where do highly academic $ donut hole students go?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:in DC area--$300k-450k is a donut hole family. 2 or more kids. SFHs run you $750k-2 million. COL is very high here.

LOL no. SFHs, investments, retirement savings, and OOS college tuitions are luxuries. You have to prioritize and choose, just like all the families who make less or way less.

Agree. A family making between 300-450k is not a donut hole family. We make in that range and we’ve saved money for our kids to go to college. One is in college now and the other will be next year. We won’t have quite enough from our 529 accounts, but we are able to cash flow the rest because we make enough money to do so.

Sure it is. We are in that range now (but were not always). We saved a lot but not enough to pay $65-80K/year. And while we CAN cash flow remaining, that will basically suck up every penny we have--quite literally-- if DC goes private and out of state (and we are also looking in state but acc to most of you on here we cannot and should not consider the Roanokes, Lynchburgs, etc.). And we do not live lavishly. Old cars that were cheap to begin with. No second home. Still in our starter home. Fly to vacation on miles accrued or stay driving distances.

After taxes and other necessities and being sucked dry for every little thing . . . . we are 1 medical emergency away from financial catastrophe. Something we came very near to actually incurring. So, yeah, I know some of you think this is living large at that salary. And maybe elsewhere it is. And it may be better than a lot and afford us a lot of comfort. But it's not rich and most certainly donut hole b/c we will get not once cent in aid. Anywhere.

You are literally in the Top 1-5% of people in the USA with 300-400K! If you were "not always" in that range, then you could have chosen to save as your salary increased.

Fact is, majority in the DCUM area live below 150K and would love to have your problem of "300-400K/year".

Very out of touch with reality

[Anonymous]

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Anonymous wrote:

Anonymous wrote:what does donut whole mean?? poor?

Too rich for financial aide, but too poor to pay out of pocket.

The term "poor" is relative. It's middle to UMC who want the brand name college but don't want to pay $80k / year, but can squeeze out close to $45k / year if it came to it.

Real middle class will get financial aid. The people complaining make $125/150-400/500K who don't want to save or pay or understand they need to go to a state college that is more affordable.

+1.

I think they wish the sliding scale would just slide more. 200k in income and 200k in assets gets you a lot of aid. You'd pay about 25k at a lot of schools. Totally doable. 200k and 500k in assets means they want you to pay down all that savings. It's a gut punch bcs it takes a lot of work to save that much on that salary -- also because you're limited to what you can shelter in retirement and there's no foresight into bigger picture ie a second or third kid to consider. I think if the people making 200k and having 500k in retirement had to pay 65k, they'd be a lot less stress about this.

What do you mean by "pay down all that savings"? No college expects you to contribute all of your assets, including liquid savings, only a certain percentage that's way less than half. Assets in a 529 plan are obviously in a different class.

If you have two kids four years apart, that’s 5.65% for 8 years. That’s 45.2% of your savings.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:in DC area--$300k-450k is a donut hole family. 2 or more kids. SFHs run you $750k-2 million. COL is very high here.

LOL no. SFHs, investments, retirement savings, and OOS college tuitions are luxuries. You have to prioritize and choose, just like all the families who make less or way less.

Agree. A family making between 300-450k is not a donut hole family. We make in that range and we’ve saved money for our kids to go to college. One is in college now and the other will be next year. We won’t have quite enough from our 529 accounts, but we are able to cash flow the rest because we make enough money to do so.

Sure it is. We are in that range now (but were not always). We saved a lot but not enough to pay $65-80K/year. And while we CAN cash flow remaining, that will basically suck up every penny we have--quite literally-- if DC goes private and out of state (and we are also looking in state but acc to most of you on here we cannot and should not consider the Roanokes, Lynchburgs, etc.). And we do not live lavishly. Old cars that were cheap to begin with. No second home. Still in our starter home. Fly to vacation on miles accrued or stay driving distances.

After taxes and other necessities and being sucked dry for every little thing . . . . we are 1 medical emergency away from financial catastrophe. Something we came very near to actually incurring. So, yeah, I know some of you think this is living large at that salary. And maybe elsewhere it is. And it may be better than a lot and afford us a lot of comfort. But it's not rich and most certainly donut hole b/c we will get not once cent in aid. Anywhere.

This makes no sense. Where is all your money going. Why did you not save? You are rich.

+1, this doesn't add up. Maybe huge mortgage. If you have an HHI of 300-450k and a medical emergency would be "catastrophe" and you don't have at least 150-200k socked away for your ONE kid's college by the time they are 18, I have zero tears for you. What do you think people who have incomes of more like 100-150k a year do? They are not homeless. If they can make it work, you have no excuse. Your money is going somewhere. Are you in debt to the mob?

+1000

If you lived on $150-200K (before your salary increased), then why did you not save 75%+ of the new salary into 529 and retirement? Lifestyle creep is a real thing and isn't needed. Even if you have only been at that salary for 2-5 years, you could have saved enough for college for 1-2 kids and easily cashflow the rest. Once again, if you didn't allow lifestyle creep to happen.

And anyone who makes 300-400K+ and is "one emergency away from catastrophe" is not very bright with finances

[Anonymous]

Somewhere with a lot of merit money.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:what does donut whole mean?? poor?

Too rich for financial aide, but too poor to pay out of pocket.

The term "poor" is relative. It's middle to UMC who want the brand name college but don't want to pay $80k / year, but can squeeze out close to $45k / year if it came to it.

Real middle class will get financial aid. The people complaining make $125/150-400/500K who don't want to save or pay or understand they need to go to a state college that is more affordable.

+1.

I think they wish the sliding scale would just slide more. 200k in income and 200k in assets gets you a lot of aid. You'd pay about 25k at a lot of schools. Totally doable. 200k and 500k in assets means they want you to pay down all that savings. It's a gut punch bcs it takes a lot of work to save that much on that salary -- also because you're limited to what you can shelter in retirement and there's no foresight into bigger picture ie a second or third kid to consider. I think if the people making 200k and having 500k in retirement had to pay 65k, they'd be a lot less stress about this.

What do you mean by "pay down all that savings"? No college expects you to contribute all of your assets, including liquid savings, only a certain percentage that's way less than half. Assets in a 529 plan are obviously in a different class.

If you have two kids four years apart, that’s 5.65% for 8 years. That’s 45.2% of your savings.

No, because it won't be 5.65% of $300K all 8 years since you will be slowly spending down that amount. For example, 5.65% of 300K the first year ($16,950), second year will be 5.65% of $283,050 ($300K minus the $16,950 you paid for the first year), etc. This example assumes, of course, that you're not adding additional assets each year, whch would also impact any financial aid you receive.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:they're not in a different class.

I've seen you post before about income vs assets and it's apparent you know .. a little. But it's easy to know more so let's do this!

Income varies quite widely btw schools but it can be somewhere between 22-47% of after tax income. Be sure to add back any retirement contributions into that income (eg income /= AGI).

Let's say you make 240: you'll pay 40-72k for college.

Then, parents are expected to pay 5.64% of their unsheltered assets annually. 529s are parent assets, if they're in the parents name (normal). Counted just the same.

so if you have 500k in assets: That's 28,200 a year to add to total.


if you have that 500k in retirement, you pay nothing. But what you can shift into retirement is limited by income so you're probably stuck here.

if you have another 100k in the kids 529: add $5640

Kids assets are hit at 20% so dont have that 529 in the kids name. Kids income is hit at 50% (After a set aside).

So you can see, this family is well into full price range.

You obviously know a lot and your analysis is spot on. Yes, having $500K versus $200K in assets may very well push you into full pay status, and I didn't mean to imply otherwise. What I was trying to push back on was the idea that if you were diligent in saving that additional $300K, a college will get most of that money so what's the point of saving it. As you correctly pointed out, 5.64% is a heck of a lot less than the 22+% for income. So even if that $300K pushes you into full pay status, the financial/need-based aid you would have otherwise received (given the same income) is not going to come close to $300K, meaning you're better off having saved that money than not.

only sorta. had you spent that on boats and vacations for the last 15 years, you would be paying let's say 35k on tuition. as opposed to 85k to the person who really gave up and saved. over 4 years, that's 200k. so you're 100k ahead but without that 300k worth of experiences taking your kids to Europe when they were growing up or sending them to pricey summer enrichment or potentially (we see this a lot) having a stay at home parent to handle the sandwich duties of kids and parents - which would have relieved a lot of stress over the last 18 years.. and that's for one kid. for two kids, I'm not sure you're ahead at all.

You're starting premise is faulty. Having $300K in additional assets would NOT equate to a difference of $50,000 ($85L - $35K) in the amount of tuition for one year. Look at the detailed analysis that a PP provided: 5.65% of $500K in assets would equal $28,250 in an expected contribution from that amount, while 5.65% of $300K would equal an expected contribution of $16,950.

[Anonymous]

It's all about ability to pay, not comfort to pay. College doesn't care thar you'd like to spend money elsewhere. College wants whatever you will bear.

So the question is, are they pricing it bearably, or where are the not-bearing going?

[Anonymous]

Anonymous wrote:"In state flagship honors college" sounds great! Except as a DC resident, I don't have one. All I have is DC TAG, which knocks $10k off of OOS costs. Will that get us to parity with in state tuition in MD? (It sure doesn't in VA or CA.) In what states does this actually work?

Well that is a choice you made by living in DC. Once you had kids, you had 18 years to consider this issue and perhaps move to VA/MD and/or start saving more. But in reality, there are plenty of private colleges that offer great merit for good students as well. In-State/in-state honor is just one choice, and you chose to forgo that choice by living in DC.

However, for the VAST majority of people, they live in an actual state and have multiple good to excellent choices for colleges that are affordable.

[Anonymous]

Anonymous wrote:

Anonymous wrote:"In state flagship honors college" sounds great! Except as a DC resident, I don't have one. All I have is DC TAG, which knocks $10k off of OOS costs. Will that get us to parity with in state tuition in MD? (It sure doesn't in VA or CA.) In what states does this actually work?

Well that is a choice you made by living in DC. Once you had kids, you had 18 years to consider this issue and perhaps move to VA/MD and/or start saving more. But in reality, there are plenty of private colleges that offer great merit for good students as well. In-State/in-state honor is just one choice, and you chose to forgo that choice by living in DC.

However, for the VAST majority of people, they live in an actual state and have multiple good to excellent choices for colleges that are affordable.

Right! And my question is, which of these multiple good to excellent choices are actually brought to in state parity by the application of the DC TAG grant? Your post doesn't offer an answer, but I sure am grateful that you shared your thoughts on my DC residency (and many predicate assumptions about my life choices), which are important and valuable to me!

[Anonymous]

Anonymous wrote:

Anonymous wrote:where do highly academic $ donut hole students go?

Do they already put across the country for merit scholarships at less selective unis?

Does each "generation" have schools (like NEU?) that invest in merit discounts, climb the rankings, and then stop the discounts?

Do they go in-state?

Do they/families suck it up and pay the high prices because it's worth it even though is frustrating to pay?


It seems to me that you could fill a few Harvards worth of brilliant students who have some money but don't want to throw it all at a college?

Public universities with good honors programs/colleges (e.g., Schreyer Honors College at Penn State, the Echols Scholars Program at UVA, or the Barrett Honors College at Arizona State)

SLACs that offer lots of merit aid (e.g., Grinnell, Macalaster)



Echols Scholars is not an honors college and is completely different from those actual honors colleges you mentioned.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:"In state flagship honors college" sounds great! Except as a DC resident, I don't have one. All I have is DC TAG, which knocks $10k off of OOS costs. Will that get us to parity with in state tuition in MD? (It sure doesn't in VA or CA.) In what states does this actually work?

Well that is a choice you made by living in DC. Once you had kids, you had 18 years to consider this issue and perhaps move to VA/MD and/or start saving more. But in reality, there are plenty of private colleges that offer great merit for good students as well. In-State/in-state honor is just one choice, and you chose to forgo that choice by living in DC.

However, for the VAST majority of people, they live in an actual state and have multiple good to excellent choices for colleges that are affordable.

Right! And my question is, which of these multiple good to excellent choices are actually brought to in state parity by the application of the DC TAG grant? Your post doesn't offer an answer, but I sure am grateful that you shared your thoughts on my DC residency (and many predicate assumptions about my life choices), which are important and valuable to me!

DP. My kid was offered good merit at UVM (25k/yr) and Pitt (20k/yr), which with your DC tag would be very affordable. Also similar aid for Drexel and Union, but those start at a higher price point and no DC tag there. Muhlenberg had very good merit as well (no DC tag, but coa around 30k). UMD sometimes offers merit for OOS.

[Anonymous]

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Anonymous wrote:Williams for us - pay $23k with $210k income. Pretty low assets (one govt employee and one assoc prof who rented forever).

Then you aren’t doughnut hole. It’s similar salary but with assets, including primary residence you can’t really sell, that make you ineligible for grants but unable to afford $85K a year.

+1

in DC area--$300k-450k is a donut hole family. 2 or more kids. SFHs run you $750k-2 million. COL is very high here.

A lot of pricey private schools offer merit or aid for $200k-once you get to $300k forget it.

And agree the assets get you. Home equity, some include investment/retirement, etc. Which is why 2 families making the same $210k--one will get aid and one won't. The big spenders will get the aid and the smart and frugal that saved will get jack-sh*t.

Income is weighted more heavily than assets in determining aid. And colleges only expect you to contribute a certain % of your assets (way less than half). So despite a difference in aid level, it's much better to have those assets than not to have them.

So the trust fund parents with low salaries will get aid in that scenario--while the grinders pay more. Kind of like paying taxes... donut hole always get screwed.

In DC's private elementary school, this was the case numerous times over. One parent had trust fund, other parent didn't work at all, two kids, got FA to attend school. Or families with second/vacation homes getting FA with one wealthy parent and one stay at home. As another poster said: parents who work hard for good salaries (but not outrageous salaries) get penalized the most with college aid.

That’s…really weird because I stayed at home and the private assigned me an arbitrary income as did the colleges when my kid applied. The schools also asked us which cars were in our driveway and expected us to drain our assets to pay before giving any aid. I must be too honest or something.

[Anonymous]

Anonymous wrote:Those of you shocked by this, did your parents not go through the same thing?

I'm 49 and I clearly remember my super frugal parents (they shopped at thrift stores for everything) having to pay 100% for my university while my roommate who had every latest gadget and outfit was on 75% financial (not merit) aid. I went to her house and it was twice as big as mine and four times as nice.

Colleges have rewarded the non-savers, big spenders for 30+ years!! This is nothing new. You either join in (and start spending) or keep saving and sleep at night.

True, but DCUM tends to attack this type of response and claim it doesn't happen.

[Anonymous]

Anonymous wrote:

Anonymous wrote:"In state flagship honors college" sounds great! Except as a DC resident, I don't have one. All I have is DC TAG, which knocks $10k off of OOS costs. Will that get us to parity with in state tuition in MD? (It sure doesn't in VA or CA.) In what states does this actually work?

Well that is a choice you made by living in DC. Once you had kids, you had 18 years to consider this issue and perhaps move to VA/MD and/or start saving more. But in reality, there are plenty of private colleges that offer great merit for good students as well. In-State/in-state honor is just one choice, and you chose to forgo that choice by living in DC.

However, for the VAST majority of people, they live in an actual state and have multiple good to excellent choices for colleges that are affordable.

The parents who hold back their kids have 19 years.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:what does donut whole mean?? poor?

Too rich for financial aide, but too poor to pay out of pocket.

The term "poor" is relative. It's middle to UMC who want the brand name college but don't want to pay $80k / year, but can squeeze out close to $45k / year if it came to it.

Real middle class will get financial aid. The people complaining make $125/150-400/500K who don't want to save or pay or understand they need to go to a state college that is more affordable.

+1.

I think they wish the sliding scale would just slide more. 200k in income and 200k in assets gets you a lot of aid. You'd pay about 25k at a lot of schools. Totally doable. 200k and 500k in assets means they want you to pay down all that savings. It's a gut punch bcs it takes a lot of work to save that much on that salary -- also because you're limited to what you can shelter in retirement and there's no foresight into bigger picture ie a second or third kid to consider. I think if the people making 200k and having 500k in retirement had to pay 65k, they'd be a lot less stress about this.

What do you mean by "pay down all that savings"? No college expects you to contribute all of your assets, including liquid savings, only a certain percentage that's way less than half. Assets in a 529 plan are obviously in a different class.

If you have two kids four years apart, that’s 5.65% for 8 years. That’s 45.2% of your savings.

No, because it won't be 5.65% of $300K all 8 years since you will be slowly spending down that amount. For example, 5.65% of 300K the first year ($16,950), second year will be 5.65% of $283,050 ($300K minus the $16,950 you paid for the first year), etc. This example assumes, of course, that you're not adding additional assets each year, whch would also impact any financial aid you receive.

Not necessarily. Hopefully there are 529s involved.