What is a "donut hole family"?

[Anonymous]

How are you all just realizing you can’t afford private college when your kids are teenagers? The outrage seems silly.

[Anonymous]

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.

Well, there is this thing that you had 18 years to save for college. Which is what most people do.

Most people…do not save for college for 18 years. Because they are supporting their families, paying off their own student debt, and trying to save for retirement.

+1. For a large percentage of Americans, prioritizing college savings would come at the expense of other things we consider to be necessities, or retirement savings. Which is not always wise because you'll be a burden to your kids in retirement too. I remember being pretty upset at 18 realizing my parents had nothing for me for college. But in retrospect I don't know where they would have found the money to save- we weren't taking fancy vacations, no travel sports or dance lessons, my mom cut coupons, etc. They still probably don't have enough for retirement but better off than many. We did get financial aid but a lot of that "aid" was loans.

Our HHI is up to $200k and I feel extremely fortunate that we can stash away a few hundred per kid per month. But it's crazy that you have to save 18 years for even an IN STATE university. This did not used to be the case. The only real affordable option for the middle class now is community college.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I'm in NW DC and almost all of my friends here went to elite universities and had undergrad paid for by family.

I grew up near Reading, PA. My mother was a nurse and my father worked for the state of PA.
I had loans for undergrad, as did my entire cohort of friends. Many of us only paid off our own loans by age 30 or 35. Those who went on to professional school were still paying at age 35. My brother went
to medical school and didn't finish residency until age 32 and only then could he start aggressively paying off a huge debt and his salary as a physician is still not impressive by DCUM standards.

I think people on DCUM forget that many people are paying for their own education well into adulthood. It's a whole different life if you start off your adult life with giant loans.
The person who gives the example "well, just keep living in the house you bought at age 27!" is so out of touch. You know that many of us had NO ability to buy a house at age 27?!!! We had 100K in loans at that point and were living with 3 roommates trying to pay them off.

Do your kids a favor and have them graduate with minimum debt/loans. You know how limiting loans can be on your upward mobility. Send them to your state universities! Why is this so difficult?

How much do I need to save per year to afford a state university with room and board? It seems they have gotten expensive too.

[Anonymous]

Anonymous wrote:How are you all just realizing you can’t afford private college when your kids are teenagers? The outrage seems silly.

It's not just private schools.

In state for Virginia tech total cost is $32,274. https://www.vt.edu/admissions/undergraduate/cost.html

For 4 years that is $129,096.

I have three kids. $129,096 times 3 is $387,288.

We make a lot of money by non-DCUM standards and have been saving for college for years but haven't quite been able to save up $387,288.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm in NW DC and almost all of my friends here went to elite universities and had undergrad paid for by family.

I grew up near Reading, PA. My mother was a nurse and my father worked for the state of PA.
I had loans for undergrad, as did my entire cohort of friends. Many of us only paid off our own loans by age 30 or 35. Those who went on to professional school were still paying at age 35. My brother went
to medical school and didn't finish residency until age 32 and only then could he start aggressively paying off a huge debt and his salary as a physician is still not impressive by DCUM standards.

I think people on DCUM forget that many people are paying for their own education well into adulthood. It's a whole different life if you start off your adult life with giant loans.
The person who gives the example "well, just keep living in the house you bought at age 27!" is so out of touch. You know that many of us had NO ability to buy a house at age 27?!!! We had 100K in loans at that point and were living with 3 roommates trying to pay them off.

Do your kids a favor and have them graduate with minimum debt/loans. You know how limiting loans can be on your upward mobility. Send them to your state universities! Why is this so difficult?

I see you live in NW DC. That was a mistake given your limited resources for college. Move to VA or MD and take advantage of the public university system. People want it all without any sacrifices. The suburbs won’t kill you, PP.

Poster you are replying to. We're now 50 and have college savings from a combination of luck and hard work. We rented through our 20s, bought a rowhouse in Baltimore at age 32, commuted by MARC train to DC for 5 years (higher DC salary, Baltimore costing of living and painful commute)
and then made a killing on the Baltimore house (total lucky timing--market has since gone down). We since had a few lucky promotions and raises (total luck with people retiring), have built up our savings, bought a DC house with the Baltimore profits (which has again
appreciated) and have college savings.

So things worked out for us. But SO much of it was luck with the housing market, etc.

I bring up my situation because it's only since we moved to DC that I encountered this entire world of people who grew up without significant college loans. That just isn't reality to most Americans.

[Anonymous]

Anonymous wrote:There seems to be this belief that your salary when you have a kid in college has been your salary their entire life. We will be at 200 HHI with kids in college. But that has only been true for the last year when I got a $50K promotion. Most of my kids' lives our HHI was more like $100K, and there were also three years with one parent unemployed scattered in there.

There's someone (multiple people) here who like to say that 18-years of saving is baked into the formulas. But it really isn't, the formula considers current income and savings, and lean heavy on current income. It's really the reverse, the formulas are rough on everyone, the only hope is to have saved, and it's not badly penalized, especially considering how little aid is actually available. The fallacy seems to be people see they don't get aid and assume someone similar did, not likely.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm in NW DC and almost all of my friends here went to elite universities and had undergrad paid for by family.

I grew up near Reading, PA. My mother was a nurse and my father worked for the state of PA.
I had loans for undergrad, as did my entire cohort of friends. Many of us only paid off our own loans by age 30 or 35. Those who went on to professional school were still paying at age 35. My brother went
to medical school and didn't finish residency until age 32 and only then could he start aggressively paying off a huge debt and his salary as a physician is still not impressive by DCUM standards.

I think people on DCUM forget that many people are paying for their own education well into adulthood. It's a whole different life if you start off your adult life with giant loans.
The person who gives the example "well, just keep living in the house you bought at age 27!" is so out of touch. You know that many of us had NO ability to buy a house at age 27?!!! We had 100K in loans at that point and were living with 3 roommates trying to pay them off.

Do your kids a favor and have them graduate with minimum debt/loans. You know how limiting loans can be on your upward mobility. Send them to your state universities! Why is this so difficult?

How much do I need to save per year to afford a state university with room and board? It seems they have gotten expensive too.

30K per year seems pretty standard. When safety schools offer merit aid, that seems to be the number they're looking to compete with. Know that most schools don't guarantee housing all four years, and rents can be very high even in college towns, so that can be an added expense.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I love data.

People who are saying families with $150-250k incomes aren't receiving need-based financial aid.....have you actually done a net price calculator? Has your child gone through the process and your aid award wasn't what the college said it would be on their website or places like https://myintuition.org/?

You can very quickly and easily play around on https://myintuition.org/ to see what different schools expect you to pay.

For a family with $200k HHI, $650k home value, $100k in liquid savings (cash), $1M in retirement, and $175k in non-retirement investments, schools would expect you to pay (none of these include loans):
$58k - Amherst
$51k - Brown
$59k - Dartmouth
$48k - Harvard
$52k - Williams

For a family with $185k HHI, $650k home value, $100k in liquid savings (cash), $1M in retirement, and $175k in non-retirement investments, I got the following cost (none of these include loans):
$55k - Amherst
$47k - Brown
$55k - Dartmouth
$42k - Harvard
$48k - Williams

For a family with $150k HHI, $650k home value, $100k in liquid savings (cash), $1M in retirement, and $175k in non-retirement investments, I got the following cost (none of these include loans):
$44k - Amherst
$38k - Brown
$45k - Dartmouth
$28k - Harvard
$38k - Williams

The Fed says UMC is roughly $75k-$127k HHI. Only 9% of Americans have $100k or more (on average) in savings. There's less clear data on what the average UMC person has in investment funds - most research includes it in "savings." So let's do this again with what is probably considered the typical UMC, and keep the house and retirement values the same (though these are really high compared to the reality of "most" Americans):

For this family -- $127k HHI, $650k home value, $60k in liquid savings (cash), $1M in retirement, $50k in non-retirement investments, colleges would expect a student/family to pay:
$30k - Amherst
$25k - Brown
$30k - Dartmouth
$14k - Harvard
$31k - Yale

The people who get "no aid" with $150k HHI are the people who have significant non-retirement assets (investments/cash). Colleges do NOT consider retirement funds in calculating your financial aid.

This is a great post. Thank you for looking this up. So leads us to understand that we really are talking about people with a $250K plus HHI who get no aid from the schools. And honestly, at that salary, it is a choice you have to make over 18 years. Choosing to send your kids to public schools is a very good and very smart option if you haven't wanted to or een able to save.

Yes, exactly. And all you need to do is get your child into one of the above schools, or another of the handful of such elite schools with huge endowments. Easy-peasy!

[Anonymous]

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.

Well, there is this thing that you had 18 years to save for college. Which is what most people do.

Most people…do not save for college for 18 years. Because they are supporting their families, paying off their own student debt, and trying to save for retirement.

+1. For a large percentage of Americans, prioritizing college savings would come at the expense of other things we consider to be necessities, or retirement savings. Which is not always wise because you'll be a burden to your kids in retirement too. I remember being pretty upset at 18 realizing my parents had nothing for me for college. But in retrospect I don't know where they would have found the money to save- we weren't taking fancy vacations, no travel sports or dance lessons, my mom cut coupons, etc. They still probably don't have enough for retirement but better off than many. We did get financial aid but a lot of that "aid" was loans.

Our HHI is up to $200k and I feel extremely fortunate that we can stash away a few hundred per kid per month. But it's crazy that you have to save 18 years for even an IN STATE university. This did not used to be the case. The only real affordable option for the middle class now is community college.

+1

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm in NW DC and almost all of my friends here went to elite universities and had undergrad paid for by family.

I grew up near Reading, PA. My mother was a nurse and my father worked for the state of PA.
I had loans for undergrad, as did my entire cohort of friends. Many of us only paid off our own loans by age 30 or 35. Those who went on to professional school were still paying at age 35. My brother went
to medical school and didn't finish residency until age 32 and only then could he start aggressively paying off a huge debt and his salary as a physician is still not impressive by DCUM standards.

I think people on DCUM forget that many people are paying for their own education well into adulthood. It's a whole different life if you start off your adult life with giant loans.
The person who gives the example "well, just keep living in the house you bought at age 27!" is so out of touch. You know that many of us had NO ability to buy a house at age 27?!!! We had 100K in loans at that point and were living with 3 roommates trying to pay them off.

Do your kids a favor and have them graduate with minimum debt/loans. You know how limiting loans can be on your upward mobility. Send them to your state universities! Why is this so difficult?

How much do I need to save per year to afford a state university with room and board? It seems they have gotten expensive too.

30K per year seems pretty standard. When safety schools offer merit aid, that seems to be the number they're looking to compete with. Know that most schools don't guarantee housing all four years, and rents can be very high even in college towns, so that can be an added expense.

This is what we've found and an in-state public that was a safety gave merit to make the cost $17k/year vs. $30k for private schools and an OOS public.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm in NW DC and almost all of my friends here went to elite universities and had undergrad paid for by family.

I grew up near Reading, PA. My mother was a nurse and my father worked for the state of PA.
I had loans for undergrad, as did my entire cohort of friends. Many of us only paid off our own loans by age 30 or 35. Those who went on to professional school were still paying at age 35. My brother went
to medical school and didn't finish residency until age 32 and only then could he start aggressively paying off a huge debt and his salary as a physician is still not impressive by DCUM standards.

I think people on DCUM forget that many people are paying for their own education well into adulthood. It's a whole different life if you start off your adult life with giant loans.
The person who gives the example "well, just keep living in the house you bought at age 27!" is so out of touch. You know that many of us had NO ability to buy a house at age 27?!!! We had 100K in loans at that point and were living with 3 roommates trying to pay them off.

Do your kids a favor and have them graduate with minimum debt/loans. You know how limiting loans can be on your upward mobility. Send them to your state universities! Why is this so difficult?

How much do I need to save per year to afford a state university with room and board? It seems they have gotten expensive too.

30K per year seems pretty standard. When safety schools offer merit aid, that seems to be the number they're looking to compete with. Know that most schools don't guarantee housing all four years, and rents can be very high even in college towns, so that can be an added expense.

Also some state university systems offer more merit aid than others. We’ve tossed around where we might move to if our jobs ever went fully remote- unlikely- but I would definitely consider states with public universities that offer greater value than MD or VA.

[Anonymous]

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.

Well, there is this thing that you had 18 years to save for college. Which is what most people do.

Most people…do not save for college for 18 years. Because they are supporting their families, paying off their own student debt, and trying to save for retirement.

+1. For a large percentage of Americans, prioritizing college savings would come at the expense of other things we consider to be necessities, or retirement savings. Which is not always wise because you'll be a burden to your kids in retirement too. I remember being pretty upset at 18 realizing my parents had nothing for me for college. But in retrospect I don't know where they would have found the money to save- we weren't taking fancy vacations, no travel sports or dance lessons, my mom cut coupons, etc. They still probably don't have enough for retirement but better off than many. We did get financial aid but a lot of that "aid" was loans.

Our HHI is up to $200k and I feel extremely fortunate that we can stash away a few hundred per kid per month. But it's crazy that you have to save 18 years for even an IN STATE university. This did not used to be the case. The only real affordable option for the middle class now is community college.

Our priority was retirement and college. We saved for a down payment in one year by going very frugal.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm in NW DC and almost all of my friends here went to elite universities and had undergrad paid for by family.

I grew up near Reading, PA. My mother was a nurse and my father worked for the state of PA.
I had loans for undergrad, as did my entire cohort of friends. Many of us only paid off our own loans by age 30 or 35. Those who went on to professional school were still paying at age 35. My brother went
to medical school and didn't finish residency until age 32 and only then could he start aggressively paying off a huge debt and his salary as a physician is still not impressive by DCUM standards.

I think people on DCUM forget that many people are paying for their own education well into adulthood. It's a whole different life if you start off your adult life with giant loans.
The person who gives the example "well, just keep living in the house you bought at age 27!" is so out of touch. You know that many of us had NO ability to buy a house at age 27?!!! We had 100K in loans at that point and were living with 3 roommates trying to pay them off.

Do your kids a favor and have them graduate with minimum debt/loans. You know how limiting loans can be on your upward mobility. Send them to your state universities! Why is this so difficult?

How much do I need to save per year to afford a state university with room and board? It seems they have gotten expensive too.

30K per year seems pretty standard. When safety schools offer merit aid, that seems to be the number they're looking to compete with. Know that most schools don't guarantee housing all four years, and rents can be very high even in college towns, so that can be an added expense.

This is what we've found and an in-state public that was a safety gave merit to make the cost $17k/year vs. $30k for private schools and an OOS public.

Curious which school this is!

[Anonymous]

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.

Well, there is this thing that you had 18 years to save for college. Which is what most people do.

Most people…do not save for college for 18 years. Because they are supporting their families, paying off their own student debt, and trying to save for retirement.

+1. For a large percentage of Americans, prioritizing college savings would come at the expense of other things we consider to be necessities, or retirement savings. Which is not always wise because you'll be a burden to your kids in retirement too. I remember being pretty upset at 18 realizing my parents had nothing for me for college. But in retrospect I don't know where they would have found the money to save- we weren't taking fancy vacations, no travel sports or dance lessons, my mom cut coupons, etc. They still probably don't have enough for retirement but better off than many. We did get financial aid but a lot of that "aid" was loans.

Our HHI is up to $200k and I feel extremely fortunate that we can stash away a few hundred per kid per month. But it's crazy that you have to save 18 years for even an IN STATE university. This did not used to be the case. The only real affordable option for the middle class now is community college.

Our priority was retirement and college. We saved for a down payment in one year by going very frugal.

If you can prioritize both, and were able to save for a down payment on a DMV house in one year, you are doing very well! That will be a wonderful gift for your children.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm in NW DC and almost all of my friends here went to elite universities and had undergrad paid for by family.

I grew up near Reading, PA. My mother was a nurse and my father worked for the state of PA.
I had loans for undergrad, as did my entire cohort of friends. Many of us only paid off our own loans by age 30 or 35. Those who went on to professional school were still paying at age 35. My brother went
to medical school and didn't finish residency until age 32 and only then could he start aggressively paying off a huge debt and his salary as a physician is still not impressive by DCUM standards.

I think people on DCUM forget that many people are paying for their own education well into adulthood. It's a whole different life if you start off your adult life with giant loans.
The person who gives the example "well, just keep living in the house you bought at age 27!" is so out of touch. You know that many of us had NO ability to buy a house at age 27?!!! We had 100K in loans at that point and were living with 3 roommates trying to pay them off.

Do your kids a favor and have them graduate with minimum debt/loans. You know how limiting loans can be on your upward mobility. Send them to your state universities! Why is this so difficult?

How much do I need to save per year to afford a state university with room and board? It seems they have gotten expensive too.

30K per year seems pretty standard. When safety schools offer merit aid, that seems to be the number they're looking to compete with. Know that most schools don't guarantee housing all four years, and rents can be very high even in college towns, so that can be an added expense.

This is what we've found and an in-state public that was a safety gave merit to make the cost $17k/year vs. $30k for private schools and an OOS public.

Curious which school this is!

Mary Washington. Their tuition/fees + R&B is about $27K. Admissions to the honors program came with a $10k merit award.