What is a "donut hole family"?

[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

A HHI above $111,000 is the top 20%. I agree that the middle 40% are under represented at elite schools, but I’m guessing that most of DCUM do not fall in the middle 40%.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Nobody in their right mind thinks college cost increases over the past 25 years are not exorbitant.

and congress wants to put a cap on nurses pay, come on let's put some regulations around college costs.

I don’t disagree with you, at all. But I still don’t believe there’s any such thing as a donut hole family.

You are right. There is no such thing as a donut hole family. There are only families who refuse to liquidate their retirement funds, forgo their annual week at the beach, sell or remortgage their family homes, work until they are 80. These people are selfish and stingy when they choose not to pay $320K per child and rising for their kids' undergraduate degrees, because if they only tried a little harder, they could pull it off. Cheapskates.

Are you so blind to reality that you don't realize there are options between $320k/kid and "your kids can't go to college"? If you can't try a little harder to save, then try a little harder to master a cost/benefit analysis. If your vacation is an annual week at the beach, then expensive private schools are not for you! Send Larlo to Whatever State Tech and stop feeling sorry for yourself.

Isn't this the problem? Expensive schools are for the wealthy....??? wtf?? Can you not see a problem with what you typed?

[Anonymous]

Wow, this thread was entertaining.

Can't afford an $80K / year college? Then tell the kids (ALL OF THEM -- not just the oldest or youngest), that they have to go to an in-state public or "school of their choice" and you'll fund, say, up to $30K / year. The kids have to make up the rest.

This is Example 1 of why Financial Literacy should be a course students take in HS. (And parents, too)

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Nobody in their right mind thinks college cost increases over the past 25 years are not exorbitant.

and congress wants to put a cap on nurses pay, come on let's put some regulations around college costs.

I don’t disagree with you, at all. But I still don’t believe there’s any such thing as a donut hole family.

Anybody making $150K HHI will not qualify for aid, so explain to me how a family of 4 saves $400K to pay for college?

Assuming they make $70K HHI at 30 and by the time they are 45 they make $150K

By making it their top priority and living modestly in every other possible way. If they don’t want to do that, they can use publics.

Again, such a weird use of words....it's not a toilet. And again, why do we only want wealthly families getting the best educations? Oh yeah....I know....

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Nobody in their right mind thinks college cost increases over the past 25 years are not exorbitant.

and congress wants to put a cap on nurses pay, come on let's put some regulations around college costs.

I don’t disagree with you, at all. But I still don’t believe there’s any such thing as a donut hole family.

Anybody making $150K HHI will not qualify for aid, so explain to me how a family of 4 saves $400K to pay for college?

Assuming they make $70K HHI at 30 and by the time they are 45 they make $150K

By making it their top priority and living modestly in every other possible way. If they don’t want to do that, they can use publics.

Can you write out the budget for me?

Sure. You start by making $70k. You progress to making $150k, with fairly modest raises each year. You keep your expenses constant as they were at $70k. Just did the math in Excel and by simply doing that, not even investing the difference in 529s (which of course any sane person would do) it's over $430k after tax.

Keep expenses the same over 20 years...like groceries? Real estate? Taxes? Gas???????

[Anonymous]

This is an awesome graphic! Thank you PP for putting this up. Everyone needs to keep this image in mind when thinking about the unfairness of it all.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Nobody in their right mind thinks college cost increases over the past 25 years are not exorbitant.

and congress wants to put a cap on nurses pay, come on let's put some regulations around college costs.

I don’t disagree with you, at all. But I still don’t believe there’s any such thing as a donut hole family.

Anybody making $150K HHI will not qualify for aid, so explain to me how a family of 4 saves $400K to pay for college?

Assuming they make $70K HHI at 30 and by the time they are 45 they make $150K

By making it their top priority and living modestly in every other possible way. If they don’t want to do that, they can use publics.

Again, such a weird use of words....it's not a toilet. And again, why do we only want wealthly families getting the best educations? Oh yeah....I know....

You need to consider why you think a certain brand name = the best education. You can get a great education at a lot of places that don't cost $80k.

[Anonymous]

Anonymous wrote: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.

Why does that irritate you? Why would you even compare yourself to anyone else like this in the first place? What a peculiar and, honestly twisted mindset. You worry about you.

[Anonymous]

We’re in that donut hole, mostly because we have three kids. But one went to UMD, one went to OOS flagship on merit scholarship (and will graduate early with APs), and one is still in high school.

All three want careers where they have to go to grad school so it didn’t make sense for us to go overboard with loans etc. for undergrad. Plus I’m still paying off my own student loan (but it will be paid off this summer)!

But the UMD kid just got into a bunch of top notch grad programs, including an Ivy. So I don’t think we really needed to pay all that extra money for a Carnegie Mellon undergrad (for example). Maybe it’s worth it if your kid isn’t going to grad school? It wasn’t for us.

[Anonymous]

Anonymous wrote:

This is an awesome graphic! Thank you PP for putting this up. Everyone needs to keep this image in mind when thinking about the unfairness of it all.

I don't think anyone disagrees that the increase in college tuition is hugely unfair.

The "donut hole" idea is based on the idea that it's more unfair to a family who makes $300K than it is to a family who makes $80K or $40K. That is what people object to.

[Anonymous]

Anonymous wrote:We’re in that donut hole, mostly because we have three kids. But one went to UMD, one went to OOS flagship on merit scholarship (and will graduate early with APs), and one is still in high school.

All three want careers where they have to go to grad school so it didn’t make sense for us to go overboard with loans etc. for undergrad. Plus I’m still paying off my own student loan (but it will be paid off this summer)!

But the UMD kid just got into a bunch of top notch grad programs, including an Ivy. So I don’t think we really needed to pay all that extra money for a Carnegie Mellon undergrad (for example). Maybe it’s worth it if your kid isn’t going to grad school? It wasn’t for us.

This is PP … our kids are also in Honors programs which give that small feel. It’s been a fantastic experience, I think, for them.

[Anonymous]

Anonymous wrote:We’re in that donut hole, mostly because we have three kids. But one went to UMD, one went to OOS flagship on merit scholarship (and will graduate early with APs), and one is still in high school.

All three want careers where they have to go to grad school so it didn’t make sense for us to go overboard with loans etc. for undergrad. Plus I’m still paying off my own student loan (but it will be paid off this summer)!

But the UMD kid just got into a bunch of top notch grad programs, including an Ivy. So I don’t think we really needed to pay all that extra money for a Carnegie Mellon undergrad (for example). Maybe it’s worth it if your kid isn’t going to grad school? It wasn’t for us.

Yep. There's plenty of research showing that outside of URMs the elite brand name provides little real benefit long term. It's a luxury good. I don't feel bad that I can't buy it just like I don't feel bad that I can't buy a Porsche or a Birkin bag.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

This is an awesome graphic! Thank you PP for putting this up. Everyone needs to keep this image in mind when thinking about the unfairness of it all.

I don't think anyone disagrees that the increase in college tuition is hugely unfair.

The "donut hole" idea is based on the idea that it's more unfair to a family who makes $300K than it is to a family who makes $80K or $40K. That is what people object to.


But the percentage of the $40-80k kids who actually attend is so, so small in comparison the number of extremely high income kids. That is some weird, mutant shaped donut. Super thin on one side & big, fat & puffy on the other.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Nobody in their right mind thinks college cost increases over the past 25 years are not exorbitant.

and congress wants to put a cap on nurses pay, come on let's put some regulations around college costs.

I don’t disagree with you, at all. But I still don’t believe there’s any such thing as a donut hole family.

Anybody making $150K HHI will not qualify for aid, so explain to me how a family of 4 saves $400K to pay for college?

Assuming they make $70K HHI at 30 and by the time they are 45 they make $150K

By making it their top priority and living modestly in every other possible way. If they don’t want to do that, they can use publics.

Again, such a weird use of words....it's not a toilet. And again, why do we only want wealthly families getting the best educations? Oh yeah....I know....

You need to consider why you think a certain brand name = the best education. You can get a great education at a lot of places that don't cost $80k.

I don't think that way...my kid is at JMU and he is happy, and no, wouldn't have gotten into the Ivy's or even UVA. I was reflecting what the DCUM think's is the "best education".

[Anonymous]

I do wonder what the atmosphere is like at these expensive private schools. With really no middle class kids there at all. Doesn’t sound like a nice environment.