude]

. In general, the meets needs schools require the Profile which is a much more thorough accounting of your financial situation than the FAFSA. Some even require their own additional information.

 

Amen. The CSS profile really requires you to divulge all finances, including retirement funds. One year, the profile even asked about make, model and year of our cars.

[MerryAtHope]

Re: your middle paragraph, and this could be where I’m understanding things wrong as I’m new to all of this, but the net price calculator consist of putting in your income and assets in order to determine the price you’re going to pay. How is that not setting a price based on income?

 

I agree that the system is confusing!

 

Think of it this way though: If a school's tuition, room & board is $40,000 per year--that's the price for every student. 

 

What the calculator tells you is how much of that money can come from other sources (Pell Grant, Merit Aid, Need-based Aid, or any other programs your child may qualify for.) It helps you figure out how much money will be due after these other sources pay on behalf of your student. (And some schools also include Loans in that original figure, so you have to look at a break-down to see what they are calling financial aid.)  

 

So...yes, for an individual, it is *in effect* different prices for different people--but there is some organization paying for that student. 

 

If you are curious how things work for or against you for the FAFSA, download the actual worksheet forms and see how much of each type of income and savings for both you and the student are used in coming up with that final EFC. I found that very helpful.

[Jazzy]

Because Harvard is a meets needs school, it’s not surprising that it could cost a middle income family less than a state school, unless the state school has very generous merit scholarships. Many state schools have little need based financial aid available beyond that provided by the federal government. Also, unless both you and your friend’s children are accepted to Harvard and get financial aid packages and then compare them, I wouldn’t trust what a calculator and your friend tells you. Additionally, two families with similar lifestyles can have very different underlying financial situations. In general, the meets needs schools require the Profile which is a much more thorough accounting of your financial situation than the FAFSA. Some even require their own additional information.

My point with that story is that he said it to us like we were in the same boat. “If she gets into Harvard, it will only cost xyz. These private schools end up costing less than our state schools!†He said it like it was true for both our families, and if I hadn’t known to go put our numbers in, I might have assumed his numbers were also good for us.

 

I guess what I’m saying is that I can understand why so many people are touring colleges they can in no way afford or why they assume they’ll get a lot of aid or why they are confused and in a pickle whem the acceptances and financial aid packages come back.

 

You really have to tune out what you’re hearing from friends and acquaintences and do the research to see what applies in your situation. I don’t think everyone realizes that.

 

I have been doing a lot of research about merit money and where my son should apply. And even doing a lot of research and getting some helpful advice, all I can do is apply to the places I *think* will be affordable and see what comes back.

 

We thankfully have a lot of options - a good CC and some good schools within commuting distance. I am happy. But I’ve found the process confusing and a bit overwhelming.

[Jazzy]

If you are curious how things work for or against you for the FAFSA, download the actual worksheet forms and see how much of each type of income and savings for both you and the student are used in coming up with that final EFC. I found that very helpful.

Thank you!

 

I would like to understand how all of the pieces come together.

 

I was talking to a friend about the NPC. She knows we have saved for the children and they’re saving summer earnings, but her kids are young and haven’t started saving yet. She asked if they’d be better off not saving and I honestly didn’t know. It always seems better to save than not, but I didn’t know how each financial piece affected the final price.

[regentrude]

I would like to understand how all of the pieces come together.

 

I was talking to a friend about the NPC. She knows we have saved for the children and they’re saving summer earnings, but her kids are young and haven’t started saving yet. She asked if they’d be better off not saving and I honestly didn’t know. It always seems better to save than not, but I didn’t know how each financial piece affected the final price.

 

No, it would definitely NOT be better not to save.

 

As a rule of thumb: parental income is "taxed" by the FAFSA at about 25% (there is an allowance based on the age of the older parent). Non-retirement parental assets are "taxed" by the FAFSA at only about 6% each year.

 

Now, student assets are taxed much higher. Savings should be in the parents' name, not the student.

A good overview and worksheet to figure out EFC is here:

https://studentaid.ed.gov/sa/resources#efc

[Jazzy]

Thank you!

[teachermom2834]

I keep hearing people say they were penalized for saving and encouraging others not to save. With saving assessed at just under 6% (last time I checked)I just can't get on board with that advice.

 

People really need to stop listening to chatter of friends and family and figure out their own situations. Whether it is thinking your dc will get a free ride because a peer is saying her kid did, or that it isn't smart to save, or that poor people get free college, or that kids can pay their own way, or whatever the chatter is.

[regentrude]

People really need to stop listening to chatter of friends and family and figure out their own situations. Whether it is thinking your dc will get a free ride because a peer is saying her kid did, or that it isn't smart to save, or that poor people get free college, or that kids can pay their own way, or whatever the chatter is.

 

This. The information about the FAFSA is spelled out very clearly and is easy to find. Work through the worksheet and put your numbers in.

 

People have odd notions. Also, people have very different priorities, and you never know all facets of a family's  financial situation.

 

And people's assessment are not always rational. Some people consider it perfectly normal for a family to forgo one income for many years so a parent stays home, but at the same time consider it nuts for another family to effectively forgo one income for the years the kids are in college because they are paying mom's income in tuition. 

[eternalsummer]

This. The information about the FAFSA is spelled out very clearly and is easy to find. Work through the worksheet and put your numbers in.

 

People have odd notions. Also, people have very different priorities, and you never know all facets of a family's  financial situation.

 

And people's assessment are not always rational. Some people consider it perfectly normal for a family to forgo one income for many years so a parent stays home, but at the same time consider it nuts for another family to effectively forgo one income for the years the kids are in college because they are paying mom's income in tuition. 

 

FWIW, 

[teachermom2834]

This. The information about the FAFSA is spelled out very clearly and is easy to find. Work through the worksheet and put your numbers in.

 

People have odd notions. Also, people have very different priorities, and you never know all facets of a family's  financial situation.

 

And people's assessment are not always rational. Some people consider it perfectly normal for a family to forgo one income for many years so a parent stays home, but at the same time consider it nuts for another family to effectively forgo one income for the years the kids are in college because they are paying mom's income in tuition.

Right. And not only do people have different priorities they also mean different things when they say "free ride", "paid their own way", etc. One family gets a $60,000 tab down to $30,000 and says "dc got a generous scholarship". The next family gets the same package and says "they didn't give us much of anything".

 

Makes my head hurt.

[Mabelen]

Amen. The CSS profile really requires you to divulge all finances, including retirement funds. One year, the profile even asked about make, model and year of our cars.

True, and yet, for our family, even though we drive older second hand cars, etc., etc., the profile schools expected 1/3 of our gross income to go in college costs. We are penalized heavily for having assets that are not officially retirement savings but which are very much retirement funds. We came to the U.S. later in our years, and so we started funding our 401 late as a result. And we are older parents. And our two children do not overlap in college. And we live in a high cost of living location. In other words, we are toast!