Reply to Coming to Terms with Full Pay

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Pretty much. Thank you for saving! Without your discipline and frugality many free ride kids wouldn’t get the chance to attend the school. [/quote]

this isn't how it works.[/quote]

I fully support need-based aid (though I also think sticker prices need to come way down), but this is kind of the way it works. And I say this as someone who spent over a decade in elite higher ed financial aid. Full pays do subsidize those on financial aid (it’s just the way budgets and fungible money work). And there is a savings penalty. It’s not a huge one, and work has been done to create appropriate asset tests, retirement allowances, etc. But for people with borderline eligible incomes, savings and investments will absolutely make the difference. [/quote]

You spent time in financial aid, but clearly not the budget office, because one does not subsidize the other. [/quote]

Full-pay students subsidize aided students, or reduce the need for additional funding sources. Even need-blind schools must seek to “balance”’ the number of full-pay and aided students in order to make the budget work. [/quote]

No, this is not how university budgets work.

First, undergrad tuition and fees at most major universities are only a portion (sometimes a very small one) of total revenues. At the schools with the biggest budgets, undergrad tuition and fees are often a single digit percentage of the revenues, of low teens. Even full pay undergrads aren’t covering their full cost.

Second, those tuition revenues are considered net of discounts and then expenditures are set at that level to match. No one is “taking” money from the full pay kids and applying it to the kids receiving aid. There is just a line for tuition and fees revenue, and it is what it is, and spending is calibrated to match. The balancing comes from lower expenditure than would otherwise be the case if everyone was full pay (but again, this may not be a significant figure at schools with large budgets).[/quote]

lol I literally work in endowment finance. Even where endowments subsidize full-pay students, those full-pay students (and those receiving less aid) are needed in order for highly and fully aided students to attend. The schools require a certain level of tuition revenue, even those with giant endowments. Students generating below average tuition revenue must be balanced with those generating above average tuition revenue in order to hit revenue targets overall. [/quote]

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