kitchen table math, the sequel: no, parents are not stupid, Post number I've-lost-count

## Sunday, December 30, 2012

### no, parents are not stupid, Post number I've-lost-count

Here we go.
Who still believes college sticker prices matter?

Some 58 percent of students from lower-income families and 62 percent of those from middle-income backgrounds are likely to eliminate schools from contention based simply on price. In comparison, 48 percent of affluent households crossed colleges off their list because of price.

Despite the stubborn belief that price-tags matter, two-thirds of students who attend private and public colleges in this country receive some type of tuition break.

Despite the stubborn belief that price-tags matter, two-thirds of students who attend private and public colleges in this country receive some type of tuition break. At private institutions, 85 percent of students receive an institutional scholarship or grant.
I just read this passage out loud to Ed, who said: "If 2/3 of all college students are receiving some type of tuition break, that means parents are aware tuition breaks are available. I doubt they're just getting tuition aid dropped on them randomly."

Speaking as a parent, I have a stubborn belief that price-tags matter.

The reason I have a stubborn belief that price-tags matter is that .... price-tags matter.

Here's how it works (short form).

1. While your child is ages 12-16, you read articles and attend guidance presentations in which you are told that nobody pays sticker price.
2. Then, when your child turns 17, you discover that virtually everyone you know with a child who is 18 is paying sticker price.

How it works (long form).

1. While your child is ages 12-16, you read articles and attend guidance presentations in which you are told that nobody pays sticker price.
2. If you're paying attention -- and, if CBS Money Watch is to be believed, a lot of parents are paying attention -- at some point along the line you realize that: a) 33% of all college students - the number paying sticker price - is a big, not small, number of kids and your kid could be among them; b) most discounts are nominal at best (e.g. the \$2000 merit scholarship to Vermont --  out-of-state cost \$45K -- awarded to a friend of C's); and c) significant merit aid is contingent upon your child attending a school at least one tier below the best schools that accept him.
3. Then, when your child turns 17, you discover that virtually everyone you know with a child who is 18 is paying sticker price.

Jean said...

Yeah, that's a lot of people paying sticker price. And as you say, the 'discounts' aren't much compared to the price. If my alma mater now costs \$17,000 per year (a *public* university mind you), a \$2000 grant is not going to make me feel a lot better. When I attended in the 1990s it was about \$6000/year. The aid does not keep up with the price, and there's still the debt to deal with afterwards.

ChemProf said...

Right. Unless you are in the top 10-20% of the students at a school, you aren't up for significant merit aid, and that likely means a tier below the best school you can get into (although I'd generally recommend against attending a school where your grades and scores put you below average -- you'll work really hard to keep up and probably won't come out with great letters from your faculty).

Then, when your child turns 17, you discover that virtually everyone you know with a child who is 18 is paying sticker price.

There might be a reason for that. You live in Irvington, where the median household income of about \$105,000 puts you firmly in the upper quintile of all households. "Everyone you know" probably also lives in Irvington, or at least Westchester County, whose median income is somewhere between \$80K and \$100K, depending on the source you use. At a stretch, "everyone" is somewhere on the upper East Coast, which a map of household incomes shows has the highest incomes in the country.

... All of which is a long-winded way to say that you probably don't know the people who are receiving aid, but they're out there.

This reminds me of a discussion I was having with a fellow software engineer who probably grosses about \$120K, and his wife, an SAP consultant, easily \$200K. He was shocked when I told him his family was not middle class, but rather in the upper 2-5%.

When you live and work among five-percenters, sometimes you lose sight of the average family out there struggling to put a couple kids in college, feed the family, and pay the mortgage on \$48K.

My brother does not have a four-year degree and has worked blue-collar jobs since he was 14. He lost his wife when their daughter, my niece, was in high school. That niece got a full ride her freshman year and tons of aid the remaining three years. She graduated a couple of years ago with honors in two departments.

Anonymous said...

Don't know if this has changed, but ten years ago colleges counted subsidized loans as "aid."

Unknown said...

Although people in the \$100,000-200,000 income range are definitely doing well, it would still be tough to come up with yearly tuition, which can easily hit \$60,000. A large chunk of that income goes to taxes and if they are smart they are also saving for retirement. Although they should have been saving for years to fund college, people usually don't move into that income level until around the age when their kids are ready for college and are not strangers to scrimping to get by.

I'm not saying that high earners are in need of sympathy, but that many people paying full price for tuition are likely struggling to do so and/or borrowing heavily. College tuitions are ridiculously high and the growth rate is unsustainable. Many schools are not even offering merit aid any more. When the economy tanked, they shifted the money to all need-based aid.

cranberry said...

Perhaps you know many students attending private colleges?
The amount states meted out in need-based grants -- \$6.5 billion -- increased by 1.5 percent from the previous year, but the proportion of grants that were distributed based on need decreased to 70.8 percent from 72.6 percent in 2009-10. The percentage of merit-based grants increased, and 23 states handed out more merit-based aid than they did the year before. Many financial aid experts have bemoaned the tendency of states and institutions to focus their aid spending on academic and other merit rather than student financial need.
But Ballman said states shouldn’t be criticized for spending more on merit-based aid. “It’s hard to criticize someone for spending more money in terms of grant aid for higher education,” he said, adding that many recipients of merit-based aid also have financial need.
Much of the nation’s need- and merit-based aid was awarded by a handful of states -- many of the same states that topped the list in previous years. Nine states -- California, New York, Georgia, Texas, Florida, Illinois, North Carolina, Pennsylvania and Tennessee -- awarded more than \$5.7 billion in grant aid, 62.4 percent of the total.

Inside Higher Ed

Catherine Johnson said...

Haven't read all the comments yet, but to cranberry (last comment first!) -- yes, I know a lot of kids attending private universities, but C's two close friends who are attending SUNY schools are paying full fare.

C. is attending NYU because we have tuition rebatement there (90%). We didn't allow him to apply anywhere else but SUNY schools (and Princeton, but that's another whole story I ought to get posted. Princeton actually recruited him, if you can imagine.)

Jerks.

Back on topic, he went to NYU ***entirely*** because tuition is covered by NYU. Otherwise he would have gone to Binghamton, our favorite of the SUNYs, and we would have paid full fare.

He did get a very nice scholarship to U Mass (\$10K/year) which as I recall would have made U Mass competitive with Binghamton. (Or perhaps U Mass would have cost less? I don't remember.)

Catherine Johnson said...

I interviewed C informally last night about all his friends. Nearly all of his Irvington friends are paying full fare.

A lot of his Jesuit high school friends have scholarships, some of the scholarships very high.

I don't have a handle on the Catholic college world. (If we'd had the money, I would have loved for C. to attend a Jesuit college.)

Ed's brother-in-law, the financial person at one of the 7 sisters, says Catholic colleges don't have money for merit aid.

BUT....an awful lot of the kids who attended C's (Catholic) school seem to receive pretty significant help.

C. used to always tell us that Catholic colleges and universities semi-compete for kids from his school in particular, and I used to always shrug that off.

But now I'm wondering whether it might be true.

Catherine Johnson said...

C's senior year was very funny in some ways.

Virtually every day, it seemed, he would come home with breathless tales of Big Scholarships from Midwest Jesuit colleges and the like.

Not being Catholic myself, and not being particularly well educated, I knew essentially nothing about Jesuit- colleges-in-the-Midwest -- it's a foreign world to me.

So here we were, me with my Illinois Methodist upbringing and Ed with his Levittown Jewish upbringing, and we're hearing starry-eyed reports of the many, many Jesuit schools that want our son and his classmates and will pay money to get them!

In my flatfootedness, I kept thinking: How come they're always tell the kids about Jesuit colleges in the Midwest?

I kept thinking that until the MOMENT I realized that: ALL OF THE OTHER PARENTS ARE CATHOLIC.

These are Catholic parents who have invested a great deal of money in providing Catholic educations for their children, who value the education Catholic schools provide, and who logically wish to provide their children with a Catholic college education, too.

Ergo: college guidance at a Jesuit high school is college guidance on which Jesuit COLLEGES give money to which students and why.

Took me half a school year to figure that out.

Anonymous said...

The Catholic colleges in Minnesota offer a great deal of merit aid based on ACT or SAT scores, grades, and extracurricular activities (bonus points for church sponsored activties). Parent income is specifically not considered. St. John's University offers Trustees' Scholarships \$18,000-\$20,000 a year (Renewable;
4-year value up to \$80,000)if students meet the following requirements:

Minimum GPA of 3.60 and minimum ACT composite score of 30 or minimum SAT combined score of 1980.
Faculty interview.

Additional money is awarded based on financial need. Tuition and fees are about \$44,000 a year. A more common amount to be awarded is \$15,000 t0 \$17,000 (for ACT scores in the 26-29 range). Final cost is still not cheap but actually fairly competitive with the University of Minnesota.

ChemProf said...

And midwest schools give more merit aid to east and west coast folks in part because they want a mix of students from around the country, and they know that many students from the coast won't consider midwest schools without it. But they also know that having more students from other parts of the country make them more appealing to those students and to midwestern students.

And in terms of Catholic parents prioritizing Catholic colleges -- remember part of the point is to improve the odds of Catholic grandchildren!

Catherine Johnson said...

Anonymous- thank you so much! (re: Catholic colleges in MN)

Anonymous said...

I've been quite aware for a while that my wife and I qualify as rich :-)

Because of this, the sticker price is most certainly what we will pay ... because we can afford it.

And because of *THAT*, we have been programming our child from a very early age to think that he is going to a state school. Specifically a University of California school. And to make things nice an concrete for him, he is going to UCSB (*).

We'll negotiate again, if needed, as things get closer. But we do *NOT* want him considering schools as if costs do not matter. The \$100K difference over four years seems to us to be "real money."

-Mark Roulo

(*) I actually think UCSB would be a pretty good fit for him, but won't object to most other UC campuses. Cal State San Luis Obispo is fine, too. What worries me is when he refers to Stanford as "we" or "us" ... as in "we beat Cal this weekend." :-)

Catherine Johnson said...

And in terms of Catholic parents prioritizing Catholic colleges -- remember part of the point is to improve the odds of Catholic grandchildren!

Oh, right!

I swear. Sometimes I feel like I just fell off a turnip truck.

Unknown said...

We toured Carleton College in Northfield, MN (Ivy League of the midwest!) on Friday for #1 son. Annual tuition, around \$40K. Average financial aid package: \$30K. Goal is to bring it to around Univ. of MN. costs.

Average student debt upon graduation: \$17.5K, \$10K less than national average. No merit aid is awarded.

We're looking at Carleton, a liberal arts school for my son who wants to major in Math or Physics, because the school graduates more math & sci majors that go on to post graduate degrees than any other liberal arts college in the U.S. (AND they've had 3 championship Ultimate Frisbee teams in the last 5 years!). 40% of Carleton undergrad are math/sci majors.

He didn't have the GPA for the School of Mines in Golden, so he's probably going to Colorado State University, just 2 miles away. I hate/love/hate the idea of him being so close.

Jo in OKC said...

When my daughter was applying last year, the financial aid packets made the decisions simpler.

She had two safety schools (one in-state private and one OOS public), but dropped one of them after getting great merit aid at the in-state school.

She then applied to 8 other schools (public and private) around the nation and got accepted to them all.

Her favorite school turned out to be just under our EFC. We eliminated any school that would cost us more (and that meant any that used loans to meet our need).

Quite a few schools met need at least in part with merit scholarships or grants.

Essentially, that got us down to 3 schools (safety, favorite, and one other).

For our area, we make good money and she had/has good stats. There's just no reason to pay MORE than the EFC (and that's what they're doing with the loans and work study) if you can get through without it.

Crimson Wife said...

For many middle class families, Stanford and the other elite private universities may be more affordable than a UC. See: http://www.mercurynews.com/breaking-news/ci_20101265

Catherine Johnson said...

wow - fantastic thread - will try to comment tomorrow - but FIRST - Crimson Wife - I haven't read your link BUT it may have to do with the experience my sister is having in the UC system

The sticker price is ***very*** misleading at this point because lots of students (most? all?) need more than 4 years to get through a 4-year degree.

The reason they need more than 4 years is that classes are scheduled in such bizarre ways that no one can fulfill major requirements in just 4 years (and I think the scheduling comes from cutbacks, right?)

I don't think either of my sister's kids are going to be able to finish 4-year degrees in 4 years.

That means they'll pay for 2 extra years of tuition, room, & board (and their daughters will sacrifice those years in terms of income and in terms of getting married & having their own kids).

Jean said...

Good point. AFAIK, California colleges across the board (CCs too) are having trouble with this. Classes are just rarer. Not enough sections are offered, or a particular course will only happen once every couple of years, and so on. There is more demand than supply, so they are always impacted and it's quite difficult to get all the classes you need.

Nearly all the CA colleges are operating in the red or having difficulty coming up with enough funding. They're cutting back on enrollment and on classes, and staffing with adjunct faculty instead of full-time professors (I think everyone is doing this now?).

My own CC is also changing its rules in an effort to help frustrated students--no more hanging around for years on end, taking courses and getting financial aid with no discernible result. Every student has to have a stated goal and a plan to get there, and if you're putzing around, the money will eventually end.

Anonymous said...

Yes, all the state-funded California colleges are having trouble because of decades of state cutbacks. At UCSC,it is still possible to finish in 4 years, but it takes careful scheduling. Far too many students don't look more than a quarter ahead in their planning and get surprised by easily predictable things (like what the prerequisites are for their required classes).

It is fairly common for engineering majors to take more than 4 years, and has been for the 29 years I've been an engineering professor. The schedules are very tight and getting the right electives for the student's interests often pushes the students into an extra quarter or two.

The community college push to require students to have a graduation plan is a system-wide initiative, not a local one for Jean's community college.

Catherine Johnson said...

Cassy - wow! (re: Carleton)

And wow! re: kids going off to college -----

Catherine Johnson said...

Nearly all the CA colleges are operating in the red or having difficulty coming up with enough funding. They're cutting back on enrollment and on classes, and staffing with adjunct faculty instead of full-time professors

One of my nieces really, truly can't finish her degree (which is lab-heavy).

I think she's in the Cal State system (have to check).

The college schedule the required lab at the same time as another required lecture.

No can do.

Catherine Johnson said...

Her advisors seem simply to take it for granted that of course she needs 5 years, not 4. They don't appear to be trying to figure out some way for her parents to pay for 4 years of college to obtain a 4-year degree.

btw, she came in with two years of community college, although I'm not sure that has made a difference in terms of the timing issue.

ChemProf said...

That attitude is pretty common at Cal States, where the schedule is largely set for the benefit of the faculty, not the students. It is one of the things we can offer as a private -- I've taught things in the "wrong" semester so that a student could study abroad, for example, but we're a small major so we try to make things work. And we know how much debt our students accumulate, so we work pretty hard to get them out in 4. I think there is an assumption at California publics that five years is normal, rather than 4.

That said, if a student comes from community college, especially to a lab-heavy field, it is common to take another semester at least. Students usually haven't actually met the prerequisites that they need, so they enter as juniors taking sophomore classes, and there is a limit to how much you can double up. That's a big issue with community colleges -- you often save less than you'd think you would.

Catherine Johnson said...

That said, if a student comes from community college, especially to a lab-heavy field, it is common to take another semester at least. Students usually haven't actually met the prerequisites that they need, so they enter as juniors taking sophomore classes

right --- but I'm pretty sure in this case that it's a scheduling issue - ! (She probably came in with more than two years of credits, but I don't know that for a fact.)

The college seems to be just assuming that a whole extra year, not just a semester or some courses over the summer, is in the offing.

Gotta get my sister to weigh in.

Unknown said...

Re: Scheduling...
I attended the University of MN in the 80's. At the time, the Intro to Psych (psych 1001) course had several sections of 2000 students. It was taught by videotape in a giant auditorium. You were required to pass a midterm & final. MANY of my friends and fellow "scholars" took the class and scheduled another for the same time. They just showed up for the two tests. Did I mention that the Univ had a used test file as well?

Easy living at a school of 50,000+ students in the 80's.

Unknown said...

Also took some classes at a community college in California that were much more rigorous than the U of MN stuff.