As almost any parent of a high-school senior knows, figuring out the true college price tag is confusing. While the full annual sticker price can be as much as $60,000 or $70,000 at a private college and more than $55,000 at an out-of-state public college, experts say that many students will end up paying considerably less. Sizable merit and need-based aid packages take the sting out of those big numbers.
Students, however, typically have to wait until the spring, when their acceptance letters arrive, to learn the amount of those awards, making it difficult for families to effectively plan a long-term budget and posing significant obstacles for first-generation students who may not be aware of all the financial options.
Last September, President Obama announced a major reform to the Free Application for Federal Student Aid (FAFSA), the government form for determining Pell Grant amounts and guiding college-grant decisions. Parents will now be able to input financial information using figures from the previous year’s taxes returns on October 1, rather than after January 1, which may mean that students will learn about financial awards earlier in the process. This effort, combined with various online tools and political proposals, could make it easier for families to figure out the real price of college. Still, others say these initiatives don’t go far enough.
More here.
Apt. 11d 
“Last September, President Obama announced a major reform to the Free Application for Federal Student Aid (FAFSA), the government form for determining Pell Grant amounts and guiding college-grant decisions. Parents will now be able to input financial information using figures from the previous year’s taxes returns on October 1, rather than after January 1, which may mean that students will learn about financial awards earlier in the process.”
That does sound very good.
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This is very informative, but I’ve got at least four more years of living in denial and I’m going to keep them.
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I worry that the statement “While the full annual sticker price can be as much as $60,000 or $70,000 at a private college and more than $55,000 at an out-of-state public college, experts say that many students will end up paying considerably less” ends up being misinterpreted by parents (and, of course, kids). That is, different families interpret “considerably less” and to whom that less applies in ways that are overly optimistic.
I also think that many schools that are trying to discount and manage budgets with sticker prices of 55-60K are making decisions that are not sustainable, because they impact their brand, or rely on discounting that undermines their bottom line. Examples include both using unprepared students who can pay the bottom lie (unfogged had a link to an article about Montana Tech) and schools that are finding discounting to fill their seats with qualified students results in under funding in the long run.
And, I am at a loss at what the long term solutions are. I think the model of US higher education that I grew up with (as a faculty child, student, and then faculty member) are fracturing. My experience was all with R1 universities, which balanced their budgets with a mix of tuition, externally funded research, professional schools, state aid, federal aid, donor support and multiple responsibilities, teaching, research, public outreach, public intellectual funding, community building. The demand that each of those things be self-sustaining means that the budgets are being balanced differently.
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“That is, different families interpret “considerably less” and to whom that less applies in ways that are overly optimistic.” Yes, absolutely. If your family makes over $100k and your kid is a b+ student, you’re getting nothing.
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That’s not entirely true everywhere. There are some expensive schools that have enough support for even those in the 6-figure category. There are a few that we’re looking at that fit that category. I’ve done the net price calculator at several and putting in our stats gets us a pretty decent break. Granted, some of that might be in loans, so it will be a difficult decision.
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Laura said:
“If your family makes over $100k and your kid is a b+ student, you’re getting nothing.”
That’s a bracing thought.
Come to think of it, that would also make a great coffee mug or kid water bottle logo.
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You may as well line the water bottle in BPA while you’re at it.
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A CNN article from August about the Congressional Budget Office points out that the CBO doesn’t know if the federal student loan program will turn a profit of $1.6 billion this year or lose $20.6 billion and continue to lose money for a decade. The discrepancy apparently comes from uncertainty about how many students will fall behind or default, how long they’ll defer payment, and so forth.
It’s sobering to think that one of those families with the $100,000 income—which here in the Northeast could easily be a family where mom and dad are schoolteachers—could first end up paying for a child’s education through loans, with interest, for decades to come, while also paying for it a second time, to some extent, as taxpayers.
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In the Northeast, one school teacher parent makes about $100,000. With two school teacher parents, that family makes closer to $200,000. All their money goes towards housing. The net calculators don’t take that into account.
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I can make the whole housing payment (including property taxes) on less than a quarter of the income of a mid-level university employee. Suckers.
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Perhaps that may be true in the NY area (and some other areas), but that’s not true across the Northeast. The BLS estimates (http://www.bls.gov/oes/current/oes252031.htm#st) that the mean salary even in those high paying areas is ~82K. Between two parents making that and the 100K estimate is about oh – a year of college. So yes – it is closer to 200K than 100K, but that’s only in the best paying school districts in affluent areas, where teachers would be hard pressed to find an affordable place to live on that salary. In other areas (including where I live), the cost of living is still high, but teachers’ salaries are lower than that. My parents were both teachers in well paying school districts – worked there their entire careers – and weren’t making high end numbers until well after we graduated from college.
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Shannon said,
“My parents were both teachers in well paying school districts – worked there their entire careers – and weren’t making high end numbers until well after we graduated from college.”
What an interesting coincidence–that you finally start making real money around the time to send in FAFSAs…
We’ve noticed a similar pattern at our house.
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For some reason I can’t reply to Amy on this, but to be clear, the 100K like figures came AFTER we graduated – a long time after. Most teachers making that money are close to retirement – so it’s not when you fill out FAFSAs, it’s when you’re about to collect your pension. 😉
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Maybe it’s all my time living in the Midwest after moving from CT but $200,000 sounds pretty nice (hell, i’d take $100,000 and feel pretty good about life). And it’s simply not true that a B+ student with parents making $100,000 isn’t getting anything. Lots of SLACs out there with merit scholarships that look for more than just good GPAs.
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The SLACs that will admit and fully fund a kid with less than a B+ average aren’t selective and aren’t well known, which makes it difficult to find a job after college.
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I work at one that will; it’s well-known. Full funding, okay maybe not. But getting a quarter to a half funding is completely reasonable. Lots of my students are from families making $100,000 and less and will graduate in 4 years without crushing student loan debt. I’m at a SLAC in OH; there are lots of schools like mine in this state and neighboring states.
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OH has some excellent SLACs. (Hubby is from Cleveland.) I got into Kenyon many years, but they didn’t give us enough financial aid so I went SUNY instead.
My article was about the difficulties in figuring out what colleges will pay and how much. I think families should be able to punch their numbers into one universal calculator and then know how much they’ll have to pay.
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$200K is actually pretty nice in the Northeast too. And, frankly, people in the top 5% of income in the U.S. should be the ones paying. Do you want people making only $50K to pay? Or is it only people who are richer than you? That’s an ever moving target.
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We don’t make $200K and yet I feel very fortunate. Granted, we have less debt because we paid it off with the help of the inheritance fairy. We still have 2 mortgages, though, that we still owe about $350K on.
We’re well-off enough that my sister had no compunction about having my adorable 5 year old nephew Facetime me to emotionally blackmail me into buying a 10 ounce bag of popcorn for $25 for his Cub Scouts fundraiser. LIKE I AM SUPPOSED TO SAY NO TO THAT FACE.
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So, if I ran the net calculators for 50 random colleges would people find that interesting? Should I do a family income of 100,000 or 150,000? No college savings. A $50,000 rainy day nest egg. No investments or kid money. 1 kid going to college.
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Yes, I would find that interesting, and do it myself, even though I know we are full pay.
But which random colleges? I think these details are often what skews the interpretation of the original statements about who pays full price. For example, the details of income level, number of children in college, assets, and the definitions of merit (grades, scores, leadership — which is sometimes a code for athletes, but not always), and the schools. What’s a SLAC you’ve never heard of, for example? And, what are the career goals afterwards? And, does discounting from 60K to 30K make enough of a difference? That inflection point for affordability is surely a moving target.
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“So, if I ran the net calculators for 50 random colleges would people find that interesting? Should I do a family income of 100,000 or 150,000? No college savings. A $50,000 rainy day nest egg. No investments or kid money. 1 kid going to college.”
Yeah.
I think it’s a good idea, but hard to come up with something relatable. I’d definitely do the $100k over the $150k, because at $150k, 90% of people are going to think, “Suck it up, buttercup!”
Here’s a possible scenario:
$100k family income
$20k college savings (last minute panic)
$30k rainy day nest egg ($20k + $30k = the same as your scenario, but there’s a little bit more pathos)
$200k retirement
$100k home equity
2 kids spaced 3 school years apart
That family has been doing a lot of good things over the years (assets equivalent to 3.5 years of income is a big deal), but they do not have big pots of cash lying around, and they’re going to find it tough to cash flow $200k in college money over a period of 7 years (assuming something like current University of Texas at Austin costs).
Our real numbers are somewhere in that ballpark–but a little different by virtue of somewhat higher income and having three children, not the typical two, and with a big space between #2 and #3.
By the way, you might want to do a paragraph or two on twin or multiple issues, as there are a LOT of families with twins these days.
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$109,000 is the median family income nation-wide for students attending a four year college.
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I did not know that. It seems really high.
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MH said,
“It seems really high.”
Not when you consider that 1) 4-year-college is a middle class thing and 2) these are parents in their peak earning years.
So, I’m not surprised at all.
In fact, you could almost derive that number (the $109k median) from the fact that $100k tends to be the financial aid cut-off.
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Laura said:
“$109,000 is the median family income nation-wide for students attending a four year college.”
Hmmm.
The relationship between that and the financial aid cut-offs reminds me a lot of the original Social Security age formula–where you get Social Security at 65, but (actuarily speaking) you’re supposed to be dead by that point.
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Handy income percentile by age calculator: https://dqydj.com/income-percentile-by-age-calculator/
A 48 year old with an income of $54,500 is in the 59th percentile in income in 2015. A married couple, both 48, would make $109,000. The 50th percentile in income in 2015 was $46,000.
It all gets very complicated. There are education credits for tuition: https://www.irs.gov/individuals/education-credits-questions-and-answers. Form 1098-T. However, the benefits do phase out: Yes. To claim the full credit, your MAGI, modified adjusted gross income (See below for MAGI definition) must be $80,000 or less ($160,000 or less for married filing jointly). If your MAGI is over $80,000 but less than $90,000 (over $160,000 but less than $180,000 for married filing jointly), you receive a reduced amount of the credit. If your MAGI is over $90,000 ($180,000 for joint filers), you cannot claim the credit.
It might be interesting for the average reader to compare financing a child’s education through a home mortgage (by which the interest is tax deductible), vs. through non-dischargeable student debt (which interest is also tax deductible.)
To add another layer, once you consider mortgages & taxes, real estate value and appreciation (for the child’s K-12 years) vary wildly: https://www.trulia.com/blog/trends/rich-city-poor-city/.
So the family that settled in Rochester, NY in 1986 saw their house appreciate much less than the family that settled in DC. If your house appreciated by 550%, tuition bills are not as large a factor as they would be if your house only appreciated by 100%. The first family can pay off any outstanding debt by selling their house; for the second family, full-pay tuition would be intimidating.
There aren’t many middle class (upper middle class) kids from the midwest looking at colleges on the coasts. The real estate market may explain why. The Chronicle of Higher Education has updated its “Where Does Your Freshman Class Come From?” article: http://www.chronicle.com/interactives/where-does-your-freshman-class-come-from?cid=FEATUREDNAV#id=ostate_40.
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The term to search for is “discount rates”: https://www.insidehighered.com/news/2016/05/16/discount-rates-rise-yet-again-private-colleges-and-universities. The average institutional tuition discount rate rose to an estimated 48.6 percent for first-time, full-time freshmen in 2015-16, according to a report released today by the National Association of College and University Business Officers. The rate, which represents the portion of total tuition and fee revenue channeled back to students as grant-based financial aid, was up from 47.1 percent the previous year. Discount rates also increased when all undergraduates were measured, rising to 42.5 percent from 41.3 percent.
A vast majority of first-time freshmen, 88.2 percent, received institutional grants in 2015-16. The amount was roughly even with the previous two years. The average grant for freshmen as a percentage of tuition and fees was up, rising to 55.5 percent from 53.9 percent.
Beware of colleges resisting “stacking” scholarships; colleges vary in how they treat outside scholarships. You do not want the college to subtract the value of an outside scholarship from the institution’s own grant.
I know that the “Colleges That Change Lives” has made an impression in our neck of the woods on parents stuck in the affordability trap, bringing more in-depth reviews of good, SLACs: http://ctcl.org/.
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My kids are at good, but definitely second-tier – state universities. They are Laura’s Bee Plussers. We are in what I call the ‘sour spot’ for college costs. We have enough money that our FAFSA result is full pay, but not enough that full paying for an expensive private college wouldn’t leave us staggered as we head into retirement, paying for weddings, etc. Not to mention the staggering and humiliating costs of old age, looming on the distant horizon. So for us, the sticker price is the real price, and we do a whole lot better at a state university. This is a calculation which a lot of sour spot parents are making – my sophomore is living in a shared apartment with several kids who seem to be from top quintile income families, but not top two per centers.
Some of our friends have a lot less money than we do, and their kids got very nice scholarship packages at sweller colleges than ours are attending. I think my kids are doing fine, but the workings of the system as Laura describes mean that the expensive private colleges looked far more expensive relative to their perceived value, to us, than they did to people either up or down the income scale.
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dave s.,
I was reading Laura’s B+ quote to my 14-year-old last night. It’s a little short, but hopefully it’s got the same punch as the “coffee is for closers” speech from Glengarry Glen Ross.
Fingers crossed, but so far I have A kids (with the occasional A-). And we seem to have the SAT encoded in our DNA. But we’re not really sports or extracurricular people.
Vanilla private school is off the table, barring some sort of major miracle. And, frankly, unless Caltech or MIT came knocking, I don’t really see the point.
That leaves two options:
1. large out-of-town state school (and I mean LARGE–this is Texas)
2. Hometown U.
I don’t want to clip our kids’ wings, but the reality is that our costs for Hometown U would be mid-four figures a year. We would literally be able to take the whole family to Disneyland every year if they lived at home and went to Hometown U. Heck, the kids might even be able to pay the whole yearly bill themselves with a little babysitting or barista-ing…
That’s for our two oldest–our youngest is 7 years younger than our middle child, so that ought to give us more of a running start, and we might be able to offer more options at that point. A little unfair to the older kids, but c’est la vie.
It’s 3.5 years until we find out where oldest is going, and the suspense is just about killing me. We’re saving as if for option #1, but it would be swell to get option #2.
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My plan for future hypothetical children are: 1) have them get into a top tier private university that offers need or merit based scholarships that make the cost to me negligible,* 2) have them get into an honors college with a full ride at an in-state institution, 3) be an academic and have them go to my institution on a faculty discount, or 4) have them go to university in Europe, where it’s free or very cheap. (They’ll have EU citizenship).
*IIRC families making less than 100K go to the Ivies and similar schools for free.100K+ can still get nice discounts.
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It seems to me that the university system as a whole is moving towards a top global 1% concierge model. As middle class Americans are getting priced out even at public institutions, they’re simply moving to admit wealthy international elites who don’t blink at dropping 100K+ a year on school costs. It’s part of our larger commitment to redistributing all the wealth upwards and destroying our middle class. Higher ed, living in cities, and good health care are all goods we’ve decided 80%+ of Americans don’t deserve, and since schools are now competing for people who aren’t price sensitive, there’s no reason to pay attention to cost. It’s a similar reason for developers building luxury condos over affordable housing. Why admit the B+ student who wants aid when you can admit the D- child of a Chinese billionaire?
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“Why admit the B+ student who wants aid when you can admit the D- child of a Chinese multimillionaire?”
If you’re managing the budget of a school that isn’t itself in the top %%%, you can’t admit the B+ student who can’t pay, unless you admit enough of the children of Chinese multimillionaire. And, depending on how elite a school you are, your multimillionaire choices are going to be limited (that is, the lower ranked you are the lower ranked your billionaire child will be).
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Sure, it makes sense in the short-term, but we also have to consider what our political commitments are long-term. Do we want our land grant higher ed system to provide high quality affordable education to our citizens, or to be a brand name sold to the global .1%?
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Oh, I totally want our public state universities to offer a high quality affordable education to the state’s residents, and, affordable should really be affordable, like say 50% of a full time minimum wage job (which would be 10K, at the 10$ minimum wage). I think the short term decision is a terrible one.
But it’s one schools are forced into, if they have insufficient funds and insufficient political power to change that equation.
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B.I — Your list made me smile because it would have probably been my plan when my children were hypothetical, too (though I didn’t have the European option, and I didn’t (and don’t) consider an honors college a necessity for an in-state university).
In practice I think the only realistic option to plan for hypothetical children is in state tuition at a decent university (which requires moving to a state where one exists and then working hard to maintain affordability for middle-income families).
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Yeah, the honors college part will only be if they’re good enough students, which they might not be. I’ve mentioned this a million times, but my partner is from a middle class family in an expensive area, and his parents didn’t help him at all with college costs. He failed out of HS, failed out of community college, then eventually got his act together, went to CC, and transferred to a highly regarded in-state school (he’s from CA, so great public schools). He took out loans of about 10-13K, and paid them off within a year by living at home and working in tech support (skills he got by tooling around with computers in his spare time). There are other paths to get an affordable high-quality education besides being a wunderkind or obscenely wealthy, though it in part depends on living in an area where there’s still a robust public school system.
I also agree the biggest problem is state school tuition, and we should push for better funding of our public university system more generally. Private schools are luxuries, and if Princeton wants to charge a million dollars a year, TBH, I don’t think it’s a big deal, because no one deserves to go there. (Plus they’d just discount it for all non multimillionaires they admitted anyways.) I do think that state schools should be easily affordable to the middle classes.
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BTW, I ran the Net Price Calculator on a series of 50+ schools at the College Board (not all schools participate), and got the following median results:
150K income, 50K assets, 600K house w/500K mortgage, family of four, 1 child in college, married; some schools asked for medical expenses (6K) & K-12 tuition (0); some schools asked for academics: 3.8 GPA, 1500+ SAT, 33 ACT (guessing).
median Cost of attending: 66K
median net price: 42K
Upping the income to 200K
median cost of attending: 66K
median net price: 57K
The schools include MIT (near lowest net price) Dartmouth (median net price) and Brown (highest net price) and many others in between. Some of the results are guessable, but the difference among those elites shows that decisions made by the school on how substantially they can and will invest in aid play a significant role, not always predictable.
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Laura writes: “I think families should be able to punch their numbers into one universal calculator and then know how much they’ll have to pay.”
But that only works if all the colleges want to make the same decisions about how they allocate their discretionary dollars (i.e.scholarships/need based grants).
And, they clearly don’t. Some of the Ivy’s + elites have made the decision to use income as the main data point (absent unusual circumstances like extensive assets) while others want to know how family money is being spent (i.e. medical expenses and private schools). Others want to use student characteristics (like academics, alumni status, leadership qualities, religious affiliation, . . .).
The College Board calculator was pretty good in allowing modifications for that subset of variables, but even there, there were unknowables (for example, some schools, like Rensselaer seem to have scholarship competitions).
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My university is getting in on the gravy train. We now offer “college readiness” 10-week summer camps in India and China, where for some obscene amount of money (I can’t imagine it’s much less than 30-50K) teenagers can learn about how to apply and get accepted to top tier American schools. My friends are MA thesis advisers, and fully 50% of the master’s in social science program is now international, mainly Chinese and Indian. It my school though, the international students at the undergrad and master’s level might be obscenely wealthy but they’re still smart and hardworking. The dumb lazy assholes are going to state schools where they can tool around in their Porsches and “pass” their classes solely due to admin pressure to keep them enrolled and keep the money coming in.I witnessed this first hand as an RA for a professor in Australia, which is about 20 years ahead of the US in selling out to international students, and it was kind of a nightmare.
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The professor failed a student for not showing up to class or doing the work. She was reprimanded by the administration and told she had to change it to a passing grade. My ex-FIL, who was a professor at the top business school in the country, had a student who failed accounting 101. He called her into the office and pulled out her GMAT scores. He asked how someone who got a perfect score on the quantitative section could fail a basic accounting class. She looked at him incredulously and said, “you don’t think I actually took that test myself, did you?”
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Australia is a smallish country (23 million population), so it’s easier for them to get swamped by low-quality rich Chinese students than it would be for the US.
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Cost of Attending Net Price/150K Net Price/200K Net Price/100K
1 Amherst $69,986.00 $39,186.00 $54,286.00 $23,686.00
2 Antioch College $49,327.00 $27,277.00 $28,927.00 $24,677.00 (A)
3 Bard $67,262.00 $46,712.00 $60,312.00 $32,262.00
4 Barnard $69,812.00 $48,784.00 $62,611.00 $35,375.00
5 Bob Jones $26,070.00 $20,570.00 $20,570.00 $20,570.00 (A)
6 Boston College $68,844.00 $44,344.00 $58,144.00 $31,994.00 (A)
7 Boston University $65,906.00 $48,056.00 $56,606.00 $30,556.00 (A)
8 Brandeis $66,710.00 $44,260.00 $59,310.00 $34,400.00
9 Brown $66,280.00 $51,230.00 $65,981.00 $39,904.00
10 Bryn Mawr $67,120.00 $41,205.00 $54,716.00 $38,628.00
11 Bucknell $69,500.00 $46,600.00 $57,600.00 $35,250.00
Cost of attending: $66,212.00
NPC, 150K income: $41,986.00
NPC, 200K income $57,600.00
NPC, 100K income $32,262.00
Don’t know if the formatting will work, but here’s a sample of 11 colleges/universities, at the College Board NPC site. (A) means the site asked questions about academic standing.
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Wow, Brown and Bryn Mawr are hard on $100k families!
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link please
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I didn’t include Bob Jones in the medians. Brown’s relatively weak aid surprised me.
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Right. I did a bunch of those calculations this afternoon, too, and got about the same averages. For 100K, most of theses colleges say that you can afford $30k per year. But that’s 1/3 of the income after taxes for a family. That’s crazy!!! That’s still $120 for four years. (The average kid takes 5 years to graduate.)
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That’s why there’s a market for student loans.
I have noticed a certain increase in transfers in my children’s former classmates in town. Some were dissatisfied with their first college; some discovered a new interest in college. In theory, students could start college at whatever reasonably reputable college offered the best “package,” then transfer to the more expensive school for the last year or two.
I know of one kid who did that, but that was more a result of being a B- student in high school, but an A student in college. The first university was a state flagship in a southern state; after two years, she transferred to a more highly ranked private university in her home state up north. She’s doing very well professionally.
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Well, at 30K/100K of income, they are presuming both savings or loans (or both).
What is affordable, at different levels of income? I think that’s what state universities should cost, but I don’t know how we’d determine that number.
Having looked at these numbers today, the 11K tuition in my state seems quite reasonable. As cost of attendance, it’s 25K. Is that affordable? Is 11K affordable?
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Hi Laura — link for what? The College Board calculators?
https://professionals.collegeboard.org/higher-ed/financial-aid/netprice/participating-schools
I signed up for a dummy account.
The data is in my spreadsheet, which I could email — I think I have a gmail address for you.
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Ah, yes. Their calculator only works for 100 schools. Most of the ivies use their own. Please send what you have… lmckenna11 at gmail.com
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So, four years of college at $30K = $120K. How many families in that income bracket have saved that much? I mean money that isn’t earmarked for emergencies, like job losses?
None of these calculators ask for how many years that a family has that income. What if the parents are real estate agents who mostly make around $50 and have a lot debt, but then have one good year right before their kid goes to college. They have to use most of that new money to pay off their debt and then go back to earning their usual $50. Aren’t they totally screwed?
While we do well, we were in graduate school until our mid-30s and are seriously, seriously behind in saving for retirement. So, we’ve put all our money in that direction. We’re going to get hosed.
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Yep.
Here’s a quick financial autobiography, starting when husband and I were in our early 30s and the parents of two small children:
2006-2013–pay off credit card debt, pay off small student loan, buy and pay off first car, save emergency fund, have third kid, save for house downpayment
late spring 2013 buy first house
summer 2013-4 save for and buy new-to-us minivan in cash
summer 2015-present saving for college
So, we’ve had quite a number of major adult projects to accomplish before we started any college savings. And we’re actually jumping the gun a bit on the college savings–Dave Ramsey says to be saving 15% of income for retirement before starting college savings and we’re not there at all–but I don’t have the heart to wait anymore, given how quickly it’s going to be 2020.
Our official family goal is to save $10k a year for college from now on and for the foreseeable future. We haven’t yet hit that number in either 2015 or 2016, but that’s the goal. As I mentioned earlier, if either of our older kids goes to Hometown U, we will be OK. The doomsday scenario, though, is that neither of them goes to Hometown U, they both go to a big out-of-town state school, and in 2024, we will have both a college senior and a college freshman in school at the same time and we will need to come up with $50k. The main purpose of our college savings is to absorb the impact of that single year.
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I think the college cost conundrum reveals how the dual-income household model is both infeasible on a societal scale while also conferring enormous benefits to families that can make it work long-term. For families with young children, there is often an advantage to single-earner households and the loss of one person’s salary is an appropriate trade-off to avoid paying child care costs. Yet there is no such option for college (unless college home-schooling becomes acceptable all of the sudden), so once the kids are secondary schooling, the calculus strongly favors dual-income families who are better able to save in advance and contribute additional cash flow to cover costs once the kids are in college.
An yet, our society is structured to make dual income households difficult to sustain over the long periods and so many families are unable to save for college even when when one person in the household is earning a very good salary, like $100k.
I am, probably foolishly, not at all worried about paying for college for my two children. The reason I’m not at all concerned about these costs is because we are a dual-income household that paid for child care when they were young, which in total cost us around $150k before the youngest started school. And that was during a time when we earned less and had more debt than we do now so I anticipate paying for college to be easy in comparison, because we’ll be able to pull on savings in addition to cash flow. But this assumes we’ll be able to maintain both incomes. For me that is the biggest uncontrollable factor and the one that would jeopardize our ability to pay for college.
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Doing the stats on 100K income made the “mystery” more obvious to me. Seems like 100K is a threshold income at which schools have variable results that you need to know a lot about the schools to predict — i.e. Haverford at 17K v Brown at 38K. I’m guessing that difference would make an affordability difference to many. 17K makes the net cost less than our state flagship, while 38K is quite a bit higher.
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“More than 60 percent of the families of students admitted to the [Harvard] Class of 2016 who will enter this coming August will benefit from an unprecedented $172 million in undergraduate financial aid, paying an average of only $12,000 per year for tuition, room, board, and fees combined.
“Beginning in 2004, Harvard announced a series of dramatic increases in undergraduate financial aid, and since 2007 has increased aid by more than 78 percent. Approximately 20 percent of families, those with normal assets making $65,000 or less annually, are not required to contribute at all.
“Families with incomes up to $150,000 will pay from zero to 10 percent of their income, unless they have significant assets beyond income. Depending on individual family circumstances, families with incomes above $150,000 still may qualify for need-based assistance.”
http://news.harvard.edu/gazette/story/2012/03/2032-admitted-to-class-of-16/
On reflection, maybe it’s not so crazy to be Ivy-minded.
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