Why do donut hole families

[Anonymous]

Anonymous wrote:One reason we complain is that we are also sandwich generation families, not just donut holes. Our families made less money when we were kids, so we received financial aid in college, took out student loans, then excelled in life, got good jobs, but spent so much $$$ paying off student loans that we didn't have enough cash to save for our own kids' colleges. However, we earn enough now to receive no financial aid, and can probably only afford in-state tuition and not full-pay private tuition, so that's why we're upset. And now some of us sandwich generation have to give money to provide for our aging parents (who were not earning much $$ to begin with) all while figuring out how to pay for our kids' educations. When I went to undergrad, tuition was $17k at a top 10/15 private university. Now that tuition is $60k. It's just sad.

This is my personal story, so not everyone is in the same boat. We have saved enough in 529s for all 3 kids to go to in-state schools. We could use cash flow + 529 for one child if they get into a private worth paying full price for. This is where it's sad because we can't afford to do that for all 3, but oh well, what are the odds they'll all 3 be smart enough to get into a top 10/15 school anyway? There is no guarantee that they will have the same experiences that I had and I accept that.

My story is very similar.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My firm recruits kids out of undergrad for some roles at $130k salaries with high bonus potential. That’s only from top schools, though, but it is the most desirable line of service. For the other lines of service (recruited from other schools) you’re starting at more like $70-95k. Good luck switching to the most desirable LOS without an MBA from a top school.

That’s why the rat race to get into top schools persists.

+1 my experience as well

What is the most desirable line of service? Just curious, if someone is kind enough to answer.

I’m the poster who wrote about that. I am referring to management consulting as being the most desirable LOS versus tax, audit, IT audit or back office roles being less desirable. At firms that only do consulting, it would be consulting versus back office roles.

[Anonymous]

Anonymous wrote:Poor people do not have more options. Most truly poor people are not in the college pipeline.

+1

[Anonymous]

Anonymous wrote:

Anonymous wrote:Poor people do not have more options. Most truly poor people are not in the college pipeline.

+1

This is the college forum we are talking about people going to college.

[Anonymous]

Anonymous wrote:

Anonymous wrote:The donut hole is a myth that poor savers tell themselves. Decisions have consequences. Buying a larger house or nicer car - spending more for vacations and fancy summer camps are all decisions.

College costs are not unexpected. You have nearly two decades to save.

Plus, you don’t have to save for the most expensive college. All of you who consider yourselves middle class- that means kids stay at home and go to college or they go to an instate college. That is what middle class parents have done for generations. Paying the full amount for high end tuitions for private schools are for rich families not yours.

I actually agree with you. So background, we have $250k HHI, $3M investment portfolio, house paid off.

Yeah, we can afford any college. Probably. For three kids though??

And is private or out of state worth it? No, I don't think so.

If we made $600k, that would be a different story. If we had $6M in stocks instead of $3M, that would also be different.

So I think we've made decent choices along the way about cars and houses and whatnot. But I consider us donut hole because we're too wealthy for financial aid, but not wealthy enough for a $350k undergraduate degree to be a drop in the bucket.

Having 3 kids is also a financial choice. I wouldn't have 3 for this very reason. We had kids we knew we could afford to send to college. For us that was 2.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Complain about being a donut hole family? When there are thousands of colleges that could work between in state options and merit aid at lower tier privates and other oos public’s?l is it bc ivies and top 25 are not options?

Entitlement and status obsession. Middle class who pretend to not be status obsessed pompous snobs, but they are -- they just don't have the money to play. They put on this bogus public persona that they they're just regular modest middle class people but secretly they are seething and obsessed with social hierarchy and status.

This is outrageously insulting. In my cultural background we value education and the educational experience highly, and big public schools aren’t the same experience as smaller private schools. It’s not purely a transaction to buy a degree. (FWIW, although I got into an ivy that I wanted to attend, I went to the local state university for purely financial reasons, so I do have some understanding of this difference). So when my kids both wanted to go to private schools — and by the way, all the top hundred or more schools are basically $75K/yr plus or minus a bit, it’s not just the top 25 — I support that. I’m willing and planning to (literally) mortgage my future for it. Your belittling statement about my choice isn’t evidence of my snobbery or status obsession, but that you lack the perspective to see that different people have different value systems.

There are actually good private schools ranked under 150 that offer tons of merit. So you can get the smaller private school experience for much less than $80K if you desire. My own 1500 and 3.9 UW even got a T50 to cost less than $50K/year. My 1200/3.5UW got 75% of tuition at a T130 bringing it down to $30K as well as 35% of tuition at a T80 making it $40K/year (and choose this one). Great that you value education. Many people do. But nobody is entitled to admission and/or merit/FA at any university.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:There is no other good or service where the amount you pay is determined by the company selling it to you deciding how much they think you can afford.

Because college is supposed to be a public good.

It is. There are plenty of good universities that do not cost 60 or 80K/year.

You don’t seem content to go to one of those.

One of my kids attended a $60K that only cost us 40K. Other is full pay at a 80K, but turned down $40K/year total at a T40 (80 K was a better fit and we have it saved). Had we needed the $$ they would have attended the excellent school with merit---both are great schools, just one was a better fit for my kid. but they would be happy at the other if it meant they had loans at the 80K.

My kids searched for colleges for fit and were not obsessed with T25 schools (only one had stats to worry about that).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Maybe I missed someone else posting this, but it is about to get WORSE for donut hole families who have two kids close in age! Quietly how financial aid is calculated for people who have two kids in college has changed. Instead of factoring in having to pay tuition for multiple kids now financial aid is no calculating this.

By this it used to be that let's say you earn 150000 and the EFC says you can contribute 60,000. It used to be that if you had two kids then you paid 30K per kid. Or if you had three kids in college you were expected to contribute 20K per year. Now you are expected to contribute 60K no matter how many other college tuitions you are paying. So if you have two kids you would pay 120,000 which is ridiculous for a family making 150,000.

You should consider that when you decide the number of kids you have. Life is about choices. Saving is a choice, the house and expenses you have are choices, and the number of kids you have are choices.

Thanks for this. I’ll remember that when I have twins again, then discover when they start college together that the FAFSA EFC is $103K while our take-home pay less our mortgage is $101K. Because that advice would so clearly help in our situation. And before you say it, no, we don’t have a million dollar home and we don’t have millions in retirement. But we do have a fair amount of college savings and apparently we get penalized for that.

How much is your mortgage? Sounds like kids should go to a state school.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The donut hole is a myth that poor savers tell themselves. Decisions have consequences. Buying a larger house or nicer car - spending more for vacations and fancy summer camps are all decisions.

College costs are not unexpected. You have nearly two decades to save.

Plus, you don’t have to save for the most expensive college. All of you who consider yourselves middle class- that means kids stay at home and go to college or they go to an instate college. That is what middle class parents have done for generations. Paying the full amount for high end tuitions for private schools are for rich families not yours.

I actually agree with you. So background, we have $250k HHI, $3M investment portfolio, house paid off.

Yeah, we can afford any college. Probably. For three kids though??

And is private or out of state worth it? No, I don't think so.

If we made $600k, that would be a different story. If we had $6M in stocks instead of $3M, that would also be different.

So I think we've made decent choices along the way about cars and houses and whatnot. But I consider us donut hole because we're too wealthy for financial aid, but not wealthy enough for a $350k undergraduate degree to be a drop in the bucket.

Having 3 kids is also a financial choice. I wouldn't have 3 for this very reason. We had kids we knew we could afford to send to college. For us that was 2.

$3m in stock and a paid off house and they’re whining? Pathetic.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The donut hole is a myth that poor savers tell themselves. Decisions have consequences. Buying a larger house or nicer car - spending more for vacations and fancy summer camps are all decisions.

College costs are not unexpected. You have nearly two decades to save.

Plus, you don’t have to save for the most expensive college. All of you who consider yourselves middle class- that means kids stay at home and go to college or they go to an instate college. That is what middle class parents have done for generations. Paying the full amount for high end tuitions for private schools are for rich families not yours.

I actually agree with you. So background, we have $250k HHI, $3M investment portfolio, house paid off.

Yeah, we can afford any college. Probably. For three kids though??

And is private or out of state worth it? No, I don't think so.

If we made $600k, that would be a different story. If we had $6M in stocks instead of $3M, that would also be different.

So I think we've made decent choices along the way about cars and houses and whatnot. But I consider us donut hole because we're too wealthy for financial aid, but not wealthy enough for a $350k undergraduate degree to be a drop in the bucket.

Having 3 kids is also a financial choice. I wouldn't have 3 for this very reason. We had kids we knew we could afford to send to college. For us that was 2.

$3m in stock and a paid off house and they’re whining? Pathetic.

Exactly. They aren't a donut hole as they can comfortably afford it.

[Anonymous]

I’m a donut hole family. Just above the cut off. So right on the lower edge of the donut. I don’t have easy solutions for the problems of paying for higher education. I had loans and my kids will have loans. They won’t be going to or wasting time applying to schools I can’t afford. Ivies are out regardless of their abilities. Why get in if you can’t go? I refuse to let them go into that much debt. Also I don’t actually believe the Ivies are good value. They aren’t for people like me.

I feel I should be clear here - this whole entry isn’t a complaint. Schools are free to draw the line on need based financial support wherever they like. Nevertheless, they may find that 90% of all applicants are very wealthy or very poor. They may find the student body is therefore less diverse and less capable of mixing than if they had a student body that included middle class kids too. But, again, they can make their own decisions. I’m happy enough with our state school options. They are probably happy with lines of people waiting to pay full price for the prestige.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My firm recruits kids out of undergrad for some roles at $130k salaries with high bonus potential. That’s only from top schools, though, but it is the most desirable line of service. For the other lines of service (recruited from other schools) you’re starting at more like $70-95k. Good luck switching to the most desirable LOS without an MBA from a top school.

That’s why the rat race to get into top schools persists.

+1 my experience as well

What is the most desirable line of service? Just curious, if someone is kind enough to answer.

Strategy, management training programs, not back office in general - that's for the non-specialized stuff.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Maybe I missed someone else posting this, but it is about to get WORSE for donut hole families who have two kids close in age! Quietly how financial aid is calculated for people who have two kids in college has changed. Instead of factoring in having to pay tuition for multiple kids now financial aid is no calculating this.

By this it used to be that let's say you earn 150000 and the EFC says you can contribute 60,000. It used to be that if you had two kids then you paid 30K per kid. Or if you had three kids in college you were expected to contribute 20K per year. Now you are expected to contribute 60K no matter how many other college tuitions you are paying. So if you have two kids you would pay 120,000 which is ridiculous for a family making 150,000.

You should consider that when you decide the number of kids you have. Life is about choices. Saving is a choice, the house and expenses you have are choices, and the number of kids you have are choices.

Thanks for this. I’ll remember that when I have twins again, then discover when they start college together that the FAFSA EFC is $103K while our take-home pay less our mortgage is $101K. Because that advice would so clearly help in our situation. And before you say it, no, we don’t have a million dollar home and we don’t have millions in retirement. But we do have a fair amount of college savings and apparently we get penalized for that.

How much is your mortgage? Sounds like kids should go to a state school.

PP here. It's about $500K and PITI nets out to around $53K/yr. We're paying for one kid at a good private college that offered some aid, but the reality is that we have a few hundred $K saved for college and this increased our EFC for both of them. Maybe we shouldn't have saved so much?

[Anonymous]

Anonymous wrote:I’m a donut hole family. Just above the cut off. So right on the lower edge of the donut. I don’t have easy solutions for the problems of paying for higher education. I had loans and my kids will have loans. They won’t be going to or wasting time applying to schools I can’t afford. Ivies are out regardless of their abilities. Why get in if you can’t go? I refuse to let them go into that much debt. Also I don’t actually believe the Ivies are good value. They aren’t for people like me.

I feel I should be clear here - this whole entry isn’t a complaint. Schools are free to draw the line on need based financial support wherever they like. Nevertheless, they may find that 90% of all applicants are very wealthy or very poor. They may find the student body is therefore less diverse and less capable of mixing than if they had a student body that included middle class kids too. But, again, they can make their own decisions. I’m happy enough with our state school options. They are probably happy with lines of people waiting to pay full price for the prestige.

+1. Similar situation here. I’m definitely going to take a different approach with my kids than my parents did with me, they encouraged me to apply to a lot of private schools we couldn’t afford and then co-signed private loans so I could go to one (I got a scholarship and sone need based aid but not enough). My kids will know from the get-go how much we can contribute per year and if they need to take out some federal loans to go where they want, that’s fine. But nothing beyond that- no private loans, no parent plus loans.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Maybe I missed someone else posting this, but it is about to get WORSE for donut hole families who have two kids close in age! Quietly how financial aid is calculated for people who have two kids in college has changed. Instead of factoring in having to pay tuition for multiple kids now financial aid is no calculating this.

By this it used to be that let's say you earn 150000 and the EFC says you can contribute 60,000. It used to be that if you had two kids then you paid 30K per kid. Or if you had three kids in college you were expected to contribute 20K per year. Now you are expected to contribute 60K no matter how many other college tuitions you are paying. So if you have two kids you would pay 120,000 which is ridiculous for a family making 150,000.

You should consider that when you decide the number of kids you have. Life is about choices. Saving is a choice, the house and expenses you have are choices, and the number of kids you have are choices.

Thanks for this. I’ll remember that when I have twins again, then discover when they start college together that the FAFSA EFC is $103K while our take-home pay less our mortgage is $101K. Because that advice would so clearly help in our situation. And before you say it, no, we don’t have a million dollar home and we don’t have millions in retirement. But we do have a fair amount of college savings and apparently we get penalized for that.

How much is your mortgage? Sounds like kids should go to a state school.

PP here. It's about $500K and PITI nets out to around $53K/yr. We're paying for one kid at a good private college that offered some aid, but the reality is that we have a few hundred $K saved for college and this increased our EFC for both of them. Maybe we shouldn't have saved so much?

So, how is that a donut hole family. You made life choices on a more personal expensive house and lifestyle.