This is nothing new. This happens at every top 20 private college/university respectively. I went to Haverford College [1] and paid nothing on tuition. Divorced parents and 10 siblings... That'll do it. A friend from high school went to Duke free too for similar reasons. And another friend went to Penn for free because of her parents' state too.
The only sad thing is how few people know about this. Under-privileged students think they can only afford state schools. In truth, I couldn't even afford a state school. Only a private college/university would give me the full financial aid that I needed to attend.
Thankfully programs like Questbridge[2] (it's not spam, surprisingly) help facilitate under-priveleged students applying to and attending top private schools.
It is true that below some income level many schools will expect no parental contribution, but the $125k / year level announced by Stanford is particularly high. Filling out the calculator at the education department(1) it appears that the FASFA expected family contribution for that income level would be somewhere around $20k (+/- depending on things like assets and family size).
Harvard, for example, makes that guarantee only as to students whose parents' income is up to $65,000 a year (2)
Edit: In light of dollaaron's correction below, this is much less significant than I thought at first glance. This part "Scholarship or grant funds will be provided to cover these costs in lieu of a parental contribution" is still above and beyond what many schools do, but is similar to Princeton and Harvard, as he points out.
This is a no tuition guarantee, not a no parental contribution guarantee. In effect they are saying that if you make under 125,000, you'll only pay 20-25k for living expenses (room/board/textbooks/etc), which is similar to Harvard and Princeton, considering they both try to structure aid so families do not have to take loans out to pay them. Coincidentally (or not), this is also equivalent to the FAFSA EFC as you mentioned.
In this announcement Stanford clearly says that the no parental contribution level is 65,000, raised from 60,000 and now equivalent to Harvard/Princeton.
The "parental contribution level" was always frustrating to me. There's no way my parents were going to pay for my education, so that number being high and tuition being zero doesn't really help anything.
Am I misunderstanding how that works, or are they just saying "the parents should pay x and the student z - x" when they really mean "the total cost is z?"
'The only sad thing is how few people know about this. Under-privileged students think they can only afford state schools.'
This is a huge problem that, in retrospect, was rampant where I came from. A pretty typical middle-class suburban high school, but one which rarely to essentially never sent any graduates to Ivy League schools. Why? Because it wasn't part of the community's culture.
How do you fix this? In anything other than upper to upper-middle class suburbs, the parents themselves probably went to state schools and have middle class jobs (which themselves are under pressure now). So the parents and neighbors didn't know anything about Ivy League schools or how to propel their own kids into the upper class.
By the time most kids learn how the culture works, it's too late, they're already in whatever college and life track they happened to fall into. It's takes especially thoughtful parents or other older role models (like great teachers or counselors) to see a kids potential and tell them about their life options.
Some kids have this experience (maybe it's a family friend or distant relative that happens to be very wealthy and shines a light on possibilities to the kid), but most do not.
> This is a huge problem that, in retrospect, was rampant where I came from. A pretty typical middle-class suburban high school, but one which rarely to essentially never sent any graduates to Ivy League schools. Why? Because it wasn't part of the community's culture.
Hmm, I'm skeptical that it was a cultural issue. I went to a suburban high school and the issue wasn't that we didn't somehow know about the top schools, it's that you had virtually zero chance of getting in.
My best friends were the top couple students from my year and the year before me and I watched them mortified as the pattern played out -- they each applied to several top tier universities and were deflated when the stream of rejections came in (though one got into Notre Dame). Just being a valedictorian, active, national merit scholar wasn't enough. Most ended up going to their "safety" schools -- either University of Texas or Texas A&M.
My takeaway from that was that if you were white, middle class and middle-American suburban, that there was almost nothing you could do distinguish yourself enough to get into the country's top schools. As such, I think this announcement is more meaningful for folks from genuinely poor backgrounds than for those from relative suburban privilege.
>My takeaway from that was that if you were white, middle class and middle-American suburban, that there was almost nothing you could do distinguish yourself enough to get into the country's top schools.
90% of my graduating class fits that description. Out of a graduating class of 500 I'd say close to 10% of my class got into an Ivy League. Hell we had 9 get into Cornell alone. The 2013 class sent about 5%. It is a public HS but they offered tons of AP/extra curriculars/etc.
That's impressive. But I think we're working with different notions of suburban. For a suburban high school to have a graduating class of 500, you were presumably around a large population center? Where I grew up, that was the size of the high schools in the city (of about 120k).
My school district, an amalgamation of suburban enclaves and small towns, only had about a third of that. I think being close to a larger city means probably a more sophisticated suburban population (I don't think I'd ever met anyone who'd been to an Ivy-ish school prior to college) and larger schools, which allows for more stratified educational tracks.
White middle-class male here, graduated HS in 2000. Got perfect 800 on SAT Math, National Merit Finalist, played two sports. Rejected by both Notre Dame and Stanford. Not sure what else I could've done.
And does Stanford really make a difference over a state school over the long term? Motivation and talent are more more important than a particular school.
Yes, it does. While at the end everything depends on the student, Stanford offers better connections with companies, a brand name that helps get interviews, and really, just better education. I've watched plenty of Stanford lectures and every professor I watch there is way better than most of mine.
All of this makes a big difference when getting your first couple of jobs. After that, it doesn't matter as much.
"The famous paper Estimating the Return to College Selectivity Over the Career Using Administrative Earning Data (2011) by Dale and Krueger raises the possibility that on average, attending a more selective college doesn’t raise earnings at all. They found that as a group, there was no statistically significant difference in income later in life between students who went to more selective colleges and students who went to less selective colleges. Their finding is somewhat robust: it’s based on a large (~10k) sample size, it’s true both of the class of 1976 and the class of 1989, it’s true of the class of 1976 from age 25 through age 50 and it’s true both of men and of women."
Looking at the earnings of graduates, it doesn't appear that Stanford graduates earn much more than other graduates. It seems like the degree mix the institution awards and the cost of living of the area have the greatest impact on post college earnings. We also need to remember that computer science students comprise just a small portion of the overall student body. http://www.payscale.com/college-salary-report-2014/full-list...
In regards to the online content, keep in mind that this content has been developed and published with the knowledge that tens of thousands of people will watch it, so it is important to ensure it is of high quality.
What the student gains from college is up to the student themselves. But if a student tries just as hard at Standford for example, compared to some other, smaller school, then the rate at which they succeed or find top notch jobs/internships is much higher than the other student. Basically, the name branding gained through a school like Stanford is a catalyst towards success. It is achievable everywhere, but the rate at which it is gained is different and the name of your university does make a difference there.
> Motivation and talent are more more important than a particular school.
That is probably true, but there are undeniable benefits from the networking that happens at schools like Stanford. So if you have motivation and talent, you may derive even more benefit from going to an Ivy or similar school.
At one time (forty or so years back) this was definitely so. I used to say that the closest I heard to college counseling was the obiter dictum of one of the secretaries that you needed a 1200 combined SAT to get into Notre Dame. The salutatorian of the class ahead of mine got into Princeton, deferred a year, and I don't know who put the idea in his head, but probably nobody at the school. Most of my classmates went to state schools--generally in-state, a few promising jocks elsewhere. I went to a local private university that offered some money, knowing no way to distinguish it from any other school.
My brother worked at Questbridge for a few years. They place low-income and disadvantaged (but brilliant kids) at top schools, for free rides. The top schools can't get enough of students like you, but they're hard to find. Questbridge's model is similar to executive headhunters. I believe they do approx. 20400 students a year. The challenging part is scaling what they do, since it's very manual labor intensive.
It is true but only for the most part. My family income was below 60K, but my aid packages varied wildly among supposed peer institutions.
Harvard was the most generous, fully funded tuition + room/board + clothing stipend (presumably to keep up with the lifestyles of what would have been my wealthier classmates) + transportation stipend to fly back home for holidays.
All of the other Ivies (Columbia, Cornell, Penn) had roughly the same deal - full tuition and room/board
Hopkins - I required that I borrow 15k over 4 years to attend. Interestingly, this is the school I ended up going to.
I went to an Ivy that made a "no loan" guarantee for me. Each successive year, their aid package got successively worse so I received less grant aid. I ended up with $10k in debt by the time I graduated.
...clothing stipend (presumably to keep up with the lifestyles of what would have been my wealthier classmates)...
It might just be a way of saying "pocket money", but if someone objected, this could be justified by Boston's climate. Poor students from warmer places are unlikely to own a sufficient range of coats and hats.
It's true that every top 20 private college/university allows in a great many people for free.
However, there's a big difference between divorced parents and 10 siblings, and a situation in which I grew up: one sibling, married parents, lower middle class income, but my father had a ton of school loans. The result was that my family income was high enough that I qualified for reduced tuition at most private schools, but nowhere near enough reduction to make most schools viable. Cost was literally the only factor I was able to consider in my choice of school, and even having chosen the school which offered me the best financial aid, I was unable to complete school due to cost.
The fact is, the cost of education has risen to the point that higher education isn't available even to people in the middle class.
$125K/year family income reaches well into the middle class. I would have paid nothing to go to Stanford, and in fact I still would pay nothing to go to Stanford. I may actually apply and try to finish my degree. :)
Shout out for Haverford folks in tech. Are you in the bay area? Not a ton of us out here. We did meet up last week though: https://www.facebook.com/events/743588762415575/ add yourself to the group.
Once I move in July, there will be at least two Haverford software engineers in Seattle. That's enough for a meetup.
I wouldn't send this message through HN, but I don't know another way to contact you. If you join one of the Haverford LinkedIn groups, we can talk that way and stop spamming this thread.
Essentially, colleges (and the government) expecting a family contribution to tuition meant I went into extensive debt on my own, though cosigned by my stepdad (who made it clear he would in no way take on any of the financial obligation of the loans) for college. Most of my friends' parents were the same way, and did not contribute to their children's college (and I'm not sure where all these kids whose parents are paying for their college are even going, really... or what kind of money those parents must be making to be able to pay outright for college tuition) -- at a top tier U.S. school. In an engineering program.
Working at a thrift store full time making minimum wage and going to engineering school full time for the first two years, then doing tech support full time and going to engineering school full time for the last two years was no joke, and I still have debt remaining, two years out of school with a good job.
Why should it be the parents' income that anyone cares about?
Students are expected to contribute? Don't make me laugh. It's their education, they are of majority age, they likely will be paying for it and then some. How are PARENTS expected to contribute at all? Mine honestly did not and do not make enough money to have any left over after taking care of my two younger siblings (ten years younger), and yet on the FAFSA right there, an "expected family contribution".
Edit: they do, of course, make enough money combined that the government expects that they'd want to send their kid to college and could theoretically contribute something to it. They did what they could, but that wasn't what fulfilled expectations laid down by the Powers That Be.
Is it? I graduated two years ago, and this is of course anecdotal, but the only kids I knew that actually got their tuition paid for had trust funds, didn't pay for anything themselves, and had never held any kind of job.
How do you imagine you're going to be able to even as a likely relatively well-paid individual, if tuition rates keep climbing?
I'm in Canada. When I went to University 1991-1996, tuition + books + etc., but not board at a top Canadian engineering school was $2500 per year. These days it's about $14500.
My wife and I currently pay about $25000 / year for daycare for two kids. Can't save too long for daycare, but can for Uni. We have minimal debt, and the house will be paid off by the time the kids go to University.
EDIT> Daycare is as expensive as University. I did not anticipate this.
This seems rather steep and definitely not the norm at Canadian universities. Take a look for example at UBC [1]. It's about 2-3 more than the actual number for most programs for domestic students. And also rather low for international students. It's similar for U of T [2] and McGill [3].
> $25000/year for daycare for two kids
Wow more than a 1000 dollars per kid? That's quite a bit. Is that typical?
I was referring to top engineering programs that are competitive with top US engineering and CS schools.
EDIT2> I doubt that the daycare rate is typical, in general, but it's typical for the area of Toronto that we live in. Overall, though, daycare is very expensive.
I'm pretty sure UBC is pretty competitive, at least from a rankings perspective. It's just one of the few schools that has a cheap engineering program.
Wow. Is the subsidy available to all or is it salary-based? The government here removed the subsidy here for higher incomes (~$100k+ year combined). What they didn't remove was the extra tax that both employer and employee have to pay to "cover" childcare for the first child. The second/third children are heavily subsidized (90%).
So in my situation, I'm just above the threshold and have 1 child; so am lucky enough to have almost no subsidy whilst still paying extra tax for the privilege. Double dipping.
Luckily for the government here I can't vote (British citizen), and I'm a compassionate capitalist so generally agree with the idea of spreading wealth around (we just do a horrible job at taxing capital gains and inheritance; I'd happily pay progressive 70-99% on the top of my net-worth if the tax was applied consistently, fairly and accounted for income over time in a fair way (so taxes are normalized over years; for sports people and the like))........
$200/month for 5 days/week daycare for one child... Here in South Africa.
I'd chalk it up to "cost of living" differences, but I'd say there is a whole lot more to it. Certifications, licenses, insurance, minimum wages. All these things affect the price, so we can't entirely compare the prices as apples to apples.
I think it's just a difference in culture. The majority of people I went to high school with had their tuition paid for by parents as well. I'm from southern California if you're curious
"How do you imagine you're going to be able to even as a likely relatively well-paid individual, if tuition rates keep climbing?" (proud) Parent here - We just put two kids through top-tier state schools paying almost all expenses. Expenses worked out to about $20K per year, per kid. Luckily for us, there was little overlap in their college years. Each had well-paid summer internships for at least the last summer so that helped as we really never specifically saved for college expenses. Now they've both graduated and are gainfully employed with Google and Lockheed respectively, starting their adult-life with no debt.
"Absolutely" the norm? Maybe in your neighborhood, but some parts of the country actually expect their kids to show some work ethic and gumption rather than expecting parents to pay for everything. A kid ought to have some skin in the game or else they end up majoring in women's studies or some such nonsense.
You seem to be engaging in black-and-white thinking. The numbers don't add up any more. This might have made sense in an era where graduates were basically guaranteed jobs and a house cost 3x a graduate's yearly salary (and mortgages were frowned upon).
In the era of massive student debt it makes no sense to cripple your children (and therefore your family) financially, if you can afford not to. Especially not to prove a point that can be learned any number of other ways.
In this era, I believe that "don't go into debt (unless you can afford to service it)" is a much more useful lesson.
As far as I'm concerned, my children's job is to learn, and to figure out how to excel. That requires time and breathing room. If they look like they're turning into dilettantes, then of course I can decide not to pay for things. I just wouldn't prematurely handicap them (and myself) financially if I didn't have to.
EDIT> Basically, I object to your casting this in moralistic terms. Of course, we all know people who don't know the value of money. You'd be surprised at how often these are poor or uneducated people, though. If anything, having wealthy parents gives you more chances to learn how to deploy money intelligently.
I don't get it, either. My siblings and I were legally adults, so why were our parents responsible for anything? We got loans, worked jobs, and were responsible to no one else for bad grades or extra semesters.
The other responses say, "Because it's expected." That doesn't answer the question. Have attitudes shifted? As education's become more expensive, I wouldn't be surprised if colleges have marketed the idea that good parents pay for their adult child's education, in order to make sure that they have business as they jack up prices.
If your goal is to help your child get the best outcome they can get from college, its way more beneficial to have them focus on doing well in school and having the time to network as well as possible (especially in a school like Stanford) than trying to make them work what's likely a shitty job while they're in school to help pay for their tuition.
I think the goal is to help my child get the best outcome from life. Even though I think college today is a bad deal, I'm not going to go full Thiel - I agree with you that networking is the critical function of college, and there's exposure to a variety of fields. I think college is at its best as a petri dish for serendipity.
You shouldn't have to settle for shitty jobs in school, and focus on schoolwork is overrated. I honed graphic design, salesmanship, and web design skills from the three I had. The last actually was a distraction from school, but then "web" became a paying job for me when it wasn't in the school curriculum. The constraint of needing to work created a bunch of opportunities.
Only if signer is delinquent. People often cosign because they are family (without stepdad cosigning he wouldnt have got the loan). But also then you dont make them pay because they're family.
It's extremely difficult to gain admittance to a place like Stanford if your parents are not supportive of your educational ambitions. This is both because your academic results earlier in life (upon which admittance would be based) will tend to reflect an unsupportive family, and a place like Stanford wants students with supportive families. That's why parental support matters.
Of course they do, but most won't get it. It's one of life's many crappy realities. There's a line from a song..."Where it ends...usually depends on where you start". There are of course exceptions, but this generally holds true.
Or, maybe Stanford counts on parential guilt? They have quite a big savings account. (Stanford’s $21.4 billion endowment (as of Aug. 31, 2014), and grateful donors give the school close to a billion dollars a year. I don't know how many full scholarships Stanford gives away per year, but I hope it's a lot?
Hey I have a sob story too. My parents own a 3 million dollar house and sent my sister to Harker for 20 grand a year, but only give me 20k total for college.
I mowed lawns, washed dishes, and worked retail before finding internships. But you know what? I still have more built in advantages than kids on need based scholarships. I'm luck my parents raised me well enough to get into good schools.
...legally, yes. However, he couldn't afford it, and I haven't gone delinquent, ever. In practical terms, he made it clear that he was cosigning because without that action I wouldn't have been able to afford college.
He could not, and does not to this day, have the money to pay down those loans (which I am currently paying down). However, he did have one thing he could offer: a reasonable credit history.
Essentially he lent me credibility. (And then told me nobody would ever find the body if I didn't pay down my debt.)
I was incredibly bitter too when my parents left me hanging and I had to pay for most of tuition and rent. But then I realized lots of people pay for their own education. I certainly didn't achieve the impossible.
Think of your stepdad's stance as tough love and motivation.
I am not bitter in the slightest, I'm just astounded that so many people expected their parents to pay for their college (and in turn expect to pay for their adult offspring's education). Simply put, it doesn't compute.
The trouble with that logic is that it doesn't work when the effects stack.
This is a good case in point. According to the article families who make less than $125,000 pay nothing and those who make $225,000 or more pay the full amount, listed as $65,000. Now let's take the hypothetical family where one parent makes $125,000 and the other makes $100,000 and look at what happens. If the second parent keeps his or her job, this is where the $100,000 salary goes:
28% federal income tax ($28,000)
9.3% California state income tax ($9,300)
Stanford annual cost ($65,000)
Total: ($102,300)
In other words, that parent is working a full time job in order to lose $2300. And that's assuming there are no other taxes or loss of benefits that come from the higher income, which there are, and that there is only one child in college.
It seems like this can't possibly have been the intended outcome.
> It seems like this can't possibly have been the intended outcome.
It's exactly the intended outcome. Progressive taxes and regressive subsidies are designed specifically to disincentivize earning income. To think these policies are implemented without actually thinking about both sides of the coin would take Hanlon's razor to the extreme.
As more people stop to actually do the math, and realized the mind-boggling treadmill that is the middle-class, not surprisingly the middle class shrinks.
The only reason keeping many in the game while they have school-aged children is some professions don't lend themselves to just taking 5 years off. But some lend themselves surprisingly well to that, and frankly I don't see an ethical dilemma in not working if the work has negative expected benefit.
The real answer imo? Stanford is a luxury, and not even a particularly compelling one at that. Are there amazing professors and cutting edge research at the university? Of course. But is it necessary? In my opinion it would be really hard to make a case for it.
For example, the name on the paper when you graduate has to be one of the more cynical compelling reasons. The connections you'll hopefully make there as a student will be invaluable later in life. Some of the most ambitious people make it to these distinguished institution and those people go on even further after they graduate.
> Those families pay no tuition, but still may pay living expenses. The 'pay nothing' tier starts at $65,000
That doesn't actually make anything better. You're attempting to address the perverse incentive for one of the parents in the family making $225,000 to quit their job by pointing to a higher burden on the families making between $65,000 and $125,000, implying that it's less desirable to become one of those families. But the incentive is still there whether it preposterously exceeds 100% or only approaches it, and reducing it by making the burden on even less affluent middle class families worse can't possibly be the right solution.
The only thing that I was 'attempting to address' was that your comment contains a factual error.
Your calculation assumes a family could deliberately reduce their income by $100,000 in order to save $65,000 on their Stanford term bill, resulting in a (net gain of $2,300) but this is not correct. The savings are more like $45,000 (the cost of tuition).
You're quite correct that I didn't account for the cost of housing paid by those making between $65,000 and $125,000, which certainly reduces the marginal rate on those making over $125,000 (not by reducing the actual burden on those people but rather by increasing the burden on those paying between $65,000 and $125,000).
But there are many, many things I didn't account for. The point was not to make a full accounting, the point was to present a back of the envelope calculation demonstrating what can hypothetically happen when programs are structured this way. If you want better researched numbers I encourage you to read this:
Those numbers also point out something else somewhat misleading about my example -- although it is possible (particularly with regard to education programs) for the upper middle class to be ravaged by excessive marginal tax rates, those most hard hit by means tested programs are really the working poor. Have a look in the first graph at the marginal rate on someone making minimum wage.
Your 'back of the envelope calculation' was in error, and in a way that affected the conclusions you drew. You claimed that the new Stanford FinAid policy introduced a 'cliff' (negative returns for increased family income), but it doesn't.
I'm not making any other claims about the merits of progressive taxation, price discrimination by universities, or economic policies affecting the working class. I'm just pointing out your error so that other readers don't rely on your calculations.
From the fine article:
"Stanford will expect no parental contribution toward tuition [~$45K for 2015-6] from parents with annual incomes below $125,000.... And there will be zero parental contribution toward tuition, room or board [~$65K for 2015-6] for parents with annual incomes below $65,000"
So your table should read:
28% federal income tax ($28,000)
9.3% California state income tax ($9,300)
Reduced Stanford FinAid ($45,000)
Total: ($82,300)
This is admittedly a very high marginal rate, but it is not negative.
Of course the calculation was wrong. The correct calculation would require consideration of the entire tax code and every means tested benefit the hypothetical family might be eligible for. But your assumption that the loss of $45,000 rather than $65,000 makes it not a cliff is equally erroneous, because many of the other things not accounted for go the other way. The loss of financial aid may still exceed $45,000 for a family with more than one child in college, or if the housing expenses in question are eligible for some other source of means tested financial aid. The additional income may destroy various previously permissible tax deductions because of the Alternative Minimum Tax. There are any number of totally unrelated benefits that the family may lose eligibility for at the same time.
There is a realistic hypothetical family that loses more than they make in total regardless of whether the loss of Stanford financial aid is $65,000 or $45,000.
"In either case, students will still be expected to contribute toward their own educational expenses from summer income, savings and part-time work during the school year. Students are expected to contribute at least $5,000 per year from these sources but are not expected to borrow to make the contribution."
So its really $5K/yr even at $60K/yr and below, despite the glorious headlines. Its quite a downer to start with a fantastic headline and realize its all BS, although the truth of the matter is a pretty good deal. The article should have been more honest. Under promise and over deliver, as opposed to the opposite provided.
Most jobs for kids at that age aren't going to pay all that well. $9/hr? After taxes, they'll need to be working almost 1000 hours per year to contribute $5k per year from those sources. 1000 hours.
Was comparing this to my own state school numbers from 20+ years ago. One year was < $5k. Min wage at $3. One could work a summer job (or two) and pay for a year of school. That just doesn't seem possible any more, or at least not without a lot of assistance programs.
Eventually, schools are going to start looking at grandparents' assets. It will become the norm to pay for school from their wills, after universities lobby to have an estate tax break if used for education.
When my wife's grandparents passed, they put the entire inheritance into a trust fund for the grandkids' education. One of the reasons they did it that way was to keep the tax liabilities to a minimum. (I don't know the specific relevant laws, but I know they did it for a reason.)
This is exactly the reason progressive income taxes are unfair: the incentive to create additional economic activity is reduced because of higher marginal rates. I never understood the stupidity of people paying different percentages in a taxes; it's punishing hard work. Your exampke makes it clear that it would be better to not work as hard because it actually would be irrational to do so.
The other part of this is the inherent infairness of someone paying $65000 per year for Stanford. That's just insane. The price of something should not change based on someone's income. Why should someone making $225k per forced to subsidize everyone else? If the lower income kids want a BMW, should higher income families be required to pay for it? Going to Stanford isn't a right; it's a luxury.
Tuition, like tax rates should be the same for everyone. As it is now, the market responsiveness of higher education costs is distorted because of this cross subsidization scheme. If we eliminated all financial aid, Stanford would cost $8000 per. As it is now, universities have zero incentives to cut costs because many of them face no exposure to actual market forces. Whatever extra they want, they know students will just go deeper into debt.
It's a scam. How many Vice Provosts and Assistant Deans or "coordinators for diversity" does a university actually need? They could likely cut half of university administrators and it would make no appreciable difference to the quality of education.
The relationship between hard work and income is very slight. The price of labour comes from supply and demand. There's little shortage of people willing to work hard. Skill, knowledge, networks: that's what people pay for, not hard work.
Now turn your perspective around. How fair is the distribution of educational opportunity and, especially, networking opportunity with powerful people?
Progressive taxes don't do my income any good. But I wouldn't be in the position I am today without them; I grew up poor, too poor to own a family computer, never mind a family car. I still resent the lack of information I had about educational opportunities. And more than anything, I wonder what we could achieve if the impoverished of the world didn't need to scratch out subsistence living, and could instead apply themselves to the limits of their ability.
That's true, although it doesn't really change the problem. That working can literally cause you to lose money is particularly outrageous (and can still happen by just accounting for more income-dependent taxes and benefits disqualifications), but even if you were "only" losing 80% of your salary, it's still totally unreasonable. Why is your marginal tax rate effectively 80% but someone making twice as much or more is paying less than half that percentage?
The right way to fund things like this is to give the same dollar amount to everyone but collect the same percentage from everyone. The rich still pay their share because a percentage of $20K/year is naturally much less money than the same percentage of $20M/year, but you discontinue the wanton destruction of the middle class, and as a happy consequence you also eliminate a lot of waste and frustration because if you give everyone the same benefits unconditionally then you don't need an invasive means testing bureaucracy.
The CBO has some great graphs on this. It literally starts at $0 and can go--obviously depending on a lot specifics--all the way up to $225k, where your marginal income is zero dollars. Every dollar you earn is taken, every dollar your don't is covered.
The basic income + flat tax system is ethically superior but politically impossible. What's worse is we're still actively going in the other direction, to more progressive taxes and more regressive subsidies.
The whole system of need-based financial aid seems to be effectively moving tuition towards perfectly elastic pricing based on how much students can pay.
Universities raise the price of tuition, then increase financial aid for the subset of students who can't pay the increase. Incremental revenue for the university still goes up as they get more revenue from anyone who can reasonably afford the increased "base tuition" amount.
There maybe a sort of monopoly here but monopolies never set their prices to free (unless they're trying to destroy competitors which is obvious not the case here)
There may indeed be grotesque stratification problems with the system but that doesn't mean some part may do the right thing occasionally. Frequently even monopolies moderate their behavior out of fear of regulation. Here perhaps schools fear the reputation hit of graduating too high a percentage of rich dimwits.
I do think it's mostly altruistic in intent, but the outcome is roughly the same as the price discrimination you'd see in a perfect monopoly.
Also, I actually think an intelligent monopoly might set their lowest price to 0 (for those who couldn't pay anything). It protects their market domination.
Also state have effectively kept their funding the same or reduced it leading to even more tuition increase costs being shouldered by the students.
As it is today, the easiest way for universities to increase funding is through tuition increase and they've been using that method more in recent decades.
I am always conflicted about these. I was fortunate enough to get a full ride (all grants, no loans) to a top University, even as an international student. My parents couldn't afford to pay for my flight here, which the University did. In a way that has allowed me to take a riskier career trajectory by quitting a 6 figure starting salary at a top tech company after graduation within 3 months and starting a startup. So I am ever so grateful for policies like this.
But I wonder if universities should offer some sort of deferred payment (5 years after graduation for instance) to students instead (not a 3rd party loan). If you go to Stanford you are pretty much guaranteed a stable income when you graduate. Yes ,granted, a lot of alumni do donate without feeling the necessity to do so, but having such an option will help universities, perhaps more for those with smaller endowments "recover" some of the cost.
Universities could always make exceptions some time down the line on a case by case basis, depending on student's current income which will vary violently even for top universities, with some students deciding to work for a non-profit while others choosing a more lucrative job, just like income tax works.
Again, I am really not sure, just throwing it out there.
Take a look at the Harvard Law School loan forgiveness program. Although it does rely on 3rd party loans (in this case the third party is overwhelmingly the government), and so is a bit of the inverse of what you are proposing, it helps pay a quite generous portion of those loans under a broad variety of circumstances while not providing any repayment assistance to those who secure the most lucrative types of private sector jobs.
It is a sort of post hoc means testing, in contrast to the more usual undergraduate system of pre hoc means testing.
The federal government also has income based loan forgiveness programs (the current one is called Pay as You Earn), but it is far less generous.
Ah! Hadn't heard about this. Professional programs usually don't offer need-based aid a lot, so this probably still doesn't go a long way. I was thinking more for undergrad programs, where need-based aid is much more common, and not too many students (none for internationals) qualify for gov grants, which might have similar provisions.
This is very interesting. As far as I know most universities don't even cover first semester worth of expenses for international students regardless of how bright they are. Most international students then find campus jobs and do 18 hour days to fill in for rest of the time in Masters programs. The PhD programs are bit more generous but never heard university paying for the flight.
Only a handful do, the ones in top 10-20 academically and endowment wise. The university covered tuition, room and board, around $58k annually. I still worked 20 hours a week, to pay for other expenses, send back a little home and save a little.
I'm glad I didn't go to college, so I don't have to give any money out of guilt to a place which wastes so much of it on landscaping and sports.
That's what I saw when I visited more privileged friends at Universities, anyway.
I'd really rather give money directly to someone that needs it than to a dysfunctional organization (and they are pretty much all dysfunctional). I wish that was actually feasible.
I definitely hope to when I financially can. Just one year into post-grad startup life :)
But in the meantime I am trying in my own little way, by advising current students, interviewing applicants and also coaching students back home in similar position as I was by helping them with their applications and SATs
I dropped out of MIT both to do a startup overseas (ITAR) and because my parents wouldn't contribute any of the "expected family contribution" and I couldn't get enough loans on my own.
Rather than all the crazy games, I'd prefer if education were genuinely market priced, or if individuals could take reasonable debt loads or sign indenture agreements. A commercial organization should be allowed to do something like ROTC; paying an undergrad full college costs in exchange for a guaranteed employee for 2-4y post graduation at market rate.
The company I work for offers bursaries to undergrad students. If I'm not mistaken, they even offer guaranteed industry experience by employing them afterwards. Not exactly the same as your suggestion, but on-par.
These things do exist, and higher education is not solely in the realm of government or colleges' doing. All it takes is for some sparky individual/group to implement it if the need is there. That is why it is very important to let the market price things using regular signals, instead of distorting it with government intervention.
What I mean is that currently there is a big shortage here for good software developers. So companies are willing to spend money on training up, paying college fees, whatever it takes.
On a side note. People are very wary of things such as "indenture agreements". It reminds them of slavery too much (I would hypothesize), as it seems they've conflated historically indentured workers with defacto slaves, despite consent.
> A commercial organization should be allowed to do something like ROTC; paying an undergrad full college costs in exchange for a guaranteed employee for 2-4y post graduation at market rate.
I'm fairly certain they can. In fact, tuition reimbursement programs aren't uncommon amongst elite employers.
Generally those are for additional classes taken by current employees -- either individual classes or a graduate program. Very rarely would that be for a full undergrad degree, and wen less likely they would hire a high school dropout and pay for full time college tuition for 4y first. ROTC is pretty unique in that respect because they have legal force of government for the contract.
Almost any organization can find employee much faster than 2-4 years. So there is no sane reasons to pay for somebody's education, especially when there are chances that person can be expelled.
Big companies like Google or others are likely to continue to need ever increasing numbers of people. If dropping $100k upfront guaranteed them someone in 4y it could be worth it. If they could structure contracts same as rotc, so if you leave you owe repayment, it could work.
If they had this program they would probably prefer Waterloo coop style students; get them for 2y out of 6y while in school, and then after.
Loan guarantees would probably be the most sane commercial way to do this. You are on the hook, but iff you join, we pay off your loans, and creditors could then reflect that in creditworthiness decisions.
Yes, and I see fresh faced engineers and programmers going unemployed for over a year out of school, all the time.
Seriously, pretty much the only field right now with a serious demand > supply condition is nursing, and MDs willing to do general family practice rather than higher-paying specialties.
What college kid has 'an entire life' to uproot? If you go into oceanography, hard to complain if the jobs are near the ocean; similar with other professions. You have to be willing to go where the jobs are.
The shortage of doctors is not due to market conditions. The government limits the supply of slots in medical schools and residencies, which then limits the number of new doctors.
This is, of course, good news for many families of current and/future Stanford students. That being said, the upper middle class continues to get screwed in this country. UMC produces most of the GNP, and pays most of the taxes (sorry no carried interest tax loopholes available to those who draw salaries), and then we still have to pay these crazy tuition fees.
The oligarchs, of course, don't care who much college costs be it 0$K, $100K or $200K year. Any at cost basis, it just doesn't make a dent in their wallet.
The UMC is also the most hard-working class, who is carefully taking responsibilities for their families etc. And guess what, it's the most exploited/punished/screwed class by either tax system or zero-tuition policy like this.
it looks like getting divorced, or one couple quitting job before kids are going to apply for college, or having unlimited kids, are the right strategies for the best colleges application than otherwise. I actually know one family did just that, the college-educated mid-age mom quit her job so her daughter got all the financial support from Harvard, and she is walking her dog on the community daily to stay fit now(instead of working). I am not sure if she will be back to work after 4 years when her kid graduates.
Basically, the more screwed your (family) situation is, the more helps are there for you for free, even for the most prestigious universities admission! only the sky is the limit.
> The UMC is also the most hard-working class, who is carefully taking responsibilities for their families etc.
I very much doubt the veracity of this broad generalisation.
Indeed I'd be most surprised if there was any correlation between hard work and socioeconomic status, given that there are such a wide range of employment roles (including self-employed) in which one can work very hard, yet with such diverse financial rewards.
There's also the conveniently undefined term 'hard-working'. It's likely too difficult to compare 'work hardness' across 'jobs'. Does a farm laborer who gets paid less than minimum wage and spends every day toiling in the fields really work 'less hard' than a lawyer who bills 60 hours a week from his air-conditioned office that he commutes to in his BMW from the suburbs? I doubt it.
Interesting paper, thanks for the link. However, I do wonder to what extent the extra hours are voluntary, and if this definition relates to working harder (rather than longer).
And yet, despite being screwed, they're still above the rest of the middle class and the working class.
If it's really that onerous, take a pay cut and enjoy a drop to the MMC or LMC. Or join the working class. They don't pay much (individually) in the way of taxes, so apparently they're not screwed much. Life would be pretty sweet there!
Any lower-class parent would be delighted to have the money to contribute to their child's education. Stop worrying that someone else might be getting a better deal than you are and be happy you can afford it. Why does it upset that someone else is getting help? Be happy for them and be glad you don't need it, and get on with your life.
I went to Stanford as an undergrad just a few years after this bidding war between top universities began. The additional financial aid I received saved my family and me more than $100k -- that figure would be much higher if we factor in the interest on the loans I didn't have to take -- and I will be forever grateful. I applaud Stanford for expanding this program.
But I'm also a little sad about the way this is playing out, because the net effect is to set the top private universities even further apart from the many great universities that nonetheless can't afford policies like this. There's already so much pressure on a lot of kids to get into a top private university, and now many of them are in a position where if they don't get into one of the top four, their only option is a public school. (And yes, there exist public schools, such as Cal, which one can argue deserve to be mentioned in the same sentence as H/P/Y/S, but certainly there isn't a UC Berkeley in every state, and going to a public school out of state can be as expensive as going to a private school.)
If you really want to be sad, take a look at how short is the list of schools with need-blind admission that claim to meet all demonstrated need:
This is a supremely low bar, because schools get to define how much you need; there's no standard for this. And of course schools can meet your need with loans. But even still, the schools on this list are the only ones in the country which even claim to be meritocratic in their admission of US applicants.
I fundamentally disagree with this, and its implementation seems to be a significant attack on dual income, middle class families who are doing well for themselves.
This doesn't hit the rich, it hits the middle earner and it hits them extremely hard. It's frankly pathetic but I suppose what can you expect in an era of hard pressed populist socialism.
I would just keep in mind that the difference in housing cost between newcomers and those who have lived here for a long time can be very significant because of prop 13, rent control, and a local housing market that has inflated rapidly over the past 30 years.
I bet if you limited the range to households with college-age children, the median would be much higher. Those are peak earnings years for most people.
Why so? Why does it hit the middle earner? The fact that families with incomes under 125k pay no tuition doesn't mean that families in a higher income bracket get hindred. In fact,
"Families with incomes at higher levels, typically up to $225,000, may also qualify for financial assistance, especially if more than one family member is enrolled in college. Financial aid offers vary by family, but the financial aid expansion for 2015-16 will allow Stanford to reduce the expected parental contribution for many families at these higher income levels."
They are still giving partial financial aid for people making more that $125k. This is helping a lot of the people who would never have a shot at affording Stanford. Is it perfect? No, but it is a step in the right direction.
One wonders about the people who make $125,001 - $170,000 who are then on the hook for the full tuition (around $45K). They'd find it cost effective to substantially lower their income.
"Families with incomes at higher levels, typically up to $225,000, may also qualify for financial assistance, especially if more than one family member is enrolled in college. Financial aid offers vary by family, but the financial aid expansion for 2015-16 will allow Stanford to reduce the expected parental contribution for many families at these higher income levels."
A Certified Public Accountant. You pay them to find the best solutions to your taxes. The FAFSA (Free Application for Federal Student Aid) uses the student's family's taxable income to determine if they qualify for aid.
Man I wish this had been in place in the 90's when I went to Stanford. I grew up lower middle class in the Central Valley. My parents did everything they could to help, but that didn't make a dent of course. Stanford was fairly generous with outright grant money, but I still graduated with enough debt that it really handicapped my wife and I in our early adulthood years, and that was after taking 2 years off to work full time to help save money for tuition.
Still, I can't complain. I wouldn't trade my Stanford experience for anything. And for what it's worth, it would have actually cost me more to go to Berkeley as the aid package there wasn't nearly as generous.
Hate to bash Stanford, but as a current master's student in CS, I've found their financial aid to be horrendous. The only real options are RAships and TAships. I don't consider these to be "aid packages" because they entail a tremendous amount of work. My current employer matched what was going to be offered by the TAship with less hours overall.
EDIT: Just for kicks, here are some emails here that demonstrate the reality of Stanford financial aid at the master's level.
Last quarter:
Nov. 17th: Hold on registration due to account balance...
Nov. 18th: This is a friendly reminder that you have unpaid charges on your account...
[PAYS $10,000 of tuition]
This quarter:
Feb. 16th: Your Stanford student account has been placed on hold* due to an outstanding balance...
Feb. 17th: This is a friendly reminder that you have unpaid charges on your account...
Mar. 18th: Student Account Notice...
Today: We are sorry to inform you that you are not currently eligible to participate in the StanfordCardPlan...due to financial hold.
[PAYS $5,000 of tuition]
This cycle has gone on for the past year now. For some context, I take two classes per quarter and live on-campus (on-campus housing is the cheapest you can get in Palo Alto). My total tuition + housing is $15,562 per quarter.
> I've found their financial aid to be horrendous. The only real options are RAships and TAships. I don't consider these to be "aid packages" because they entail a tremendous amount of work.
Not saying that being a TA is by any means "easy," but come on. Complaining about having to work while being at one of the greatest universities in the world is a bit whiny, is it not?
You don't have to go to graduate school. It's a choice. If you want to be a career academic, you're grinding it out now for what could be a cushy life.
Seriously, call the Waaambulance. A master's degree in CS at Stanford is basically like a business degree - you expect serious financial reward from this investment, and you'll most likely get it.
If he wanted to be a career academic, he'd be in a PhD program and wouldn't have to pay... terminal Master's are expensive because they are "worth it."
"Financial aid" as such in the U.S. typically means for undergraduate students, not graduate students. Graduate funding is a fairly different system, mostly consisting of competitive fellowships, research grants, and RA/TA jobs.
A CS masters is the last kind of degree Stanford would give good financial aid for. For a bachelors degree, you can get need based aid, and for a Ph.D, it's customary that you're pretty well subsidized, but masters programs are where they get you. I'm not sure why.
PhD students are essentially junior employees of the university. They're either teaching or conducting research, so they're getting paid (largely in the form of free tuition).
Masters students are customers buying an extra year or two of education.
A substantial proportion are also foreign students from wealthy families looking to get their students a prestigious U.S. degree. Such families are quite willing/able to pay, so there's no great incentive for Stanford to subsidize them.
Ineptitude at the bursar's office is a little off topic, and it isn't unique to Stanford. I'm sure HN's users could fill thread after thread with stories.
Having been in that exact situation before, I wouldn't complain too specifically about Stanford's master in CS. That department makes it really easy to get a TA/RA (I'm comparing with my friends in less trendy fields of study), and while they represent a non-negligible amount of work, I think they are perfectly manageable at the graduate level. So while it's not financial aid, it actually makes it possible to go through the whole program with a positive net balance. Now I understand that the absence of guaranteed funding can feel scary for many, although the current state of the job market should greatly reduce their fears.
My family was making about $150k/yr when I was in school. We didn't get any assistance.
It's great that children from lower income families are getting subsidized, but with these kinds of policies there's always a hard cutoff point, and the people just above that cutoff point are the ones who get screwed.
Money shouldn't be in education period. If whether or not you can study is even partly determined by the finances of your parents, then the system is wrong.
I don't want be a troll, but I am struck by something. I think this may be the first TB thread I've seen, about college education, where there isn't a strong sentiment (approaching 50%) questioning the value of college education at all, dismissing it as "signaling," and demanding "disruption" of the entire higher education system.
I'm biased, because I went there, but I think people need to break down a college education into two parts: (1) the education you receive (the things you know at graduation minus everything you knew as a day 1 freshman) and (2) the people, friends, and connections you've formed.
Part 1 is quickly becoming a commodity for many study topics that are available online, for free or close to it, so it's hard to justify a $200k price tag for something you can teach yourself.
Part 2 is much more difficult to supplant with alternative education. The people I've met while at Stanford have been invaluable to me in starting my career, and I don't even consider myself great at networking. There's just such a huge brain trust there it's hard to even question the value of being there. I'm sure the same can be said of the top 20 schools, however that probably quickly drops off past that.
Those are interesting points. I think there are some other factors as well: College provides kids with the experience of face-to-face interaction in an academic setting, which is sufficiently similar to a professional setting. And it also may provide psychological conditions necessary for some kids to actually finish. I would have had a hard time earning my BS degree sitting in front of a screen all day every day for 4 years, while living in a my backwards little hometown.
As a thought-experiment, imagine going down the hallway at a large company, talking to all of the new entry level recruits, and trying to guess which ones went to college and which ones studied at home, just from their behavior. Now guess which ones will move up the ladder and which ones won't.
If colleges are driven out of business, affluent parents will find other ways to provide their kids with those extras, poor kids won't know why their online education hasn't made them employable, and we'll just be back to the same disparities as before.
I'm obviously pushing a particular agenda here, but I think it's worth considering.
I don't know that that doesn't happen at real schools too though
while I'm sure college works as a smoothing function
but it seems to me that certain (almost always UMC) kids show up and immediately get what the valuable connections to make at the school are
they get what sorts of fraternities are worth trying to get into, what sort of extracirricular activities are likely to prove valuable in the future, what sort of internships are worth angling for, that sort of thing
while alot of the less clued in students sort of fumble around almost at random
it strikes me that the degree of clued in'ness' usually breaks down along class lines
(this might be more of a finance, politics, business thing than a tech thing)
> In either case, students will still be expected to contribute toward their own educational expenses from summer income, savings and part-time work during the school year. Students are expected to contribute at least $5,000 per year from these sources but are not expected to borrow to make the contribution.
Agreed. Student earnings requirements aren't much of a problem for CS/engineering students (who can get paid summer jobs related to their field), but they are difficult for students trying to get into industries where unpaid internships are effectively a requirement. You would think Stanford would have made a change to this as well.
I'm a current Stanford undergrad. Most Stanford kids are able to pay for their "student contribution" by getting on campus work-study jobs (like in the Library or career development center), working as dorm staff in the underclassmen dorms, or working as paid researchers in professors' labs.
I've had on-campus jobs throughout college, and making $5000 from those jobs alone would require working somewhere in the neighborhood of 15-20 hours a week. Certainly possible (and many do it), but at that point it starts to have a pretty noticeable affect on your schoolwork and personal life.
What? $5000 a year is a straightforward, achievable contribution, especially with work-study jobs. When I was an undergrad at an ivy league school I made significantly more than that working at the dining hall during the year and the course review guide in the summer, and this was in the mid 90s.
15 weeks / semester * 2 semesters = 30 weeks.
$5000 / 30 weeks = $166 / week. At $8 an hour, that's 20 hours a week; at $10 an hour it's 16 hours. (Ignoring taxes, which are low but still push the hours needed higher.)
This is not accounting for summer jobs, but my original point was that having the student contribution at that level will make some students take a paying but dead-end summer job over an unpaid internship or other opportunity that would benefit them more in the long run. (Another reason unpaid internships are questionable ethically...)
The financial aid site clarifies the definition of typical assets. Seems like families with under $300K qualify, excluding retirement accounts and primary residence home equity beyond 1.2 times annual income. As others have mentioned, it's designed to prevent families who have large savings from manufacturing an artificially low income (an extreme case is retiring early for a few years to show no income).
The takeaway is, maxing out retirement accounts like a 401k and dumping savings into paying off the primary residence mortgage are ways to accumulate net worth without accumulating "above-typical" assets.
For applicants who report total annual parent income up to $125,000, we generally consider "typical assets" to be an adjusted total net worth of less than $300,000. Adjusted total net worth usually reflects the sum of the following amounts:
Cash, savings, checking
Investments
Home equity, capped at 1.2 times annual income
Equity in real estate other than the home
Business net worth
We do not include formal retirement assets (401k, 403b, IRA, Keogh) in our analysis.
This is interesting, I wonder what does it mean for international students? $125K in family income for students from developing countries, will probably cover most of the students.
It'd definitely cover all of the international students from developing countries, but I don't think they're included in this policy. IIRC Stanford only does need-blind admission for US students. $125K/yr is an order of magnitude more than upper middle class families in Latin America make, for example.
I looked into going to a US university when I was finishing high school in Brazil but the reality is that even with aid packages and all of the assistance you can get, the process involves a significant chunk of money being spent on paperwork (official translations of dozens and dozens of documents are expensive, US visas are expensive, intl travel is expensive, the standardized English exam is expensive, etc.).
A free ride to Stanford for me when I was going into college 3 years ago would have put my family in debt. Today I know that I could've remedied that with a single internship in the US, but back then all of the costs intimidated me and I gave up.
I just relocated one of my managers from Campinas to Huntsville and I think he paid about $4000 for official translations. I couldn't believe it. The company paid, but even so -- that's insane. And apparently there are different levels of translation, ranging up to about $75/pp.
> Stanford has long been committed to need-blind admissions for U.S. students, supported by a financial aid program that meets the demonstrated financial need of all admitted undergraduate students.
Boy, wanna talk about perverse incentives? How about this "typical assets" business? One more way today's world proves you're a sucker to be frugal and save. Stanford is indeed a luxury, and there's no reason a well-off family should not pay for it. But these free rides are not coming only from endowments. If you're paying full freight, you're not covering just your kid but a couple other kids too. This is a mad way to price products. Only maybe healthcare is less rational.
You misread me, and put words in my mouth. I'm not objecting to getting or giving a hand.
Consider two families. One makes $100k/year and has $750k saved. They drive modest cars, live in a modest home, take modest vacations and drive their kid across town every day to the public (free to them) magnet school. The other family lives very well, has nothing saved, a house that they can't afford, and debt from paying for private school. Which one should get the free ride at Stanford? Which one will?
With real interest rates below zero and a bailout culture, which family is living the modern version of the American dream?
Every time I see this, I get a little sick thinking about the ~$100k in loans I accumulated getting a BA at University of Chicago and Wash U in St. Louis (I transferred). I got some merit scholarships and a good amount of grant aid, but policies like this starting going into effect not long after I graduated. Based on the current policies at Wash U, I would have paid nothing :/
I honestly had no idea this existed. I feel like a fool now that I spent over $70k at RIT. Which, don't get me wrong, is a great school...but I could have went to Standford for free?...that's pretty crazy to me. I really really really wish I knew about this before.
I have a feeling that the reason some of these policies are going into effect (or getting expanded) is due to the increased dialog about rising tuition costs. They'd rather make it affordable for those who need the aid, so they can keep on getting the high tuition from those who can afford it. That way, they avoid any legislative action that would crush their money making machine.
Yeah, I understand why they're doing it, and I think it's great since you can't really expect kids who grew up poor to have that kind of money at 17 or 18. If you're coming out of a sub-par school system and you spent your childhood constantly worried about money issues, you're doing well just to qualify for those kinds of schools.
I just wish there would have been SOME kind of retroactive forgiveness for those of us who were well below the family income threshold but were born just a couple years too soon. Don't get me wrong, I understood the implications of taking out huge loans and I'm doing pretty well now (finally making progress on the loans) - but it kills me to think I could have had the same education without the crushing debt.
Rice University (originally Rice Institute) began teaching in 1912 and didn't charge tuition until 1965, as they were also amending their charter to admit other than white students. My understanding is that Rice still provides a relatively large amount of student aid compared to most elite universities.
Anecdotally, a number of my high school friends went to Rice and all claimed to be paying very little or nothing in tuition (2008). My high school girlfriend received a full ride offer there (as she did from Caltech, which is what she chose). IIRC 38 students from my high school graduation class received offers from Rice.
Rice actually has a lower-% of students receiving need based aid.[1] I think a key reason why Rice enters a lot of conversations re: value stems from Houston's low cost of living.
Can any one explain what '...and typical assets means'? I took it to mean the value of normal things you own such as a house and cars. This seems like a massive caveat against the headline (basically anyone who owns their home), but since it's being ignored, I assume I'm wrong.
I know of one family that run a profitable business and own ~10 rental properties. Their accountant has structured things such that they are making so little profit that they are able to get government subsidies for low income families. The 'typical assets' clause would probably be to disqualify people like that.
The amount universities expect a family to pay for college in the US depends on two numbers: annual income and assets. A fairly typical formula for the expected family contribution is (income - allowance) * X + assets*Y, where the "allowance" depends on things like size of family, parents' ages, state of residence, etc, X varies from 22 to 47% depending on the size of (income - allowance) (and in particular there are various brackets in there, with different marginal rates, etc), and Y is generally about 5.7%. This is all for the parents; student income and assets are treated more harshly.
All of which is to say that the college might think you can pay a lot because you have a lot of income, or because you have a lot of assets.
What counts as "assets" varies also. Obviously things like bank accounts and stock investments are included, though retirement accounts are typically excluded. Home equity for the primary residence is included by many private colleges but not by the FAFSA's methodology (which is used by most public colleges, as I understand).
So yes, this can be a massive caveat. Stanford does consider home equity as part of your assets, so if you have a fully paid off house they may effectively assume that you will take out home equity loans or a mortgage on it to help pay for the college education.
Of course it's not that common for families with income of < 125k who have college-age kids to have a fully paid off expensive house. So in practice for many people this is not an issue. But there are absolutely people who are asset-rich and income-poor (think retirees!) for whom the fact that all this stuff is not purely income-based makes a huge difference.
I think I understand what you're getting at (i.e. it's not as widespread?), but at the same time, I can think of numerous situations where wealthy individuals use deductions and tax advantaged assets to shield income.
Wealthy individuals have greater spending flexibility and access to things like trusts, asset relocation to no-tax locations, deductions, etc.
In '09, 35K households with income over $200K reported 0 tax liability [1].
In a downturn, I wouldn't necessarily assume that someone has sufficient gains to offset their losses. They could just be losing money.
Also, there are restrictions on how you carry forward losses and how much you can deduct in later years.
edit: I think the issue is you're being nuanced about the connotations of "accounting games" (I mention this downthread and argee that some tactics are straightforward.) the user [tiler] above, responded as if the recession explains how 35K people with $200K+ income had 0 tax liability, which is silly.
I reject the premise that anyone can move to a foreign country, select tax exempt bonds and gross at least $200K/year. Maybe you as someone who appears smart and ambitious could pull it off consistently, but that's tough to do.
You seem to be getting hung up on whether there's anything "novel" about a subset of tax avoidance schemes and not mentioning trusts or other tax schemes disproportionately used by wealthy individuals such as offsetting income with high medical costs or moving assets to lower-tax jurisdictions.
FWIW, the IRS study in the article referenced breaks down these expenses for folks without worldwide income.
I certainly agree that moving to a foreign country and getting a good job there is hard. Further I agree that buying bonds that gross 200K a year in interest is expensive (though it's not hard to select them). However neither of those things constitute "accounting games." They are extremely straightforward aspects of the tax code available to anyone.
They also won't actually save you any money. With the former you'll just be paying taxes to a foreign government instead. With the latter you'll get a lower rate of return than you would for buying other bonds.
I didn't mention "trusts or other tax schemes" because the Forbes article you linked to didn't mention them. It didn't mention them because those aren't actually ways to get out of paying taxes. That is, as I said upthread, largely a myth.
You bring up medical costs so I'll touch on those as well. People don't get sick or injured and pay lots of money for medical treatment to avoid paying taxes. Certainly one can debate whether such expenses should result in a tax reduction but we, as a country, have currently decided that they have in most cases. Again this doesn't constitute "accounting games." They are, again, very straightforward deductions available to all. Keep in mind though that you do have to spend the money on medical care instead of taxes though. So you won't have saved any actual money to spend out a house or a new iPad or whatever.
OK. I didn't realize you were being nuanced about the definition of "accounting games" and its connotations. I agree that these tactics are straight forward.
It's not nuance. it's just being straightforward. A lot of people (including the person that started this thread) seem to think that the "super-wealthy" can play "accounting games" to avoid paying taxes in a way that is somehow mysterious, nefarious or unavailable to everyone.
In reality, things are actually fairly straight forward when it comes to our taxes and most of the time if you're earning money you're paying taxes. If you aren't, it's generally for a pretty good reason.
Instead of straight income, would a better method look at AGI, or account for cost of living in some way? Colleges doing this would be a boon for people in small towns like mine, but would offer smaller advantage to those living in high expense cities.
I find myself asking the same question as a resident of Los Angeles, where the cost of living is high, so salary is high. If I moved to San Antonio or Atlanta I could live a better lifestyle on a fraction of the salary and still take advantage of offers like these (and all the tax credits I currently don't qualify for).
And yet, by staying where you are, your revealed preference is that you value you living there higher than the claimed 'better lifestyle' and foregone grants, subsidies etc...
(not a personal attack, just an observation - usually lots of 'grass is greener' talk in this sort of threads, but still urban centers grow at the expense of so-called 'low CoL areas')
This is a great step. I wonder if there are any plans to expand this to would-be adult learners. That would be amazing. If other top universities follow suit (I'd love to see this at NYU and Columbia, personally), that'd be even better. Not going to solve the student loan crisis, but it'll certainly help a bit. Encouraging to see this.
Another thing I like about this is the "only contribute $5000 a year" part (especially if it does expand to adults) - that means if you've built a small personal safety net, you won't have to watch it all go up in smoke instantly. That adds a margin of safety you don't get right now.
My girlfriend works in the US education system (in an other state), and there seem to be a trend were the marketing power of those schools is good enough to attract rich kids from foreign countries paying full tuition, so that on the US side they could maintain appearances of some equality (without touching their budget, it's not on the table).
Of course, one of the problems is that the selection based on money is very different from selection based on school grades, and the whole sport story is set to play again with Saudi students.
on one hand this is good in that they are recognizing that debt burdens are a real hinderence to their graduates
on the other hand, this is used to pitch the line that 65K tuition is no big deal
which you're in line for at the full rate at combined 225K income
look, I get that in modern internet culture, no sypathy is supposed to be shown to people with household income over 200K, but that is still really alot
its also not at all obvious that the return on any investment of 200K for education is worthwhile
also even if it does pay off, you have to work like a dog to make it pay off, its not a passive investment
if you're buying a website on flippa, the degree to which your investment is passive or active factors pretty heavily into the price,
it should be the same for colleges
(I'd also love to see a breakdown of exactly how much of Stanfords admitted class comes form < 125K parent income, between 125K and 225K parent income, and > 225K parent income)
also, I have a problem with the meme that elite colleges are now cheaper than state colleges
I get that merit scholarship vary by college, but students qualified enough to get into Stanford or Harvard will almost certainly qualify for full merit scholarships at most if not all state schools
(maybe not at Cal or UCLA, but almost certainly at UCSB or UCD or San Jose State or Fresno State)
Honest question: Lets take a hypothetical worst case scenario. You are admitted to a top school. However, your parents make well over $125k but are for some reason unwilling to provide any contribution. You are responsible for full payments.
Is there no bank that will let you take out these loans? isn't it possible to take out a combination of federal and private loans to cover the cost?
Disclaimer: I was fortunate enough to go to a top university and pay nothing for tuition and housing.
During my time at school 10+ years ago, the answer was no -- you had to fill out a FAFSA (with your parents' tax information), and you had to take the maximum allowed Parent PLUS loans before you could take federal or private loans in your own name. If your parents would not take the PLUS loan, you were SOL.
Worst case scenario, you wait until you're 24 and become a financial independant to the domain of college lending. This is how I did it (as a side effect - I started school at 24 because that's when I felt mature enough)
My son goes to UNC Chapel Hill. He was his high school's valedictorian and had excellent SAT's. He won an academic scholarship (The Johnston) that has a needs based criteria as well. My wife (she's disabled and receives Social Security Disability) earn less than $100K. Based on our income, our son's scholarship is whittled down to all of $1000.00 per semester. I'm paying nearly $9,000.00 per semester so he can graduate with no loans.
So, when I got my rejection letter, I replied with "I reject this rejection" like in the Snopes story.
Then went to talk to the admissions folks, who thought that I had literally hopped on a plane and flew half the planet just to make good on a joke (I was already in the US for work actually).
Ended up working with a Stanford prof for a semester, after which I decided I was done with academia.
It would seem to me that using a single cutoff like this versus a continuous graded scale incentivizes people just above the cutoff to lie about their income.
Even if the expected contribution for a family with $130k is very small, it would be tempting to fudge the number and put that tuition money towards other expenses.
With "typical assets" -- my family was below the income thereshold but didn't receive any aid from Stanford in '06 because our family farm was worth quite a bit. Lots of ways to slip through the cracks with these policies...
Well not to make this personal, but how would you consider this 'slipping through the cracks'? If your family is worth 1mm or 2mm or whatever, would you feel it's 'fair' (for lack of a better word) that you'd get a full ride? 2mm in real estate is enough to retire on, would it be 'fair' if somebody (or their children) who essentially lives off the returns on their capital gets a 'needs based' grant?
Owning land that has gone through 3 or 4 generations in the same family, while technically an "investment asset", usually isn't treated the same way from a planning perspective as, say, apartments you purchase with the intention to liquidate upon retirement. There may be a lot fewer ways to generate revenue from it, so in all reality you may barely be breaking even on upkeep. You're then forced to decide between giving your children an excellent education which will set the up well in life vs keeping the land which you have a strong emotional attachment to and wish to share with future generations.
Without getting too specific, a family farm like ours is definitely not worth $2mil, and outright selling it wouldn't cover me + siblings going to Stanford. But the key is that it's enough to borrow against -- Stanford just wants you to be physically able to pay, even if that means exorbitant loans, and they'll generally offer you enough grants to get you to the point where loans can cover the rest.
Even this 125k threshold assumes a 5k student contribution and doesn't cover the mandatory 15k in room + board for incoming freshmen. It's great PR, though, and still, props to them.
but you still need a high family income to send the kid to a school (private) where there will be a teacher who will have the connections with ivy league schools so they can write a letter of recommendation that will be read and not summarily discarded
at my (private) school the ONLY way to get into an ivy league (no matter how high your grades were) was to get a letter from the teacher with the connection to Harvard ... or the (other) teacher with the connection to Stanford ... or the (other) teacher with the connection to Yale
students even decided early on which courses to take so that they would have exposure to these teachers early on
Yes, I remember friends having that problem in undergrad in Canada. There was a way around it but it was an application process with an interview. I believe they were concerned with people trying to game the system to get lower tuition fees.
In some, especially Europpean, countries such thing exist, and it's called tax. Besides paying taxes, there's no additional fees for attending university.
In Europe, these are the countries I know of that either have no tuition, or only nominal fees up to €100/semester or so (for EU/EEA citizens): Austria, Denmark, Finland, Germany, Norway, Sweden. Denmark is the most generous, not only charging no tuition, but even paying students about €700/mo to attend university, in order to cover living expenses [1].
As an Indian junior, this makes me even sadder. Especially considering that there are like 7 schools in the US that are need-blind for overseas applicants. :/
Given that all the ivies have need-blind admissions for American students, and half are need-blind for everyone, the odds are about as good as they are for anyone else. Also, Stanford isn't an ivy.
how will this make any difference? if you're a non urm who doesn't already know that top colleges provide very generous financial aid, it's highly unlikely that you will have developed the right all round profile to get a place at stanford.
Why is this even news?? This happens at pretty much every top tier private/public university. Colleges price discriminate between people of different incomes. The true cost per student is not 50k at a private school, it's probably more like 30k, and people pay between 0 and 50k depending on their income.
Looks like Standford is learned something :-) Not everyone that can afford to pay is smarter then the one who can't. Students should be accepted upon knowledge and skills and not there financial situation. I vote for free education!
> Families with incomes at higher levels, typically up to $225,000, may also qualify for financial assistance, especially if more than one family member is enrolled in college.
Thanks for your reply. I would imagine there is some sort of gradual scale from no tuition to full tuition. My goodness, I thought it was a reasonable question, but it earned me a -4 in Hacker News!
That's not the definition of non-profit. Non-profit companies charge for products all the time, the only requirement is that they reinvest any profits back into their mission instead of distributing it to shareholders.
That's why you get non-profits with million dollar CEO salaries- its they only way to funnel money out.
The only sad thing is how few people know about this. Under-privileged students think they can only afford state schools. In truth, I couldn't even afford a state school. Only a private college/university would give me the full financial aid that I needed to attend.
Thankfully programs like Questbridge[2] (it's not spam, surprisingly) help facilitate under-priveleged students applying to and attending top private schools.
[1] - http://colleges.usnews.rankingsandreviews.com/best-colleges/...
[2] - http://www.questbridge.org/