What is a "donut hole family"?

[Anonymous]

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Anonymous wrote:Could someone please explain, because it sounds like people with nice resources feeling entitled to more than they can afford.

No. It is a family that won’t qualify for FA but that doesn’t have the resources to reasonably handle tuition at the priciest/most elite colleges. I don’t know about families feeling entitled, but from the colleges’ standpoint it is a real problem that they are concerned about. They don’t want their student populations to come from two stratified socioeconomic groups.

This most closely describes the issue in an unbiased way. While I don’t expect massive FA, we also can’t comfortably pay for expensive private college. The colleges take into account all assets, which is great. No one should get to hide their wealth in a boat purchase. At the same time, we can’t liquidate our retirement savings. We would have to pay penalties. The government has penalties to discourage using your retirement money for non-retirement. So, we find ourselves in a spot where savings that we can’t use without expensive penalties is used to indicate we have “too much” money.

Meanwhile, our cash flow is not high, so it’s hard to swing the full cost.

Before people call me a whiner or tell me how lucky I am, I know I am lucky. I’m not complaining. We could empty our retirement accounts, but it would then lead us into poverty and that doesn’t help society or ourselves.

I don't know anyone who thinks paying for "expensive private college" is comfortable. This is the problem with donut hole discussions - of course it's expensive! It's expensive for everyone! If you think you're hard done by because you can't just instruct your household manager to write a check and forget about it moments later, you have skewed expectations in life. "Not outrageously wealthy" is not a protected class.

I'm 60 years old and graduated from a NESCAC school in 1983. The year I started, it cost about $8K for tuition, room, and board. I paid about $2000-$2500 of that from summer and part-time job (during the school year) earnings and my parents paid the rest. They did the same for my three siblings. It was not "comfortable" meaning "cushy," but it was completely doable. Some of my friends at similar schools and at Ivy League schools needed loans, and they took them out (usually around $6K-$8K total) and paid them off fairly quickly. My friends at public universities were able to work their way through college earning minimum wage.

Fast-forward, that private school now costs $80K all-in. Very few families with four children could pay for it "comfortably" no matter how hard the kids worked during summers.

That is what people are angry about.

Once upon a time, private college was not expensive. Everyone knows that. I'm not arguing that college costs are reasonable now, I'm saying that the posters complaining about being in a "donut hole" because they cannot comfortably pay for the most expensive option are not adding anything to the discussion. The nature of an option being the most expensive is that . . . it's expensive and everyone can't afford it! And unless you're very rich, it's going to sting to write that check. If you can still afford it, just "uncomfortably"; if you can still handle tuition, just not "reasonably" - that's not sympathetic, and it's not a donut hole. And there are literally thousands of other options at lower price points. But they've convinced themselves they're uniquely challenged because the best of the best isn't a given for their kid.

If you want to talk about spiraling tuition costs, let's talk about the tax breaks that were funded by gutting state budgets for higher ed. It's not a donut hole discussion it's a political discussion. But the same people moaning that they're stuck in a donut hole are voting for the "drown it in a bathtub" people, and can't tell they did it to themselves.

Right, but again: Most everyone COULD afford the EXACT SAME THING a generation or two ago, with a little effort.

It hurts to tell a super high-performer that he can't even apply to elite schools because you can't pay for them. Is it a tragedy? No. But when you have a MEMORY of those schools being in fact, affordable when you were his age, it hurts.

That's it.

P.S. I agree re: gutting state budgets for higher ed.

No, it's not true that everyone could afford it a generation ago. Sorry, but you were in a bubble if you thought so.

A generation ago, schools toped out in the 30k range. With federal loans and modest parental contribution (or flat out grants if you are talking about the elite schools), everyone could afford them

No. Absolutely false. Maybe everyone at your high school could afford them, but the idea that everyone in America could afford to send their kids to college AT ANY POINT IN HISTORY is so blind to reality as to be a joke.

The elite private schools met full need a generation ago.

...with loans. Not grants. Loans.

Student loans actually covered costs 40 years ago, and the total over four years was less $ than a college graduate's salary at her first job.

Now, Parent Plus loans would be required, as the student loans (limited to just over $25K over four years) don't begin to touch the cost of college.

40 years ago?! You mean when my parents were in college?

40 years was two generations ago, when I was in college. I am the mother of a college student now.

Maybe your parents were in college forty years ago, as well. That doesn't change any of the points made above.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Could someone please explain, because it sounds like people with nice resources feeling entitled to more than they can afford.

No. It is a family that won’t qualify for FA but that doesn’t have the resources to reasonably handle tuition at the priciest/most elite colleges. I don’t know about families feeling entitled, but from the colleges’ standpoint it is a real problem that they are concerned about. They don’t want their student populations to come from two stratified socioeconomic groups.

I'm a CMU grad from the olden days and they asked whether my STEM-focused kids would be attending as well. We didn't waste the time to apply because it simply wasn't going to work.

I don't deny that it's a real problem but truly don't believe that the schools really care.

[Anonymous]

Where do you recommend the non-wealthy people who live in DC should go that is within their means? There's no state flagship (because there's no state) so your best hope is out-of-state tuition, which is still crazy expensive, even with DC TAG. Because that hasn't kept pace with inflation either.

[Anonymous]

Anonymous wrote:Where do you recommend the non-wealthy people who live in DC should go that is within their means? There's no state flagship (because there's no state) so your best hope is out-of-state tuition, which is still crazy expensive, even with DC TAG. Because that hasn't kept pace with inflation either.

You look for state Us with reasonable OOS tuition or who have a reputation for giving merit aid (Alabama, West Virginia, Delaware, Arizona, Miami (Ohio) are a few that come to mind). Mid-tier LACs that give merit aid (many of these).

We are in VA but the only state U that appeals to DD is W&M and that's nearly $40k in-state, the top of our budget. She's also applying to a variety of LACs that will all likely be less than W&M with merit. Also applying UMW as an in-state admissions and financial safety just in case.

[Anonymous]

Anonymous wrote:Where do you recommend the non-wealthy people who live in DC should go that is within their means? There's no state flagship (because there's no state) so your best hope is out-of-state tuition, which is still crazy expensive, even with DC TAG. Because that hasn't kept pace with inflation either.

WVU was actually more affordable for us than UMCP. I’d look there if your kid can handle the transition to Morgantown. It is a big transition.

[Anonymous]

Question: i was completely ignorant of the fact that student loan amount for a first year undergraduate student is 5500. A poster on this thread has enlightened me. But now I am more confused.If the parent plus loans have an interest rate of about 7%, how are people sending their kids to 80k/year colleges? Is it mostly rich full pay kids then? If so, there is such a lack of diversity at these schools. If not, then how are people paying, especially those who cannot afford more than 30-40k year. How are they paying for the difference? Not to mention there is other cost like travel, etc.

[Anonymous]

Anonymous wrote:Question: i was completely ignorant of the fact that student loan amount for a first year undergraduate student is 5500. A poster on this thread has enlightened me. But now I am more confused.If the parent plus loans have an interest rate of about 7%, how are people sending their kids to 80k/year colleges? Is it mostly rich full pay kids then? If so, there is such a lack of diversity at these schools. If not, then how are people paying, especially those who cannot afford more than 30-40k year. How are they paying for the difference? Not to mention there is other cost like travel, etc.

You can look at the math at any school from The NY Times.

Here's tufts, 77% of students are from the top 20%

https://www.nytimes.com/interactive/projects/college-mobility/tufts-university

Bowdoin is 70 from the top 20

https://www.nytimes.com/interactive/projects/college-mobility/bowdoin-college

Emory only has 60% form the top 20, but they have 10% from the bottom 20.

https://www.nytimes.com/interactive/projects/college-mobility/emory-university


Essentially, the middle 40% is very under represented at expensive schools

[Anonymous]

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Anonymous wrote:new poster here

Wow. I thought we were a "donut hole" family but I guess not.

What is a step below "donut hole" called? We make too much to qualify for aid, but paying for an expensive school would involve far more than "liquidating assets." It would be more like taking on a second full time job, skipping at least one meal a day, absolutely zero entertainment budget (not even cable tv or netflix) etc.

No Netflix?? Surely you are kidding. You are basically describing what lower income families sometimes do to afford even state schools.

Yes, that's exactly my point. Some "lower income" can't afford these things yet still "make too much" to get financial aid. I thought that was "donut hole" but apparently I was wrong, because it's been posted here that Donut hole families still have assets to liquidate.
I'm asking what it's called if you don't have those assets yet still make too much for financial aid.

Not following. Are you saying you can't afford your state school without financial aid? Because it sounds like you are saying you can't afford an elite school without financial aid, which does sound kind of entitled.

+1 but if you really really want that fancy school for your kid you can move into a condo, cancel Netflix, get a second job, and get it done. But it’s not worth it so it’s not worth it.

The “entitlement” is feeling entitled to send your kid to the very best school they get into, because you think that’s what meritocracy means. And it’s a rude awakening to find out that’s not true.

Yeah, cancel Netflix and pay a realtor a huge chunk of your home equity and start paying monthly rent instead, and also get a second job even though that is going to get you fired from your first job which disallows moonlighting; that will cover the 80K per year for your kids. Not.

You are so clueless to suggest it is that easy. The donut hole is not about people making bad financial choices -- it's about the real middle ground between the extremely wealthy and the groups that get financial aid (including loans). Just because people are in fact in the donut hole does not mean they have excess money or that they feel entitled to expensive colleges. The whole point of the moniker is that they are stuck in the middle ground of those two extremes.

Wow, the resentment and entitlement just oozes from this response! (I mean, not only does it complain about the cost of elite colleges, it also takes a swipe at real estate agents!).

The bitter reality is no one owes you anything just because your kid applied to and was admitted to a school that costs $80,000. Your very first mistake was allowing him to apply in the first place knowing you couldn't pay for it. Do you go shopping for Lambourghinis and then whine about how they're too expensive but you feel like you are owed one because you're a good driver?

The "donut hole" families that make $80,000 a year work are those who had the foresight to start saving for college when their child was born and are doing some combination of savings, pay-as-you-go and loans. Others look at that option and go, "nope, it ain't worth it" -- and they're usually right. It's *not* worth it for most undergraduate school experiences.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Question: i was completely ignorant of the fact that student loan amount for a first year undergraduate student is 5500. A poster on this thread has enlightened me. But now I am more confused.If the parent plus loans have an interest rate of about 7%, how are people sending their kids to 80k/year colleges? Is it mostly rich full pay kids then? If so, there is such a lack of diversity at these schools. If not, then how are people paying, especially those who cannot afford more than 30-40k year. How are they paying for the difference? Not to mention there is other cost like travel, etc.

You can look at the math at any school from The NY Times.

Here's tufts, 77% of students are from the top 20%

https://www.nytimes.com/interactive/projects/college-mobility/tufts-university

Bowdoin is 70 from the top 20

https://www.nytimes.com/interactive/projects/college-mobility/bowdoin-college

Emory only has 60% form the top 20, but they have 10% from the bottom 20.

https://www.nytimes.com/interactive/projects/college-mobility/emory-university


Essentially, the middle 40% is very under represented at expensive schools

The middle 40% is not a protected class. Are you arguing that it should be?

[Anonymous]

Anonymous wrote:Question: i was completely ignorant of the fact that student loan amount for a first year undergraduate student is 5500. A poster on this thread has enlightened me. But now I am more confused.If the parent plus loans have an interest rate of about 7%, how are people sending their kids to 80k/year colleges? Is it mostly rich full pay kids then? If so, there is such a lack of diversity at these schools. If not, then how are people paying, especially those who cannot afford more than 30-40k year. How are they paying for the difference? Not to mention there is other cost like travel, etc.

hence the donut hole

There are 70% rich kids and the rest qualify for aid, the middle class and upper middle are not going to these schools unless they get a sports or merit scholarship.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Question: i was completely ignorant of the fact that student loan amount for a first year undergraduate student is 5500. A poster on this thread has enlightened me. But now I am more confused.If the parent plus loans have an interest rate of about 7%, how are people sending their kids to 80k/year colleges? Is it mostly rich full pay kids then? If so, there is such a lack of diversity at these schools. If not, then how are people paying, especially those who cannot afford more than 30-40k year. How are they paying for the difference? Not to mention there is other cost like travel, etc.

You can look at the math at any school from The NY Times.

Here's tufts, 77% of students are from the top 20%

https://www.nytimes.com/interactive/projects/college-mobility/tufts-university

Bowdoin is 70 from the top 20

https://www.nytimes.com/interactive/projects/college-mobility/bowdoin-college

Emory only has 60% form the top 20, but they have 10% from the bottom 20.

https://www.nytimes.com/interactive/projects/college-mobility/emory-university


Essentially, the middle 40% is very under represented at expensive schools

The middle 40% is not a protected class. Are you arguing that it should be?

athletes are not a protected class either but schools do make an effort to recruit them.

Diversity is diversity.

[Anonymous]

Anonymous wrote:Question: i was completely ignorant of the fact that student loan amount for a first year undergraduate student is 5500. A poster on this thread has enlightened me. But now I am more confused.If the parent plus loans have an interest rate of about 7%, how are people sending their kids to 80k/year colleges? Is it mostly rich full pay kids then? If so, there is such a lack of diversity at these schools. If not, then how are people paying, especially those who cannot afford more than 30-40k year. How are they paying for the difference? Not to mention there is other cost like travel, etc.

Yes, mostly rich full pay students, and students who qualify for need-based financial aid.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Could someone please explain, because it sounds like people with nice resources feeling entitled to more than they can afford.

No. It is a family that won’t qualify for FA but that doesn’t have the resources to reasonably handle tuition at the priciest/most elite colleges. I don’t know about families feeling entitled, but from the colleges’ standpoint it is a real problem that they are concerned about. They don’t want their student populations to come from two stratified socioeconomic groups.

This most closely describes the issue in an unbiased way. While I don’t expect massive FA, we also can’t comfortably pay for expensive private college. The colleges take into account all assets, which is great. No one should get to hide their wealth in a boat purchase. At the same time, we can’t liquidate our retirement savings. We would have to pay penalties. The government has penalties to discourage using your retirement money for non-retirement. So, we find ourselves in a spot where savings that we can’t use without expensive penalties is used to indicate we have “too much” money.

Meanwhile, our cash flow is not high, so it’s hard to swing the full cost.

Before people call me a whiner or tell me how lucky I am, I know I am lucky. I’m not complaining. We could empty our retirement accounts, but it would then lead us into poverty and that doesn’t help society or ourselves.

I don't know anyone who thinks paying for "expensive private college" is comfortable. This is the problem with donut hole discussions - of course it's expensive! It's expensive for everyone! If you think you're hard done by because you can't just instruct your household manager to write a check and forget about it moments later, you have skewed expectations in life. "Not outrageously wealthy" is not a protected class.

Spoken like a rich person. A household manager? I don’t even having a house cleaner.

You live in another reality.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:new poster here

Wow. I thought we were a "donut hole" family but I guess not.

What is a step below "donut hole" called? We make too much to qualify for aid, but paying for an expensive school would involve far more than "liquidating assets." It would be more like taking on a second full time job, skipping at least one meal a day, absolutely zero entertainment budget (not even cable tv or netflix) etc.

No Netflix?? Surely you are kidding. You are basically describing what lower income families sometimes do to afford even state schools.

Yes, that's exactly my point. Some "lower income" can't afford these things yet still "make too much" to get financial aid. I thought that was "donut hole" but apparently I was wrong, because it's been posted here that Donut hole families still have assets to liquidate.
I'm asking what it's called if you don't have those assets yet still make too much for financial aid.

Not following. Are you saying you can't afford your state school without financial aid? Because it sounds like you are saying you can't afford an elite school without financial aid, which does sound kind of entitled.

+1 but if you really really want that fancy school for your kid you can move into a condo, cancel Netflix, get a second job, and get it done. But it’s not worth it so it’s not worth it.

The “entitlement” is feeling entitled to send your kid to the very best school they get into, because you think that’s what meritocracy means. And it’s a rude awakening to find out that’s not true.

Yeah, cancel Netflix and pay a realtor a huge chunk of your home equity and start paying monthly rent instead, and also get a second job even though that is going to get you fired from your first job which disallows moonlighting; that will cover the 80K per year for your kids. Not.

You are so clueless to suggest it is that easy. The donut hole is not about people making bad financial choices -- it's about the real middle ground between the extremely wealthy and the groups that get financial aid (including loans). Just because people are in fact in the donut hole does not mean they have excess money or that they feel entitled to expensive colleges. The whole point of the moniker is that they are stuck in the middle ground of those two extremes.

Wow, the resentment and entitlement just oozes from this response! (I mean, not only does it complain about the cost of elite colleges, it also takes a swipe at real estate agents!).

The bitter reality is no one owes you anything just because your kid applied to and was admitted to a school that costs $80,000. Your very first mistake was allowing him to apply in the first place knowing you couldn't pay for it. Do you go shopping for Lambourghinis and then whine about how they're too expensive but you feel like you are owed one because you're a good driver?

The "donut hole" families that make $80,000 a year work are those who had the foresight to start saving for college when their child was born and are doing some combination of savings, pay-as-you-go and loans. Others look at that option and go, "nope, it ain't worth it" -- and they're usually right. It's *not* worth it for most undergraduate school experiences.

Well said

[Anonymous]

Financial aid should take into account income from the past decade rather than current income. I'm irritated that people who bought an expensive house get financial aid when people with thr dame income bought a cheap one and saved more.