What is a "donut hole family"?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:People who do not qualify for financial aid, but whose real economic situation means they can't afford expensive colleges even if their kids are admitted. They are the families whose kids turn down Carnegie Mellon and take the merit award at Pitt.

So why is this a problem? Statistically, it seems highly likely their resources are what enabled their kids to become high achievers in the first place. If they can't afford the tippy top status colleges, what is wrong with being "the best" at what they can afford?

Like PP said, some of the colleges are worried about their student bodies getting barbelled and resembling private schools more than the traditional mix that the colleges had. We'll happily pay instate or equivalent OOS, but we're not willing to give up on retirement to send out kids to Haverford. That's fine with us and our kids. Whether or not these schools want a mix of LMC and Poor and very upper middles class and upper class with nothing in between is another question.

Same. Yes, we could stretch for it by compromising our retirement or pulling out home equity but I just don't see the value of these $70K+ colleges no matter what name is on the diploma. One kid happy at VT and the other is looking at mostly LACs that give merit or would like W&M in-state. Totally fine with those options. I had to make the same trade off when I went to college in the early 90s.

Agree! I can afford 80k per year but I can’t let myself pay that much for a college degree. I posted about this here and was harassed by most posters regarding my lack of understanding about the college experience and how much better options and life an 80k college can guarantee versus a state school. So thank you for your post. I have friends who are donut hole families but somehow took out loans to send both kids to 80k /year schools (not Ivies). I know posters will tell me to MYOB etc. but its still shocking what people will do for so called prestige.

[Anonymous]

See also:



https://www.forbes.com/sites/camilomaldonado/2018/07/24/price-of-college-increasing-almost-8-times-faster-than-wages/?sh=7c61f37666c1

[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.

ok. How does a couple married at 26 with student loans and earning 200k by the time their oldest is in college, but whose earnings were closer to 100k combined for most of the kid's life (i.e. reasonable salaries outside of high COL cities) afford an expensive college? The family never would have earned sufficiently to save enough, but they don't qualify for aid. There is nothing right or wrong/moral or amoral about it, it's just a financial status

If they had stayed in the home they could afford at 26 they would have the ability to save. I mean that’s literally me (admittedly we married at 27 not 26 but otherwise). No upgraded house. 10 yr old cars. Modest house with no guest bedroom.

You mean rent, no. That is terrible advice since most rent and mortgage is the same.

??? No I don’t mean rent. We got married at 27, saved for a couple years to get into a house with PMI, and are still in that house (obviously no more PMI).

That is what donut hole families do.

[Anonymous]

Donut hole families are people that didn’t save enough for their kid’s college tuition and are very, very bitter that other families can afford it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:People who do not qualify for financial aid, but whose real economic situation means they can't afford expensive colleges even if their kids are admitted. They are the families whose kids turn down Carnegie Mellon and take the merit award at Pitt.

But can’t they/don’t they take out loans to pay the tuition?

A family earning around 250k is not going to take out loans to cover the 50k a year difference in cost between publics and privates for multiple kids unless they are utterly terrible with money

What about student loans? Kids can payoff later? Why won’t donut hole families go for that option? Each kid takes out 50-60k loan per year to cover the cost of college?

Because students are not allowed to take out more than $5K.

[Anonymous]

Anonymous wrote:Could someone please explain, because it sounds like people with nice resources feeling entitled to more than they can afford.

Jealousy is a character flaw.

[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.

Can you write out the budget for me?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:People who do not qualify for financial aid, but whose real economic situation means they can't afford expensive colleges even if their kids are admitted. They are the families whose kids turn down Carnegie Mellon and take the merit award at Pitt.

But can’t they/don’t they take out loans to pay the tuition?

A family earning around 250k is not going to take out loans to cover the 50k a year difference in cost between publics and privates for multiple kids unless they are utterly terrible with money

What about student loans? Kids can payoff later? Why won’t donut hole families go for that option? Each kid takes out 50-60k loan per year to cover the cost of college?

Because students are not allowed to take out more than $5K.

Then how do people have 60k in student loans?

[Anonymous]

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.

Well, there is this thing that some people only move up later in their working career from lower-income, thus not having had the opportunity to save much for college, if at all in addition to retirement and emergency funds that one is supposed to have.

[Anonymous]

I grew up in the Midwest in the 80s and 90s. My dad was a partner at a mid sized law firm and did very well and my mom was a headmistress at a private school who also had a very high salary. My brother, sister and I went to Catholic schools and private single sex high schools. My dad was absolutely shocked when we didn't qualify for financial aid. My parents and school steered us to Catholic colleges where we would get lots of scholarships making their school look good, because we were high ACT and SAT scorers and the state school. My brother's school did have him apply to more "top colleges" but I did not apply to any schools like that. Maybe a few kids in my class went to schools like Notre Dame, Columbia, NYC, U of Chicago or small liberal art schools like Reed, Rice, etc. My dad and mom were from a working class mindset. They had zero debt, had paid off their mortgage, paid for their cars, etc. But they did not save or have a 529. My brother asked in HS if he had a college fund like his frieds at his prep school and they laughed. My dad honestly thought we would get work study and be able to get a good job in the summer, like he and my mom did (union jobs) that would pay for the school year.

My parents grew up very working class. When you are 18, you are on your own. My parents claimed me on their taxes so I got absolutely zero financial aid. But they didn't help me out because they thought I should be able to support myself on the minimal loans I took out (like $1500 a semester) and measely scholarship (it covered my tuition, but not books or housing). I worked 3 jobs in college and it was horrible. I was always worried about money, always tired, always hungry. I was food insecure. Meanwhile my dad was making $500K a year in the 90s and my mom was making $90K. My parents are not flashy and didn't owe me anything, but I sure as hell didn't want my kids to experience what I did. Imagine being 18, the daughter of white collar jobs, and not really understanding rent, food, utiliities for a summer house when your sorority house is closed. I had super sketchy jobs: at a collection agency, as a personal assistant, as a bartender and waitress. That is what I could get.

My parents could not understand why I was in a sorority (it was literally $1500 a semester versus $7K a semester for the dorms and included food and parking). My parents think I'm hella bougie. I can't even tell you the horrible things I dealt with in college at my part-time jobs.

I did get a full scholarship to grad school because I worked my ass off in college and started a small business when most people were having fun and out drinking. But I was also very dependent on boyfriends in an unhealthy way and exposed to some really sketchy situations that as a parent I would never want my daughter or son to be in.

My parents judge me and my DH because we send our kids to public schools. We are both feds and we wanted to save for college. VA colleges are so competitive and I'm not sure if our kids have the test scores for them. I did go to an Ivy for grad school and I saw the advantages I have over others with my alumni network and networking. I still have resentment towards my dad who was confident I could find a job keeping a resource binder in the dorm that would magically pay my room and board or slinging food at the cafeteria that would miraculously pay $35K in tuition.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:People who do not qualify for financial aid, but whose real economic situation means they can't afford expensive colleges even if their kids are admitted. They are the families whose kids turn down Carnegie Mellon and take the merit award at Pitt.

But can’t they/don’t they take out loans to pay the tuition?

A family earning around 250k is not going to take out loans to cover the 50k a year difference in cost between publics and privates for multiple kids unless they are utterly terrible with money

What about student loans? Kids can payoff later? Why won’t donut hole families go for that option? Each kid takes out 50-60k loan per year to cover the cost of college?

Because students are not allowed to take out more than $5K.

Then how do people have 60k in student loans?

Undergraduates' parents take out Parent Plus loans and make the kids responsible for them post-graduation.

Graduate students are subject to different limits.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Could someone please explain, because it sounds like people with nice resources feeling entitled to more than they can afford.

No. It is a family that won’t qualify for FA but that doesn’t have the resources to reasonably handle tuition at the priciest/most elite colleges. I don’t know about families feeling entitled, but from the colleges’ standpoint it is a real problem that they are concerned about. They don’t want their student populations to come from two stratified socioeconomic groups.

This most closely describes the issue in an unbiased way. While I don’t expect massive FA, we also can’t comfortably pay for expensive private college. The colleges take into account all assets, which is great. No one should get to hide their wealth in a boat purchase. At the same time, we can’t liquidate our retirement savings. We would have to pay penalties. The government has penalties to discourage using your retirement money for non-retirement. So, we find ourselves in a spot where savings that we can’t use without expensive penalties is used to indicate we have “too much” money.

Meanwhile, our cash flow is not high, so it’s hard to swing the full cost.

Before people call me a whiner or tell me how lucky I am, I know I am lucky. I’m not complaining. We could empty our retirement accounts, but it would then lead us into poverty and that doesn’t help society or ourselves.

I don't know anyone who thinks paying for "expensive private college" is comfortable. This is the problem with donut hole discussions - of course it's expensive! It's expensive for everyone! If you think you're hard done by because you can't just instruct your household manager to write a check and forget about it moments later, you have skewed expectations in life. "Not outrageously wealthy" is not a protected class.

I'm 60 years old and graduated from a NESCAC school in 1983. The year I started, it cost about $8K for tuition, room, and board. I paid about $2000-$2500 of that from summer and part-time job (during the school year) earnings and my parents paid the rest. They did the same for my three siblings. It was not "comfortable" meaning "cushy," but it was completely doable. Some of my friends at similar schools and at Ivy League schools needed loans, and they took them out (usually around $6K-$8K total) and paid them off fairly quickly. My friends at public universities were able to work their way through college earning minimum wage.

Fast-forward, that private school now costs $80K all-in. Very few families with four children could pay for it "comfortably" no matter how hard the kids worked during summers.

That is what people are angry about.

Once upon a time, private college was not expensive. Everyone knows that. I'm not arguing that college costs are reasonable now, I'm saying that the posters complaining about being in a "donut hole" because they cannot comfortably pay for the most expensive option are not adding anything to the discussion. The nature of an option being the most expensive is that . . . it's expensive and everyone can't afford it! And unless you're very rich, it's going to sting to write that check. If you can still afford it, just "uncomfortably"; if you can still handle tuition, just not "reasonably" - that's not sympathetic, and it's not a donut hole. And there are literally thousands of other options at lower price points. But they've convinced themselves they're uniquely challenged because the best of the best isn't a given for their kid.

If you want to talk about spiraling tuition costs, let's talk about the tax breaks that were funded by gutting state budgets for higher ed. It's not a donut hole discussion it's a political discussion. But the same people moaning that they're stuck in a donut hole are voting for the "drown it in a bathtub" people, and can't tell they did it to themselves.

Right, but again: Most everyone COULD afford the EXACT SAME THING a generation or two ago, with a little effort.

It hurts to tell a super high-performer that he can't even apply to elite schools because you can't pay for them. Is it a tragedy? No. But when you have a MEMORY of those schools being in fact, affordable when you were his age, it hurts.

That's it.

P.S. I agree re: gutting state budgets for higher ed.

No, it's not true that everyone could afford it a generation ago. Sorry, but you were in a bubble if you thought so.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Could someone please explain, because it sounds like people with nice resources feeling entitled to more than they can afford.

No. It is a family that won’t qualify for FA but that doesn’t have the resources to reasonably handle tuition at the priciest/most elite colleges. I don’t know about families feeling entitled, but from the colleges’ standpoint it is a real problem that they are concerned about. They don’t want their student populations to come from two stratified socioeconomic groups.

This most closely describes the issue in an unbiased way. While I don’t expect massive FA, we also can’t comfortably pay for expensive private college. The colleges take into account all assets, which is great. No one should get to hide their wealth in a boat purchase. At the same time, we can’t liquidate our retirement savings. We would have to pay penalties. The government has penalties to discourage using your retirement money for non-retirement. So, we find ourselves in a spot where savings that we can’t use without expensive penalties is used to indicate we have “too much” money.

Meanwhile, our cash flow is not high, so it’s hard to swing the full cost.

Before people call me a whiner or tell me how lucky I am, I know I am lucky. I’m not complaining. We could empty our retirement accounts, but it would then lead us into poverty and that doesn’t help society or ourselves.

I don't know anyone who thinks paying for "expensive private college" is comfortable. This is the problem with donut hole discussions - of course it's expensive! It's expensive for everyone! If you think you're hard done by because you can't just instruct your household manager to write a check and forget about it moments later, you have skewed expectations in life. "Not outrageously wealthy" is not a protected class.

I'm 60 years old and graduated from a NESCAC school in 1983. The year I started, it cost about $8K for tuition, room, and board. I paid about $2000-$2500 of that from summer and part-time job (during the school year) earnings and my parents paid the rest. They did the same for my three siblings. It was not "comfortable" meaning "cushy," but it was completely doable. Some of my friends at similar schools and at Ivy League schools needed loans, and they took them out (usually around $6K-$8K total) and paid them off fairly quickly. My friends at public universities were able to work their way through college earning minimum wage.

Fast-forward, that private school now costs $80K all-in. Very few families with four children could pay for it "comfortably" no matter how hard the kids worked during summers.

That is what people are angry about.

Once upon a time, private college was not expensive. Everyone knows that. I'm not arguing that college costs are reasonable now, I'm saying that the posters complaining about being in a "donut hole" because they cannot comfortably pay for the most expensive option are not adding anything to the discussion. The nature of an option being the most expensive is that . . . it's expensive and everyone can't afford it! And unless you're very rich, it's going to sting to write that check. If you can still afford it, just "uncomfortably"; if you can still handle tuition, just not "reasonably" - that's not sympathetic, and it's not a donut hole. And there are literally thousands of other options at lower price points. But they've convinced themselves they're uniquely challenged because the best of the best isn't a given for their kid.

If you want to talk about spiraling tuition costs, let's talk about the tax breaks that were funded by gutting state budgets for higher ed. It's not a donut hole discussion it's a political discussion. But the same people moaning that they're stuck in a donut hole are voting for the "drown it in a bathtub" people, and can't tell they did it to themselves.

Right, but again: Most everyone COULD afford the EXACT SAME THING a generation or two ago, with a little effort.

It hurts to tell a super high-performer that he can't even apply to elite schools because you can't pay for them. Is it a tragedy? No. But when you have a MEMORY of those schools being in fact, affordable when you were his age, it hurts.

That's it.

P.S. I agree re: gutting state budgets for higher ed.

No, it's not true that everyone could afford it a generation ago. Sorry, but you were in a bubble if you thought so.

In my case it was two generations ago, and definitely not in a bubble. Sorry.

[Anonymous]

Anonymous wrote:I grew up in the Midwest in the 80s and 90s. My dad was a partner at a mid sized law firm and did very well and my mom was a headmistress at a private school who also had a very high salary. My brother, sister and I went to Catholic schools and private single sex high schools. My dad was absolutely shocked when we didn't qualify for financial aid. My parents and school steered us to Catholic colleges where we would get lots of scholarships making their school look good, because we were high ACT and SAT scorers and the state school. My brother's school did have him apply to more "top colleges" but I did not apply to any schools like that. Maybe a few kids in my class went to schools like Notre Dame, Columbia, NYC, U of Chicago or small liberal art schools like Reed, Rice, etc. My dad and mom were from a working class mindset. They had zero debt, had paid off their mortgage, paid for their cars, etc. But they did not save or have a 529. My brother asked in HS if he had a college fund like his frieds at his prep school and they laughed. My dad honestly thought we would get work study and be able to get a good job in the summer, like he and my mom did (union jobs) that would pay for the school year.

My parents grew up very working class. When you are 18, you are on your own. My parents claimed me on their taxes so I got absolutely zero financial aid. But they didn't help me out because they thought I should be able to support myself on the minimal loans I took out (like $1500 a semester) and measely scholarship (it covered my tuition, but not books or housing). I worked 3 jobs in college and it was horrible. I was always worried about money, always tired, always hungry. I was food insecure. Meanwhile my dad was making $500K a year in the 90s and my mom was making $90K. My parents are not flashy and didn't owe me anything, but I sure as hell didn't want my kids to experience what I did. Imagine being 18, the daughter of white collar jobs, and not really understanding rent, food, utiliities for a summer house when your sorority house is closed. I had super sketchy jobs: at a collection agency, as a personal assistant, as a bartender and waitress. That is what I could get.

My parents could not understand why I was in a sorority (it was literally $1500 a semester versus $7K a semester for the dorms and included food and parking). My parents think I'm hella bougie. I can't even tell you the horrible things I dealt with in college at my part-time jobs.

I did get a full scholarship to grad school because I worked my ass off in college and started a small business when most people were having fun and out drinking. But I was also very dependent on boyfriends in an unhealthy way and exposed to some really sketchy situations that as a parent I would never want my daughter or son to be in.

My parents judge me and my DH because we send our kids to public schools. We are both feds and we wanted to save for college. VA colleges are so competitive and I'm not sure if our kids have the test scores for them. I did go to an Ivy for grad school and I saw the advantages I have over others with my alumni network and networking. I still have resentment towards my dad who was confident I could find a job keeping a resource binder in the dorm that would magically pay my room and board or slinging food at the cafeteria that would miraculously pay $35K in tuition.

Wow! That sounds harsh. Didn’t your dad know the cost of attendance? How did he figure you can come up with that kind of money?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:People who do not qualify for financial aid, but whose real economic situation means they can't afford expensive colleges even if their kids are admitted. They are the families whose kids turn down Carnegie Mellon and take the merit award at Pitt.

But can’t they/don’t they take out loans to pay the tuition?

A family earning around 250k is not going to take out loans to cover the 50k a year difference in cost between publics and privates for multiple kids unless they are utterly terrible with money

What about student loans? Kids can payoff later? Why won’t donut hole families go for that option? Each kid takes out 50-60k loan per year to cover the cost of college?

Because students are not allowed to take out more than $5K.

Then how do people have 60k in student loans?

Undergraduates' parents take out Parent Plus loans and make the kids responsible for them post-graduation.

Graduate students are subject to different limits.

You also have years of compounding while the kid is in school, new loans every year and years of further compounding if the kid can't afford full payments after graduation and ends up paying less than the full interest every month