What is a "donut hole family"?

[Anonymous]

Anonymous wrote:Comfortable families who make lifestyle choices like big expensive houses, cars, travel, eating out and don't save enough and expect their kids to go to privates. Then compain about it.

No, this is not it.

[Anonymous]

Why does this topic generate all of the value judgements. The term donut hole family is just used to describe people who are price-sensitive. If income is low enough, there is no price sensitivity, because aid will mitigate any price change. Above a certain income, price changes are relatively unimportant. In between, there is sensitivity to price changes. Neither good, nor bad, just economics.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Comfortable families who make lifestyle choices like big expensive houses, cars, travel, eating out and don't save enough and expect their kids to go to privates. Then compain about it.

No, this is not it.

If you are making 175+, yes it is.

[Anonymous]

Anonymous wrote:Why does this topic generate all of the value judgements. The term donut hole family is just used to describe people who are price-sensitive. If income is low enough, there is no price sensitivity, because aid will mitigate any price change. Above a certain income, price changes are relatively unimportant. In between, there is sensitivity to price changes. Neither good, nor bad, just economics.

Only when you are talking about T20 meets-need schools.

Otherwise, for low income families their price sensitivity is so strong that they just apply to the local school so they can live at home.

[Anonymous]

Anonymous wrote:Why does this topic generate all of the value judgements. The term donut hole family is just used to describe people who are price-sensitive. If income is low enough, there is no price sensitivity, because aid will mitigate any price change. Above a certain income, price changes are relatively unimportant. In between, there is sensitivity to price changes. Neither good, nor bad, just economics.

Because some of the people here badly need someone to listen to them.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I feel like a broken record on this thread. Before you assume you don't qualify for need-based aid, do a net price calculator. A non-school specific non-profit one is available here: https://myintuition.org/quick-college-cost-estimator/.

For most (all?) of the most selective schools, families with HHI of up to and even in some cases OVER $200k ARE receiving need-based financial aid. The families who are not are the families with significant non-retirement assets (savings or investments). If someone tells you they aren't receiving need-based aid with a $180k HHI income at one of these kinds of schools, they have big $$ in accounts somewhere (EXCLUDING retirement...financial aid does not consider retirement $).

There are persistent rumors out there that families making $100-200k are not receiving financial aid when it's not the case at the most-desired schools. I don't know why this misconception is so ubiquitous.

To drive this point home, just did the calculator -- for a family with $250k HHI, $200k in savings, and $200k in non-retirement investment funds, they WOULD STILL RECEIVE FINANCIAL AID AT BROWN. ($13k in financial aid a year, no loans)

That's basically us and sure, that's a little bit of aid, but it's not enough to make it a financially responsible option that would have been worth applying to: cost would be around 70k/year. At that level of savings, it would mean spending down nearly everything for college for two kids. We are doing in-state very cheaply and 529 will cover all costs.

And that is your choice (a smart one I might add!)

But nobody is entitled to attend a T25 school with merit/FA so it's not "too expensive". There are tons (hundreds literally) of great schools that can be affordable for you, and you should smartly choose one if you cannot easily pay at a $90K+ school. But just like you don't buy a 100K BMW if you cannot afford it, you buy a $50K Acura/Lexus/Honda instead, the same applies to college. You attend an instate school or any school that gives you enough merit to make it affordable to you, unless you can actually afford the $90K/year costs.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I feel like a broken record on this thread. Before you assume you don't qualify for need-based aid, do a net price calculator. A non-school specific non-profit one is available here: https://myintuition.org/quick-college-cost-estimator/.

For most (all?) of the most selective schools, families with HHI of up to and even in some cases OVER $200k ARE receiving need-based financial aid. The families who are not are the families with significant non-retirement assets (savings or investments). If someone tells you they aren't receiving need-based aid with a $180k HHI income at one of these kinds of schools, they have big $$ in accounts somewhere (EXCLUDING retirement...financial aid does not consider retirement $).

There are persistent rumors out there that families making $100-200k are not receiving financial aid when it's not the case at the most-desired schools. I don't know why this misconception is so ubiquitous.

To drive this point home, just did the calculator -- for a family with $250k HHI, $200k in savings, and $200k in non-retirement investment funds, they WOULD STILL RECEIVE FINANCIAL AID AT BROWN. ($13k in financial aid a year, no loans)

At 250K a year there is no excuse they aren't saving more except for rare situations.

Yes---even if they were only making $175K a decade ago, they could have chosen to save the increases over the years, invest wisely (plenty of good 529 plans out there) and have enough if they wanted to make that choice.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I feel like a broken record on this thread. Before you assume you don't qualify for need-based aid, do a net price calculator. A non-school specific non-profit one is available here: https://myintuition.org/quick-college-cost-estimator/.

For most (all?) of the most selective schools, families with HHI of up to and even in some cases OVER $200k ARE receiving need-based financial aid. The families who are not are the families with significant non-retirement assets (savings or investments). If someone tells you they aren't receiving need-based aid with a $180k HHI income at one of these kinds of schools, they have big $$ in accounts somewhere (EXCLUDING retirement...financial aid does not consider retirement $).

There are persistent rumors out there that families making $100-200k are not receiving financial aid when it's not the case at the most-desired schools. I don't know why this misconception is so ubiquitous.

To drive this point home, just did the calculator -- for a family with $250k HHI, $200k in savings, and $200k in non-retirement investment funds, they WOULD STILL RECEIVE FINANCIAL AID AT BROWN. ($13k in financial aid a year, no loans)

At 250K a year there is no excuse they aren't saving more except for rare situations.

Yes---even if they were only making $175K a decade ago, they could have chosen to save the increases over the years, invest wisely (plenty of good 529 plans out there) and have enough if they wanted to make that choice.

I think many are saying they would not want to make that choice and do not see it as good use of money.

[Anonymous]

Anonymous wrote:Why does this topic generate all of the value judgements. The term donut hole family is just used to describe people who are price-sensitive. If income is low enough, there is no price sensitivity, because aid will mitigate any price change. Above a certain income, price changes are relatively unimportant. In between, there is sensitivity to price changes. Neither good, nor bad, just economics.

Outside of the T25 or so universities, "low income" people are still extremely price sensitive, as those schools don't give full FA always. Also, your choices are limited because if your parent(s) can barely keep the lights on at home or the car functioning, it's highly likely attending a school that is a plane ride away might be a financial deal breaker versus one that is only 1-2 hour car ride away.

So "donut hole" is really only for those aiming for T25-40 schools that chose not to save enough for college. Therefore they are price sensitive and need to compare offers and hope for merit.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Why does this topic generate all of the value judgements. The term donut hole family is just used to describe people who are price-sensitive. If income is low enough, there is no price sensitivity, because aid will mitigate any price change. Above a certain income, price changes are relatively unimportant. In between, there is sensitivity to price changes. Neither good, nor bad, just economics.

Outside of the T25 or so universities, "low income" people are still extremely price sensitive, as those schools don't give full FA always. Also, your choices are limited because if your parent(s) can barely keep the lights on at home or the car functioning, it's highly likely attending a school that is a plane ride away might be a financial deal breaker versus one that is only 1-2 hour car ride away.

So "donut hole" is really only for those aiming for T25-40 schools that chose not to save enough for college. Therefore they are price sensitive and need to compare offers and hope for merit.

I am surprised by posters who think families at 180k can very easily save 800k+ earmarked for college. Are posters with that opinion much wealthier?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Why does this topic generate all of the value judgements. The term donut hole family is just used to describe people who are price-sensitive. If income is low enough, there is no price sensitivity, because aid will mitigate any price change. Above a certain income, price changes are relatively unimportant. In between, there is sensitivity to price changes. Neither good, nor bad, just economics.

Outside of the T25 or so universities, "low income" people are still extremely price sensitive, as those schools don't give full FA always. Also, your choices are limited because if your parent(s) can barely keep the lights on at home or the car functioning, it's highly likely attending a school that is a plane ride away might be a financial deal breaker versus one that is only 1-2 hour car ride away.

So "donut hole" is really only for those aiming for T25-40 schools that chose not to save enough for college. Therefore they are price sensitive and need to compare offers and hope for merit.

Now now. Nobody disputes that some low income families may be price-sensitive in some situations. But, there are certainly many reasons why people with higher incomes might also be. I wouldn't presume to judge whether they are making good decisions or not.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why does this topic generate all of the value judgements. The term donut hole family is just used to describe people who are price-sensitive. If income is low enough, there is no price sensitivity, because aid will mitigate any price change. Above a certain income, price changes are relatively unimportant. In between, there is sensitivity to price changes. Neither good, nor bad, just economics.

Outside of the T25 or so universities, "low income" people are still extremely price sensitive, as those schools don't give full FA always. Also, your choices are limited because if your parent(s) can barely keep the lights on at home or the car functioning, it's highly likely attending a school that is a plane ride away might be a financial deal breaker versus one that is only 1-2 hour car ride away.

So "donut hole" is really only for those aiming for T25-40 schools that chose not to save enough for college. Therefore they are price sensitive and need to compare offers and hope for merit.

I am surprised by posters who think families at 180k can very easily save 800k+ earmarked for college. Are posters with that opinion much wealthier?

For the top schools, 180k would get full tuition coverage and some cover full tuition up to 200k with typical assets(Harvard, Princeton, Penn). So the cost would be about 30-35k. That is less than UVA in state. 180k reasonably should be able to have 32k per year to go toward college. 32k per year x saving since the kid was 5yo is 416k, with typical interest over 440 total. For 2 kids that means 220kfor ea kid 4 yrs plus the 32k that you have been saving put directly into college costs each year. Thats 348k without accounting for the kid to earn some themselves or have a campus job(many of these high level schools pay 8-10k per year for 10hrs a week undergrad TA). None of that counts the $ you save on food and sports/activities when your kid is not living at home.
It is doable to have saved enough on 180k if you planned. But even if it is not, the ivy/most elite schools have a net cost of under 40k per year to attend these schools, some are under 30 at 180k income.

[Anonymous]

Anonymous wrote:I feel like a broken record on this thread. Before you assume you don't qualify for need-based aid, do a net price calculator. A non-school specific non-profit one is available here: https://myintuition.org/quick-college-cost-estimator/.

For most (all?) of the most selective schools, families with HHI of up to and even in some cases OVER $200k ARE receiving need-based financial aid. The families who are not are the families with significant non-retirement assets (savings or investments). If someone tells you they aren't receiving need-based aid with a $180k HHI income at one of these kinds of schools, they have big $$ in accounts somewhere (EXCLUDING retirement...financial aid does not consider retirement $).

There are persistent rumors out there that families making $100-200k are not receiving financial aid when it's not the case at the most-desired schools. I don't know why this misconception is so ubiquitous.

+ 1 million. Preach.

[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.

The bootstrap plan:

Put away close to $2000 every single month since 2007, without fail. Cut any corner you need to with regards to housing, other costs, etc.

Then your kid miraculously gets into a school with a sub-10% admit rate.

You have somehow foreseen this back during the George W Bush administration so you know this was a worthy opportunity cost scenario.

Take the entire sum you saved plus gains and hand THE ENTIRE AMOUNT (nearly half a million dollars) over to the school.

The school has an endowment of over $30 billion.

This is somehow called “good financial planning.”

[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.

The bootstrap plan:

Put away close to $2000 every single month since 2007, without fail. Cut any corner you need to with regards to housing, other costs, etc.

Then your kid miraculously gets into a school with a sub-10% admit rate.

You have somehow foreseen this back during the George W Bush administration so you know this was a worthy opportunity cost scenario.

Take the entire sum you saved plus gains and hand THE ENTIRE AMOUNT (nearly half a million dollars) over to the school.

The school has an endowment of over $30 billion.

This is somehow called “good financial planning.”

Lol. This.