Coming to Terms with Full Pay

[Anonymous]

Anonymous wrote:

Anonymous wrote:Welcome to the 2 fed, full pay club, OP!

+100

But there is a huge amount of variety based on GS-level and step…

2 50-year old GS-14/step 10 would have a combined income of $440k, if that maxed out production each year.

I am a $220k/year Fed myself- even on my own my kid wouldn’t qualify.

^ but I has my kids late 35 & 38 and have 30 years of service.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Welcome to the 2 fed, full pay club, OP!

You know that $300 HHI is well beyond the average for American households.

It’s the 85th percentile in DC.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Pretty much. Thank you for saving! Without your discipline and frugality many free ride kids wouldn’t get the chance to attend the school.

this isn't how it works.

I fully support need-based aid (though I also think sticker prices need to come way down), but this is kind of the way it works. And I say this as someone who spent over a decade in elite higher ed financial aid. Full pays do subsidize those on financial aid (it’s just the way budgets and fungible money work). And there is a savings penalty. It’s not a huge one, and work has been done to create appropriate asset tests, retirement allowances, etc. But for people with borderline eligible incomes, savings and investments will absolutely make the difference.

You spent time in financial aid, but clearly not the budget office, because one does not subsidize the other.

Full-pay students subsidize aided students, or reduce the need for additional funding sources. Even need-blind schools must seek to “balance”’ the number of full-pay and aided students in order to make the budget work.

No, this is not how university budgets work.

First, undergrad tuition and fees at most major universities are only a portion (sometimes a very small one) of total revenues. At the schools with the biggest budgets, undergrad tuition and fees are often a single digit percentage of the revenues, of low teens. Even full pay undergrads aren’t covering their full cost.

Second, those tuition revenues are considered net of discounts and then expenditures are set at that level to match. No one is “taking” money from the full pay kids and applying it to the kids receiving aid. There is just a line for tuition and fees revenue, and it is what it is, and spending is calibrated to match. The balancing comes from lower expenditure than would otherwise be the case if everyone was full pay (but again, this may not be a significant figure at schools with large budgets).

[Anonymous]

My grandparents on both sides were working poor, one grandfather was a union rail worker with 6 kids and the other was an Iowa farmer with 4 kids. Both of my grandmothers worked, the one with 6 kids took in other kids and the one with 4 was a seamstress. All they cared about was that their kids got educations so they could have different lives, and they all did, many by going into the military first and by living at home during college.
My engineer dad and HR rep mom put 3 kids through college and two masters degrees and one JD with no aid by not moving into bigger and better houses, nicer cars, and by taking vacations to national parks.
You are paying it forward for your own kids . . . . they will appreciate it and do the same for their kids. Be proud of the fact that you are able to do so

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Pretty much. Thank you for saving! Without your discipline and frugality many free ride kids wouldn’t get the chance to attend the school.

this isn't how it works.

I fully support need-based aid (though I also think sticker prices need to come way down), but this is kind of the way it works. And I say this as someone who spent over a decade in elite higher ed financial aid. Full pays do subsidize those on financial aid (it’s just the way budgets and fungible money work). And there is a savings penalty. It’s not a huge one, and work has been done to create appropriate asset tests, retirement allowances, etc. But for people with borderline eligible incomes, savings and investments will absolutely make the difference.

You spent time in financial aid, but clearly not the budget office, because one does not subsidize the other.

Full-pay students subsidize aided students, or reduce the need for additional funding sources. Even need-blind schools must seek to “balance”’ the number of full-pay and aided students in order to make the budget work.

No, this is not how university budgets work.

First, undergrad tuition and fees at most major universities are only a portion (sometimes a very small one) of total revenues. At the schools with the biggest budgets, undergrad tuition and fees are often a single digit percentage of the revenues, of low teens. Even full pay undergrads aren’t covering their full cost.

Second, those tuition revenues are considered net of discounts and then expenditures are set at that level to match. No one is “taking” money from the full pay kids and applying it to the kids receiving aid. There is just a line for tuition and fees revenue, and it is what it is, and spending is calibrated to match. The balancing comes from lower expenditure than would otherwise be the case if everyone was full pay (but again, this may not be a significant figure at schools with large budgets).

lol I literally work in endowment finance. Even where endowments subsidize full-pay students, those full-pay students (and those receiving less aid) are needed in order for highly and fully aided students to attend. The schools require a certain level of tuition revenue, even those with giant endowments. Students generating below average tuition revenue must be balanced with those generating above average tuition revenue in order to hit revenue targets overall.

[Anonymous]

Take USC as an example. 30% of tuition is redirected back at financial aid. Low income first years are up to 21%. So if you are paying 92 K a year, 30K of that money is covering the 21% that can’t pay anything.

This is one of the reasons college costs have risen and why there is such variability in who pays what. The schools need a high top number to recoup the growing number of low income students.

[Anonymous]

Anonymous wrote:As a full-time working mother... I've never found it easy to get over the fact that my neighbors get financial aid b/c they are sahm and therefore single income. Ugh... I did it all wrong. Feel penalized since I schlepp to an office everyday. Enjoy your mid-morning, weekday Costco trip while I have to fight the crowds on Saturday afternoon AND pay full tuition...

You’re not being penalized. You made your choice, they made theirs. If you think your life would improve by becoming a SAHM then go ahead and do it. No one is stopping you.

[Anonymous]

Anonymous wrote:So I started checking the net price calculators. We are both feds and have been for 20-plus years, with plenty of promotions. Own our little rowhouse. Almost paid off. 20 years of TSP. 2 kids, strictly DCPS. Old car, limited spending, lots of savings. No medical bills.

We’re gonna be at max for ability to pay even though we aren’t living in champagne and caviar. Right?

I just need to count my blessings right? We’ve had stability and ability to pay even if we aren’t living high on the hog. People with more precarious lives deserve the lower price. Right?

I guess merit aid is possible - first kid did great on PSAT. But we’re still likely to just pay full freight even then because if he applies to a reach school EA or ED we’ll say yes, right?

I am right there with you. Double senior fed, DCPS, high performing kids.

One is at a LAC with some merit. We will see where the second goes, if she gets her ED we will be full pay private. We will be fine and our kids will graduate without debt.

We should feel lucky. We have a nice house in NWDC with the best of DCPS, short commutes and an idyllic neighborhood for raising families. We bought over 20 years ago. Young feds today are priced out of our neighborhood.

With regard to whether people with lower incomes deserve merit, for the most part yes, college is outrageously expensive and I don’t want kids from lower income families coming out of college buried in debt. There are always stories about families that play the game of spending not saving and lowering their incomes for the years that count for college. I am sure there are some, but really that is hard to do. There are a lot of people living with a lot of debt in this country to keep up appearances, I wouldn’t trade lives with them.

My sister’s son went to private college with financial aid which kept the price to what it would have cost to send him to their state flagship. Both she and my nephew worked hard to ensure that he could graduate without debt (her ex husband did not pay his fair share which made it even harder). That was even tighter financially for them than full pay will be for us. I am so grateful that aid was there to help with his education.

[Anonymous]

Anonymous wrote:We ended up agreeing to pay more than we’re
comfortable with because our kids have been great kids. They’ve worked hard in school, never asked for expensive clothes or gadgets. and really did everything we asked of them. Also, we could have saved a bit by making our second kid go to a large state school like
our first kid, but after seeing the crappy education our first kid is getting we decided it’s worth it to spend more for a first tier private for our second kid.

Can you say more about this?

[Anonymous]

OP, if you are talking about private full pay ~ no sympathies. Why private? why why why. Have the courage to choose differently.

[Anonymous]

Any "crappy" education is kid specific

[Anonymous]

Anonymous wrote:We ended up agreeing to pay more than we’re
comfortable with because our kids have been great kids. They’ve worked hard in school, never asked for expensive clothes or gadgets. and really did everything we asked of them. Also, we could have saved a bit by making our second kid go to a large state school like
our first kid, but after seeing the crappy education our first kid is getting we decided it’s worth it to spend more for a first tier private for our second kid.

What crappy school are you unhappy with?

[Anonymous]

Anonymous wrote:As a full-time working mother... I've never found it easy to get over the fact that my neighbors get financial aid b/c they are sahm and therefore single income. Ugh... I did it all wrong. Feel penalized since I schlepp to an office everyday. Enjoy your mid-morning, weekday Costco trip while I have to fight the crowds on Saturday afternoon AND pay full tuition...

Uh, most families with SAHM don’t qualify for aid! You’d need a hefty single income to have a SAHM, which would disqualify one for need-based aid.

[Anonymous]

The answer is merit aid schools.

[Anonymous]

"affluent" households as those who either earn at least $210,000 or have a net worth of about $1.8 million, a level that places them above 90% of U.S. households.

It’s crazy that $200k is the cutoff amount Hopkins, Duke, the Ivies, etc picked for providing free tuition.. that’s top 10% of the US.

Why not help some $300k donut holes?