Yep. If your parents are wealthy and don't want to help you, you are most definitely not going to a high-end school, not even a state flagship. At that point community college is the only reasonable option (because it's actually possible to earn enough without the degree to cover the cost).
You couldn't really have it any other way without drastically altering the structure of higher education: the alternative is that everyone's parents will "refuse" to pay and the financial aid system would be totally overwhelmed.
I am incredibly lucky and incredibly thankful that my parents value high-quality education and come from a tradition of academics who help their children through college. Some of my friends who are far smarter than me had to give up on dreams because their parents don't understand how inflation works and think you can still pay your own way through high-quality undergrad in the US.
That is, until you get to the high-end Ivies. Harvard would have cost me $12,500 over UW Madison's $24,000, but I was never going to get accepted there.
My parents had just gotten divorced. My dad had zero net worth, my mom very little. Full federal financial aid and need-blind admission at Columbia U. Super cheap, but only later did I realize how lucky I was (in a way) compared to a kid from a moderately wealthy family with two siblings in college. Let alone my friend who came to CU from a rich family but with no parental support who had to get an official parental divorce to make it work!
The financial aid system shouldn't be pre hoc means tested, it should be post hoc means tested. 18 years old is old enough to vote, marry, and enlist in the military. The government ought not to be looking at parents to foot the bills for legal adults.
Students do not have anything close to enough money to cover the actual cost of their education before earning it.
The value of an education I can pay for by mowing lawns is going to be lower because that necessitates zero research, extremely poor student:faculty ratios, etc.
The solution, to me, is to drastically increase government's share of the burden. But try introducing that in Congress.
The schools should lend students their education. They are in the best position to underwrite such loans, and such a system would eliminate the current perverse incentives the schools face.
I think your analysis is mostly correct, but it leaves out the option of really hustling for scholarship money.
My good friend from high school was in a position of not being able to afford our flagship state school, even though he got accepted.
He basically made it his full time job to scour all of the scholarship websites and apply to everything he was even minimally eligible for. He was constantly writing, or altering essays to fit a particular scholarship prompt.
All in all, he was able to afford school and has since graduated and become a pharmacist.
Like in a lot of things, hard work and hustle pays off.
The problem is most scholarship programs with significant awards have a single-digit number of winners.
This strategy works for a few of the most shining individuals in the country in any given year who dedicate the time required and get extremely lucky. I tip my hat to your friend, but the nature of scholarship programs is that for every kid like your brother, hundreds more worked just as hard, had just as much hustle, and got nothing (or a little, but not enough to make college affordable).
Paying for school on outside scholarships is an impressive accomplishment, but not something we can reasonably expect kids in general to pull off.
I think he means his friend hustled for the ones that on their own were not significant. Like I think my credit union gives out 5 $500 scholarships a semester. It wouldn't surprise me if the only people who apply are those who's parents work there. If you found a ton of programs like that it can make a pretty sizable dent.
Still, the availability of scholarship money doesn't scale up with the demand for it. They're designed to reward the extraordinarily gifted (or whatever minority status their endowment specifies), not fund education in general.
The incremental cost of going to school versus "just" living is like $6000. Even the child of a rich parent with no financial aid should be able to pull that together, especially if you manage to swing any scholarship money.
No, they shouldn't, because "just" living gives you 40-60 hours/week to work, and going to college doesn't. Especially at a high-level, challenging school.
Declare yourself independent, move out, get a part-time job, remove yourself as a dependent from your parents taxes, etc. etc. Now you are the income source for your own education expenses, and if you don't make that much money should be eligible for all kinds of wonderful tuition assistance programs. If the school asks, just say you have a terrible relationship with your parents and are estranged from them.
They've thought of that. Even emancipated children are not considered financially independent for aid purposes until the age of 25. The only exception is if you can provide documentation of child abuse - police reports, DCF files, etc. Estrangement is not enough.
Even a noncustodial parent you've never met is expected to make the same sacrifice as your custodial parent.
At my school, I once worked with an administrator who helped with the admissions process (every application is read by a minimum of two people, at least back then), and she had her hands on a lot of data, including a big set of accepted students. We looked through them and noted a couple of things: a disproportionate number were first born (like me) or only children, and no admits she looked at were from broken families. She also got a feel for that based on people asking about going to the university in her department, she hears a lot of stories, arranges and gives lots of tours, etc. Hmmm, now that I think about it I cannot remember a single student I knew who came from a broken home.
Basically, it appears that once parents divorce, at least one parent is not willing to pay what the College Board/the school expects, and that's game over.
At least as of a few years ago, that's not quite true. I went back to school at 24, and because I had earned over 50% of my own income in the past year (100% in my case) and had not been claimed as a dependent on my parents' taxes, I was considered independent.
I brought that sort of scenario up, was told it wasn't an option, although the lower level staffer I talked to wished it was. Perhaps my school took a particularly hard line, I certainly had a few peers who boasted of scams they and their family were running, e.g. borrowing at subsidized rates and getting >20% returns that Carter era inflation allowed them to earn (the government was slow to acknowledge the inflation it had created back then).
Dunno then. It's exactly what I did. I had to show lots of paperwork, bills in my name, apartment rent payment and cashed rent checks, bank account info etc. But once over that hurdle I was in like Flynn (except I didn't have wealthy parents in the first place).
My school is exceptionally expensive, almost $60K last academic year, and had been historically very bad with their endowment and earning money from inventions, and was one of the post-Civil war ones so didn't it have centuries of compounding donations. Iffy alumni loyalty, particularly for unrestricted donations. In face, tuition was very very highly prized because it was unrestricted....
All I can say is, I hope a quarter million for an undergrad is worth it to you and that it helps you land a high paying job out of the gate so you can start paying off any loans. Statistically, at around 5 to 7 years post-graduation, your much lower tuition paying state school peers will end up at job parity with you. Unless your school offers some highly specific specialty program that you can't get anywhere else.
I've written here quite a bit about my school experience and why it doesn't have to put new grads into unbelievable debt. I did freshmen through MS for under $30k out of pocket -- in the U.S and not all that long ago. Looking at the subject the last few years I've no reason to think it can't still be done for maybe no more than $45-50k. Paying off all of my student debt 3 years out of undergrad, then earning enough to cover my M.S. out of pocket is a pretty awesome feeling. (BTW My school's entire endowment wouldn't even add up to MIT's yearly earned interest on their's)
If you really think that your school is where you have to go, most outrageously expensive private schools have a handsome tuition assistance program if you can figure out how to work the system -- these days you can probably get an undergrad from one of those schools for less than I paid for my education. They probably do everything they can not to advertise is. But you have to have lots of chutzpah and don't take no for an answer. Hit the tuition assistance office daily, be a squeaky wheel, adjust your living conditions to suite the requirements for maximum assistance. Need to make less than $x per year? Do that. Need to not be a dependent of your parents? Do that (make sure they take you off of their taxes, you might need a copy). Get extra assistance as a school employee? Get a crap job cleaning floors.
Do not pay the inflated sticker price just to have fashionable brand recognition for a brand that won't matter in the job market in 7 years.
Do the math and optimize. If you aren't willing to do that, it might be worth reevaluating why you went to an "exceptionally expensive" school in the first place.
Given that my calling is science, and an undergraduate degree is just a step toward your terminal Ph.D., and getting into a good program for the latter means a lot of luck if you don't have a professor who the admitting department knows recommend you and your ability to do research, yes, it would have been worth it. As long as you get a STEM degree (don't know about other departments, but then again all students have to do a serious amount of the calculus and calculus based mechanics and E&M) its generally considered to be worth the price. Ditto CalTech, and ditto the other 3 top in the world CS schools if you do that major (CMU, UC Berkeley and Stanford).
In my case, with multimillionaire parents who back in the '80s drove one vehicle with a depreciated value of 2 plus or minus years of full costs, no amount of cleverness would have helped with the financial aid office. Due to MIT's horrible money management and youth it just didn't have the money.
As for why I choose MIT, my parents attempted to set up a trap, they were sure I couldn't get into it or CalTech (I'm not a math genius, but good enough to do MIT's required level), so they said it "wasn't worth their money" to send me to any place good but those two. As it turned out, MIT was looking for people like me (ask for details if desired; one less obvious one is that they look for evidence the student can do projects, and submitted a couple of those) and I got in, not that they had any intention of paying more than they could get away with (a saving face sort of thing).
The later experiences of my younger siblings showed that it wouldn't have mattered where I went, except that I probably could have worked my way through the very cheapest possible place, but that was so down market getting into a good grad school would have been iffy. In my field of chemistry, the only none required by the subject accrediting organization courses they offered were analytical lab ones clearly intended for student for whom the undergraduate degree was terminal, for a lab tech career.
Prior to a fairly recent overhaul, the technology licencing office (rough quote from memory from Tech Talk, the Institute's official newsletter): "focused on the details of licencing vs. doing a lot of licences" and averaged a little over 1 per year (!!!). Given that I know 3 of those, the LMI Lisp Machine licenses and the same plus Macsyma to Symbolics....
They notoriously screwed up the 3D core memory patent ($40 million lump sum to IBM vs. the offered 1 cent per core) and a synthetic penicillin patent. Either could have paid for a complete replacement of the entire campus. I very strongly suspect these weren't the only screwups, and e.g. Symbolics scammed an exclusive license to Macsyma mostly to keep it out of other people's hands, one reason Wolfram was able to beat it sort of starting from scratch.
Back then, when the prime rate was over 20%, and inflation was over 15%, MIT was getting a much lower return on its endowment. I want to say 4%, but I'm not sure. MIT does a lot better now, but that is also recent.
It got its charter just as the Civil War started, and set up operations just after. So as noted it doesn't have the 2 centuries or more of additional compounding alumni donations the famous Ivies have.
Not sure when it started, and it was again fixed only fairly recently, but the alumni magazine, Technology Review, was dedicated to telling most of the alumni that what they were doing was evil. And again by then the Institute apparently had convinced a lot of alumni that it couldn't be trusted with unrestricted gifts. In its favor it never tried a Princeton Woodrow Wilson Center type donation theft, then again I don't know of any other top school so brazen.
Ah, it also was wretched, not interested or perhaps in part stymied by city government (which hates Harvard with a passion, and MIT gets some of the blowback) in making money off of local real estate. When I showed up the Kendal Square area had that bombed out sort of look, in part due to NASA deciding after JFK's assassination and LBJ becoming President that, oh, on second though Texas is where we should build our space center. There was almost no housing, let alone vaguely affordable and safe, to be found close to campus. I'm sure that bit of MIT's studied indifference to student welfare didn't escape some of the alumni who were the sort to later make a fortune.
Bottom line: not a lot of money to grant to students, and a total focus on needs based aid. And, hmmm, rather obviously students like me who were crushed by the intersection of the financial aid policies of MIT and their parents would never be in a position to donate a lot of money, and not inclined to donate much of what we do have.
Don't forget parents with modest incomes but a lot of savings from planning their own retirement. That's the reason I didn't get any financial aid (other than some subsidized loans to cover part of my costs).
This annoys the hell out of me. "Retirement account" here is a tax deferred account like a 401k or an IRA, right? There are limits to how much you can put into accounts like these, and in today's world it can be difficult to adequately fund a comfortable retirement on these savings alone.
If you make a modest income but are careful about your spending, it's not unreasonable to have leftover after-tax money that you can invest in other ways. That doesn't mean it somehow ceases to be retirement money.
> where they could use it for things other than retirement
Retirement isn't some thing you just go to the store and buy. There's no clear split between buying goods and services that are "retirement things" and "non retirement things."
Some people retire by quitting their job once they reach some magic number in an account, and then hope that they die before their balance goes to zero. This is increasingly harder to do if you don't want to be working past 70.
The age threshold for withdrawal from some of these tax deferred accounts can be a significant hindrance if you plan to fund your retirement in other ways such as by buying a rental property. You don't want to be buying the property at 60, you want to have already bought it, done maintenance, allowed it to depreciate a bit, etc. so that you can actually make a reasonable profit by the time you're 60.
But your concern of their limitations applies to so few people.
Roughly 30% of people have less than $1000 saved for retirement, in any kind of account [1]
Roughly 55% of people have less than $25K saved, in any kind of account
The 401k personal contribution limit is $17,500 this year, and if someone had a 50% match form their company, they could top that in just ONE single year.
Yes, I know that the vast majority of people don't/can't/won't plan for retirement at all. But we're already talking about "parents with modest incomes but a lot of savings from planning their own retirement." Many of these people could fall into this category.
Many private schools (including UChicago) supplement FAFSA with CollegeBoard's CSS PROFILE, which is more encompassing and looks straight through retirement savings, business assets, trusts, and everything else. My dad is a CPA and it took him several days to fill it out. He said it was very clearly designed by experts who are very good at finding hidden assets.
Before someone turns that into an argument for state schools, remember that it's really only private schools which give any financial aid at all to middle-class kids.
The part that killed the FAFSA was a mutual fund that my parents committed to use only as a supplement to their retirement accounts. Based on the amount in the mutual fund (in combination with all the other factors), FAFSA estimated that my family could afford $40,000 a year on college, which was over half the household's yearly income and was patently ridiculous.
Unsubsidized Stafford loans are, AFAIK, always available no matter what your parents make. They will cover half to most of in-state tuition (~3-5k) at many in-state colleges, but not much more. It wouldn't cover even half the tuition + fees at Cal Berkeley, but it would cover half to most at SFSU.
It's been my experience that when people say any they really mean the straightforward stuff like Federal and State grants and loans. Being Ineligible for Federal grants is one thing, but so long as you filled out a FAFSA you were still eligible for school grants, private grants, and private student loans with deferred interest payments. That's a huge incentive to complete a FAFSA. Even people who have used up their Federal and State aid should keep their FAFSA going and check their school's financial aid office for other types of aid.
Case in point: in high school I lined up thousands of dollars in financial aid that no one else bothered to apply to. The largest check being $4,000 from my Alumni association for writing two paragraphs about how much I liked my school. A white friend of mine even got a NAACP scholarship because no one else applied (In case you don't believe this happens or think I'm joking, see [1] (not my friend). No one seemed to mind in his case).
I had some family issues and then had a falling out with my family and was locked out of FAFSA until I turned 23. Now THAT is something that does made you ineligible for pretty much any financial aid aside from traditional loans and working a lot. That really sucked. I ended up having not finishing my bachelors as a result. Thankfully Community College worked out pretty well for me.
Well, none was available as far as my financial aid office knew. ALL the school's financial aid was needs based, so there were no scholarship or school grant options. It was very expensive (and worth every penny) so "small" checks like $4K wouldn't have helped much. And my parents certainly wouldn't have filled out a FAFSA/College Board CSS PROFILE (I believe the latter was required; it is now).
Only other option was the military, but my eyesight was too poor to even enlist in the Army (and this during the Carter nadir of the military).
Do you think the landscape is completely unchanged since the Carter administration?
While this history can certainly be interesting, you're anecdotes aren't all that helpful for people looking for options now such as the person who wrote the blog post.
I don't think it has changed significantly for the better with one exception:
By then, the cost of going to a top school was beyond what almost anyone could do to work through it (MIT used to be known as a place where working class parents could send their children to to become engineers, and they'd work on the side to put themselves through it; didn't Feynman do this in part?), and since academic inflation has been a lot greater than CPI inflation, it's only gotten worse. E.g. not too long after I started in the fall of 1979, as I understand it MIT's costs doubled in the space of a few years (no doubt due to Carter inflation plus MIT's horrible financial management which I detail here: https://news.ycombinator.com/item?id=6178931).
MIT still has the same needs based only financial aid system. Others have confirmed that if you don't need it as judged by FAFSA/College Board CSS PROFILE---which my parent would have refused to fill out anyway---you will get insufficient or no loans if your parents don't cooperate/co-sign.
The military eyesight situation has improved due to new procedures (http://en.wikipedia.org/wiki/Refractive_surgery ; the radial keratotomy available then was right out), although I don't know if my astigmatism would be a disqualifier now, or if it could be arranged or maybe afforded by me as my eyesight was back then.
Bottom line: if the military is not an option, the kids of uncooperative rich parents are still seriously screwed, and for the same reasons.
Yeah, that is half of why I dropped out of MIT (the other half was chance to do an ecash startup, but I was financially screwed for this reason otherwise; the alternative was ROTC)
I'm wondering what the parent meant when they said that their parents were unwilling to help. Does that mean that they would not cosign for a private loan?
If you're referring to me, yes, they totally rejected cosigning a private loan. My school had its own independent program for this, and their credit was not exactly a problem (that year their main band issued them an unsecured note for more than 4 years of the total costs; ironically to set up a computer system, the brand of which I researched and specified as about the last thing I did before going to the university).
A bit more: they were quite determined to make sure none of us graduated from college, with one exception that proved the rule and another than paid her way through a community college level 4 year school, the sort that rents textbooks and was literally on the other side of a creek sharing a border with us. The other 2 of us were more ambitious and ruthlessly crushed.
The system assumes good will on the part of parents, and pretty much has to, to avoid free riders.
> The system assumes good will on the part of parents, and pretty much has to, to avoid free riders.
That's the second time I have read this lie in this thread.
Firstly, state governments are bound by the equal protection clause to ignore the assets of relatives (and all similar irrelevancies). They do just fine not soaking people for their ancestors wealth.
Secondly, university costs are in a financial bubble, for the exact same reason as house prices in 2007. The bizarre funding schemes and underwriting are a temporary state of financial cprruption, not the natural order of things.
Thirdly, the free rider problem only applies to zero sum games. If FedGov stopped blackmailing parents, it would not be education that collapses, just the bureaucracy grown fat on the back of ill gotten money.
Fourthly, to the extent that higher education is a zero sum game, that problem is trivially solvable by funding it with taxes. If higher education is a profitless necessary evil, like street construction and dog catchers, it should be funded the same way.
The equal protection clause is of no use to nineteen year-olds whose assets measure in the hundreds of dollars. What's your suggestion to the student who is wronged by the Fin Aid office? Hire a lawyer and sue? Ridiculous.
>Secondly, ... Thirdly, ... Fourthly, ...
What are you even responding to? None of your retorts are responsive to hga's or any of the other parent comments.
Well, the 2nd is responsive even if the author doesn't know it. MIT is a genuinely expensive place: the last time I knew the numbers, it spent about half your tuition on you in your freshman year and quite a bit more on average for the 3 remaining years. STEM subjects are expensive, all have lab work, and one of the reasons MIT is MIT is that with the rare exception that proves the rule, all courses are taught by tenure track or tenured professors.
You can't get tenure without being an adequate teacher and the vast, vast majority I knew really cared about teaching undergraduates. The school also constantly makes sure the professors are doing an adequate job (I once both read all the student evaluations for a disaster (only one was not negative and she was a special case), and then overheard the department head tell the professor, who's name you probably know, that he'd never be allowed to teach that particular course again), and e.g. has no hesitation about taking a course away from a professor who violates the rules like what can be asked for at the end of the term.
MIT is also in a very expensive location, the cost of living is very high. That's also true for many of the Ivies, Harvard up chuck river from it, Columbia in NYC, Princeton in NJ, etc.
3rd doesn't apply so much to MIT, although, yeah, it has too large a bureaucracy like pretty much every other institution of higher education. Just not one grossly out of wack with the rest of the school.
4th, no, MIT's independence is unquestionably one reason it's so good and continues to be. Go to 100% government spending and it would regress to the mean as government bureaucrats enforces their own irrelevant fantasies on it (even more than they do now: http://en.wikipedia.org/wiki/Grove_City_College_v._Bell).
My comment was directed to the repeated claims that free riders mean the only viable way to pay for universities is to bill parents. I am apparently not able to make that clear after staying up to four in the morning.
Is MIT actually that expensive, inflation adjusted, compared to 1960?
Bureaucracy is not just about labelled bureaucrats, but about the well-meaning organizational structure that tends to spring up over time. Take an axe to the budget and the excess structure often disappears with no ill effect. (I'm looking at you, committee meetings and approval processes.)
For academic year 2012-3, the MIT nominal cost is $57,010. Plugging that into the BLS inflation CPI inflation calculator at 2012, that's $7350 1960 dollars.
But that's somewhere around what the tuition was 2 decades later from memory and someone graduating in 1980, the same as my first academic year. Can't remember the rest, maybe $3,000, could be less if you went for less expensive housing (not sure if that was much of an option) and especially food.
Looks like MIT's inflation rate 1979-2012 was very roughly double the CPI; I'm comfortable saying it was around that, and it's congruent with the general reports I've seen on US higher education inflation.
At least during the '80s, I was told I was ineligible for any financial aid.