How Princeton is Getting Around the Endowment Tax

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've never attended one of these private schools with the massive need-based aid programs. Is it a weird dichotomy with basically only poor kids and rich kids and no real middle class?

I attended a state school so there were basically all types of kids, but lots of middle class.

Yup. It is the barbell. Low income (which includes a number of middle income people in this case) go for free so don't care about sticker price. Super rich people don't care about sticker price. Those who are just above the threshold get squeezed - $100k a year is still meaningful to them when there is a much cheaper option. No one cries for the families in high cost of living areas making $400k a year, but going to Princeton will not be easy. Ironically, many legacies fit in this bucket - contrary to popular opinion, most Ivy alums are UMC, not rich.

I was an UMC full pay at an Ivy+ 30 years ago. I was far from ostentatious, but I had a car (a hand-me-down Toyota Camry from my grandparents) and would occasionally go out for dinner, to concerts, etc. on weekends (nowhere fancy). But I had friends who had to think twice about coming to dinner and doing other things that many took for granted. There were plenty of people who advertised their wealth much more, and it was a challenge. And this has likely just gotten worse.

Affording Princeton should be pretty damn easy on a 400k/year salary.

Ha. At a different Ivy - 2 kids $180k/year is not easy on that salary in this area. It’s kind of ridiculous people with half that go free when we literally give 50% of our income.

And the difference is you have a 2 parent working household (both making $200k) where the households with a parent that never worked are the $200k getting the aid. It’s fkkkd up. They should assign a salary to the non-worker like they do in divorce proceedings.

And the families that have inherited wealth but low salaries…sigh.

[Anonymous]

The hardest part is getting accepted to Princeton not paying for it!

[Anonymous]

Colleges have favored spenders over savers for 30+ years! It has never been "fair."

I remember in 1992 I grew up in a tiny home with an incredibly simple lifestyle and yet we paid full price for college because my parents diligently saved for years. Meanwhile my roommate was on 50% aid and had all the latest gadgets, a beautiful home and a mom who didn't work.
It really offended my 18 year old self.

[Anonymous]

I'm curious, for those of you who are angry at the college FA system, what would you do if you were in charge? Would you make it a flat rate for everyone? In which case a lot of very bright kids would get locked out of private colleges? The current way is certainly not perfect, what alternative would be perfect?

[Anonymous]

Anonymous wrote:Colleges have favored spenders over savers for 30+ years! It has never been "fair."

I remember in 1992 I grew up in a tiny home with an incredibly simple lifestyle and yet we paid full price for college because my parents diligently saved for years. Meanwhile my roommate was on 50% aid and had all the latest gadgets, a beautiful home and a mom who didn't work.
It really offended my 18 year old self.

Yep. My parents only let me go in-state. I had the stats for much higher ranked schools.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've never attended one of these private schools with the massive need-based aid programs. Is it a weird dichotomy with basically only poor kids and rich kids and no real middle class?

I attended a state school so there were basically all types of kids, but lots of middle class.

Yup. It is the barbell. Low income (which includes a number of middle income people in this case) go for free so don't care about sticker price. Super rich people don't care about sticker price. Those who are just above the threshold get squeezed - $100k a year is still meaningful to them when there is a much cheaper option. No one cries for the families in high cost of living areas making $400k a year, but going to Princeton will not be easy. Ironically, many legacies fit in this bucket - contrary to popular opinion, most Ivy alums are UMC, not rich.

I was an UMC full pay at an Ivy+ 30 years ago. I was far from ostentatious, but I had a car (a hand-me-down Toyota Camry from my grandparents) and would occasionally go out for dinner, to concerts, etc. on weekends (nowhere fancy). But I had friends who had to think twice about coming to dinner and doing other things that many took for granted. There were plenty of people who advertised their wealth much more, and it was a challenge. And this has likely just gotten worse.

Affording Princeton should be pretty damn easy on a 400k/year salary.

Ha. At a different Ivy - 2 kids $180k/year is not easy on that salary in this area. It’s kind of ridiculous people with half that go free when we literally give 50% of our income.

And the difference is you have a 2 parent working household (both making $200k) where the households with a parent that never worked are the $200k getting the aid. It’s fkkkd up. They should assign a salary to the non-worker like they do in divorce proceedings.

+100

Busted my @ss and I see neighbors that never saved, taking extravagant vacations, only 1 parent in the house worked and they are getting need-based aid.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Just here to reiterate that "getting more students into the non-tuition-paying category" means students admitted and choosing to enroll, in a need-blind admissions environment.

They should drop the pretense of need-blind since need will, in fact, play a role in this process one way or another. Right now it's on the back end, but one bad algorithm from enrollment management consulting can really mess with the budget.

Because of Princeton's current numbers, it wouldn't need to drop its need blind policy; it can get where it wants without doing so, by giving more aid to students already getting it. But i agree that there are other schools (like Dartmouth) that would really have to go need-aware (in favor of those who have need) in order to get to fewer than 3,000 tuition-paying students.

Does the law say fewer than 3000 tuition paying students or fewer than 3000 tuition paying undergraduates? If it is the former, Dartmouth could never do this - they have a med school, law school, etc, none of which Princeton has. So Dartmount probably has >>10k students. Princeton has almost exclusively PhDs which don't pay tuition.

[Anonymous]

Anonymous wrote:I've never attended one of these private schools with the massive need-based aid programs. Is it a weird dichotomy with basically only poor kids and rich kids and no real middle class?

I attended a state school so there were basically all types of kids, but lots of middle class.

Do you think a six figure household income below $200k is middle class? If so, there are plenty of middle class kids.

[Anonymous]

If a big issue for you is not liking how Princeton University runs its financial aid calculator then you are in a really good shape.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've never attended one of these private schools with the massive need-based aid programs. Is it a weird dichotomy with basically only poor kids and rich kids and no real middle class?

I attended a state school so there were basically all types of kids, but lots of middle class.

Yup. It is the barbell. Low income (which includes a number of middle income people in this case) go for free so don't care about sticker price. Super rich people don't care about sticker price. Those who are just above the threshold get squeezed - $100k a year is still meaningful to them when there is a much cheaper option. No one cries for the families in high cost of living areas making $400k a year, but going to Princeton will not be easy. Ironically, many legacies fit in this bucket - contrary to popular opinion, most Ivy alums are UMC, not rich.

I was an UMC full pay at an Ivy+ 30 years ago. I was far from ostentatious, but I had a car (a hand-me-down Toyota Camry from my grandparents) and would occasionally go out for dinner, to concerts, etc. on weekends (nowhere fancy). But I had friends who had to think twice about coming to dinner and doing other things that many took for granted. There were plenty of people who advertised their wealth much more, and it was a challenge. And this has likely just gotten worse.

Affording Princeton should be pretty damn easy on a 400k/year salary.

Ha. At a different Ivy - 2 kids $180k/year is not easy on that salary in this area. It’s kind of ridiculous people with half that go free when we literally give 50% of our income.

And the difference is you have a 2 parent working household (both making $200k) where the households with a parent that never worked are the $200k getting the aid. It’s fkkkd up. They should assign a salary to the non-worker like they do in divorce proceedings.

And the families that have inherited wealth but low salaries…sigh.

There are certain investment vehicles that aren't often looked at as a potential payment source, like your retirement fund. You could also buy your family a house with the understanding that it's temporary.

[Anonymous]

Anonymous wrote:I'm curious, for those of you who are angry at the college FA system, what would you do if you were in charge? Would you make it a flat rate for everyone? In which case a lot of very bright kids would get locked out of private colleges? The current way is certainly not perfect, what alternative would be perfect?

This still happens. "Upper middle class" families who don't qualify for aid cannot afford these prices. Not while raising other kids and saving for retirement. And part of the reason we can't afford it is because tuition at private schools is artificially inflated to cover all of this ridiculous financial aid! Private schools were 20-25k/year when we went to college. That would be $50k in todays money, not the $80k that it is.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've never attended one of these private schools with the massive need-based aid programs. Is it a weird dichotomy with basically only poor kids and rich kids and no real middle class?

I attended a state school so there were basically all types of kids, but lots of middle class.

Yup. It is the barbell. Low income (which includes a number of middle income people in this case) go for free so don't care about sticker price. Super rich people don't care about sticker price. Those who are just above the threshold get squeezed - $100k a year is still meaningful to them when there is a much cheaper option. No one cries for the families in high cost of living areas making $400k a year, but going to Princeton will not be easy. Ironically, many legacies fit in this bucket - contrary to popular opinion, most Ivy alums are UMC, not rich.

I was an UMC full pay at an Ivy+ 30 years ago. I was far from ostentatious, but I had a car (a hand-me-down Toyota Camry from my grandparents) and would occasionally go out for dinner, to concerts, etc. on weekends (nowhere fancy). But I had friends who had to think twice about coming to dinner and doing other things that many took for granted. There were plenty of people who advertised their wealth much more, and it was a challenge. And this has likely just gotten worse.

Affording Princeton should be pretty damn easy on a 400k/year salary.

Ha. At a different Ivy - 2 kids $180k/year is not easy on that salary in this area. It’s kind of ridiculous people with half that go free when we literally give 50% of our income.

And the difference is you have a 2 parent working household (both making $200k) where the households with a parent that never worked are the $200k getting the aid. It’s fkkkd up. They should assign a salary to the non-worker like they do in divorce proceedings.

+100

Busted my @ss and I see neighbors that never saved, taking extravagant vacations, only 1 parent in the house worked and they are getting need-based aid.

Yep and driving luxury cars too…

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Seems like a win for everyone!

Seems like it makes the endowment tax arbitrary stupid nonsense. Don't tax Princeton but tax MIT. Don't text Amherst or NYU but tax Notre Dame. This whole thing just seems pointless.

It is a Pigovian tax. It wasn’t intended to raise revenue. This is an optimal outcome, perhaps even an intended one.

It’s kind of crappy to be a family who makes just a tad over the line (or who have more than typical assets) who will pay full price while others just a tiny bit under the line pay none. I get the rationale but it’s not optimal from that perspective.

Totally agree - this system is very binary - all or nothing. There will be a lot of gamesmanship among families to get below the line - ironically people will have an incentive to take a pay cut for a few years. It makes very little sense yet given the constraints Princeton is dealing with, I don't blame them. But as one who is not far over the line and also had the audacity to live somewhat conservatively and save money for college, it is frustrating. But life isn't fair - I'm fortunate to have more than most other Americans and college is not a God-given right.

Plus don't pretend that your approach to money and saving isn't helping you out in other ways. You might not be getting a college break, but there are so many other benefits you get by living this way.

NP. Like what? We have a single car, don’t do vacations at all beyond drive to the beach and stay in a motel type of thing or camping, shop at Walmart for clothes, literally never eat out, we do spend more money than most people on food because our kids have severe food allergies and we need to. We have other therapies for special needs but basically just a typical middle class lifestyle plus some extra frugality compared to most people, and yet we just miss out on all financial aid. No family money at all (we were first gen), actually we support our parents a little if anything. Our kids are very high stats and so could definitely get some merit at some places but it’s frustrating that ivys are out for them because we really can’t afford it. If we lived irresponsibly and didn’t work so hard, they would get financial aid. The system sucks.

So apparently you have figured out how to have some of the things you want plus get financial aid but you refuse to do it? Maybe the system doesn't suck. Maybe you just aren't understanding how to benefit from the system?

And if you don't want to shop at Walmart like most people so that your kid can get a Princeton education, then dont. No one is forcing you to do that. The system sucks because you you have to shop at lower price stores like most people instead of expensive stores?

You are a total insincere jerk. This person was very frank and honest and is trying to be fiscally responsible and you jump all over them. Can you respond in a kind, thoughtful way? What happened to intelligent conflict and discourse?

The low class trash who have no hopes of having their children ever attend a place like Princeton really stand out here. But I'm sure they will argue they didn't want Princeton anyway.

And thank you to the poster who this jerk was responding to. That was a very interesting, meaningful post that demonstrates what a lot of people are dealing with. And as the other poster who is being wrongfully demonized noted, no one is saying woe is me or that they would trade their lives with a homeless person. They are just saying that the system could use fixing. Is that so wrong?

The poster is entitled to their opinion that people that are crying about having to shop at Walmart to afford Princeton are totally in a bubble. You want Princeton to give more aid to your family so that you don't have to shop at Walmart? Do you know how entitled and ridiculous that sounds? If a poster is of the opinion that that indicates you live in a bubble, then that is that poster's opinion. It is no less valid than yours.

I’m the PP you’re dissing, and the problem is that we really CAN’T afford an ivy for our kids even though our talented kids would have a very good chance of being admitted. We’re already shopping at Walmart and it’s not enough. That was my point. And yes, it sucks to see people driving SUVs and wearing lulu and taking cruises and we just don’t do that stuff but don’t get aid because we’re in the donut. Of course we could spend down our assets and have nothing to retire with but we’re too responsible for that so we won’t. Meanwhile, people who don’t work hard, don’t make any work or financial sacrifices and who spend everything they get their hands on get their kids a full ride to ivy league colleges. If you can’t see the inherent unfairness in that then I don’t know what to tell you.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Seems like a win for everyone!

Seems like it makes the endowment tax arbitrary stupid nonsense. Don't tax Princeton but tax MIT. Don't text Amherst or NYU but tax Notre Dame. This whole thing just seems pointless.

It is a Pigovian tax. It wasn’t intended to raise revenue. This is an optimal outcome, perhaps even an intended one.

It’s kind of crappy to be a family who makes just a tad over the line (or who have more than typical assets) who will pay full price while others just a tiny bit under the line pay none. I get the rationale but it’s not optimal from that perspective.

Totally agree - this system is very binary - all or nothing. There will be a lot of gamesmanship among families to get below the line - ironically people will have an incentive to take a pay cut for a few years. It makes very little sense yet given the constraints Princeton is dealing with, I don't blame them. But as one who is not far over the line and also had the audacity to live somewhat conservatively and save money for college, it is frustrating. But life isn't fair - I'm fortunate to have more than most other Americans and college is not a God-given right.

Plus don't pretend that your approach to money and saving isn't helping you out in other ways. You might not be getting a college break, but there are so many other benefits you get by living this way.

NP. Like what? We have a single car, don’t do vacations at all beyond drive to the beach and stay in a motel type of thing or camping, shop at Walmart for clothes, literally never eat out, we do spend more money than most people on food because our kids have severe food allergies and we need to. We have other therapies for special needs but basically just a typical middle class lifestyle plus some extra frugality compared to most people, and yet we just miss out on all financial aid. No family money at all (we were first gen), actually we support our parents a little if anything. Our kids are very high stats and so could definitely get some merit at some places but it’s frustrating that ivys are out for them because we really can’t afford it. If we lived irresponsibly and didn’t work so hard, they would get financial aid. The system sucks.

So apparently you have figured out how to have some of the things you want plus get financial aid but you refuse to do it? Maybe the system doesn't suck. Maybe you just aren't understanding how to benefit from the system?

And if you don't want to shop at Walmart like most people so that your kid can get a Princeton education, then dont. No one is forcing you to do that. The system sucks because you you have to shop at lower price stores like most people instead of expensive stores?

You are a total insincere jerk. This person was very frank and honest and is trying to be fiscally responsible and you jump all over them. Can you respond in a kind, thoughtful way? What happened to intelligent conflict and discourse?

The low class trash who have no hopes of having their children ever attend a place like Princeton really stand out here. But I'm sure they will argue they didn't want Princeton anyway.

And thank you to the poster who this jerk was responding to. That was a very interesting, meaningful post that demonstrates what a lot of people are dealing with. And as the other poster who is being wrongfully demonized noted, no one is saying woe is me or that they would trade their lives with a homeless person. They are just saying that the system could use fixing. Is that so wrong?

The poster is entitled to their opinion that people that are crying about having to shop at Walmart to afford Princeton are totally in a bubble. You want Princeton to give more aid to your family so that you don't have to shop at Walmart? Do you know how entitled and ridiculous that sounds? If a poster is of the opinion that that indicates you live in a bubble, then that is that poster's opinion. It is no less valid than yours.

I’m the PP you’re dissing, and the problem is that we really CAN’T afford an ivy for our kids even though our talented kids would have a very good chance of being admitted. We’re already shopping at Walmart and it’s not enough. That was my point. And yes, it sucks to see people driving SUVs and wearing lulu and taking cruises and we just don’t do that stuff but don’t get aid because we’re in the donut. Of course we could spend down our assets and have nothing to retire with but we’re too responsible for that so we won’t. Meanwhile, people who don’t work hard, don’t make any work or financial sacrifices and who spend everything they get their hands on get their kids a full ride to ivy league colleges. If you can’t see the inherent unfairness in that then I don’t know what to tell you.

I don't understand. You just said it yourself. You have money saved for retirement and presumably the other family doesn't. I know which family I'd rather be but you do you.

But if you're looking at this family that is doing the thing that you seemingly want to do, then do it. get the full ride and drive the luxury car I guess if you're able to figure out how that works. What is stopping you?

I seriously think that if this is your big problem in life, then you're fine.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Seems like a win for everyone!

Seems like it makes the endowment tax arbitrary stupid nonsense. Don't tax Princeton but tax MIT. Don't text Amherst or NYU but tax Notre Dame. This whole thing just seems pointless.

It is a Pigovian tax. It wasn’t intended to raise revenue. This is an optimal outcome, perhaps even an intended one.

It’s kind of crappy to be a family who makes just a tad over the line (or who have more than typical assets) who will pay full price while others just a tiny bit under the line pay none. I get the rationale but it’s not optimal from that perspective.

Totally agree - this system is very binary - all or nothing. There will be a lot of gamesmanship among families to get below the line - ironically people will have an incentive to take a pay cut for a few years. It makes very little sense yet given the constraints Princeton is dealing with, I don't blame them. But as one who is not far over the line and also had the audacity to live somewhat conservatively and save money for college, it is frustrating. But life isn't fair - I'm fortunate to have more than most other Americans and college is not a God-given right.

Plus don't pretend that your approach to money and saving isn't helping you out in other ways. You might not be getting a college break, but there are so many other benefits you get by living this way.

NP. Like what? We have a single car, don’t do vacations at all beyond drive to the beach and stay in a motel type of thing or camping, shop at Walmart for clothes, literally never eat out, we do spend more money than most people on food because our kids have severe food allergies and we need to. We have other therapies for special needs but basically just a typical middle class lifestyle plus some extra frugality compared to most people, and yet we just miss out on all financial aid. No family money at all (we were first gen), actually we support our parents a little if anything. Our kids are very high stats and so could definitely get some merit at some places but it’s frustrating that ivys are out for them because we really can’t afford it. If we lived irresponsibly and didn’t work so hard, they would get financial aid. The system sucks.

So apparently you have figured out how to have some of the things you want plus get financial aid but you refuse to do it? Maybe the system doesn't suck. Maybe you just aren't understanding how to benefit from the system?

And if you don't want to shop at Walmart like most people so that your kid can get a Princeton education, then dont. No one is forcing you to do that. The system sucks because you you have to shop at lower price stores like most people instead of expensive stores?

You are a total insincere jerk. This person was very frank and honest and is trying to be fiscally responsible and you jump all over them. Can you respond in a kind, thoughtful way? What happened to intelligent conflict and discourse?

The low class trash who have no hopes of having their children ever attend a place like Princeton really stand out here. But I'm sure they will argue they didn't want Princeton anyway.

And thank you to the poster who this jerk was responding to. That was a very interesting, meaningful post that demonstrates what a lot of people are dealing with. And as the other poster who is being wrongfully demonized noted, no one is saying woe is me or that they would trade their lives with a homeless person. They are just saying that the system could use fixing. Is that so wrong?

The poster is entitled to their opinion that people that are crying about having to shop at Walmart to afford Princeton are totally in a bubble. You want Princeton to give more aid to your family so that you don't have to shop at Walmart? Do you know how entitled and ridiculous that sounds? If a poster is of the opinion that that indicates you live in a bubble, then that is that poster's opinion. It is no less valid than yours.

I’m the PP you’re dissing, and the problem is that we really CAN’T afford an ivy for our kids even though our talented kids would have a very good chance of being admitted. We’re already shopping at Walmart and it’s not enough. That was my point. And yes, it sucks to see people driving SUVs and wearing lulu and taking cruises and we just don’t do that stuff but don’t get aid because we’re in the donut. Of course we could spend down our assets and have nothing to retire with but we’re too responsible for that so we won’t. Meanwhile, people who don’t work hard, don’t make any work or financial sacrifices and who spend everything they get their hands on get their kids a full ride to ivy league colleges. If you can’t see the inherent unfairness in that then I don’t know what to tell you.

Your kids are not even in college not getting any kind of aid package and you're all upset about it. You have a perfect opportunity to look at how the aid package is distributed and adjust your finances to maximize your financial award . I am not an expert in the aid awards, but if you are saying that buying a luxury car and a fancy vacation helps you get more aid rather than less, then I guess you have the advantage of doing that.

I agree that that does not make sense. But I don't know if you're in a position to fundamentally change how Princeton calculates their financial aid so you probably should go with the system they are using.

And things are only going to get worse across the board for financial aid at places like Princeton. They are about to get whacked with hundreds of millions of dollars in endowment taxes that obviously will no longer be used for aid awards. It sounds like Princeton might have a chance to get out of some of it, but some of the others will not.