Thu 27 Sep 2007
Boston Globe Article on Financial Aid for the Middle Class
Posted by admin under Admissions
Posted at 4:37 pmAt the moment, the most e-mailed article on the The Boston Globe’s web site (www.boston.com) is one entitled, “At elite colleges, new aid for the middle.”
Some excerpts:
“The misconception is you get financial aid only if you’re poor,” William R. Fitzsimmons, dean of admissions and financial aid at Harvard, told about 160 parents and their college-bound children last week at a recruitment event at a Worcester hotel also attended by admissions officers from Duke, Stanford, Georgetown, and Penn.
Fitzsimmons and the other officials said they are increasingly reaching out to families caught in the middle: those who are too wealthy to be eligible for federal grants, but not so wealthy as to be able to absorb the $50,000 a year for college, particularly with the rising costs of home ownership.
A decade ago, when the annual price for elite colleges hovered near $30,000, the five colleges gave little or no financial aid to families earning $100,000 or more, unless they had more than one child in college. Now, colleges say they typically cover between $20,000 and $30,000 of the $50,000 bill for comparable families.
At Harvard, the average need-based grant for families in the $100,000-$140,000 income range last school year was $21,693, up from $17,910 in 2004-05.
At Stanford, a family with an income of more than $100,000 with one child in college would get about $30,000 this academic year, compared with just $4,000 to $5,000 a decade ago. Stanford specifically targeted $5 million of its $10 million overall aid increase last year for middle- and higher-income families, its financial aid director said.
College officials define middle class as families who make $100,000 and more per year….
At the admissions directors’ presentation in Worcester, Fitzsimmons stunned many parents when he showed a slide of the income levels of Harvard’s 3,357 undergraduate aid recipients last academic year. About 40 percent of the recipients came from families who made more than $100,000, while just over 30 percent were from families making under $60,000. The highest income on the slide was $180,000 and above.
September 27th, 2007 at 5:00 pm
Maybe I should have gone to Harvard. My family’s combined after-tax income is about $75k, and Williams gave me a need-based grant of exactly $0.
September 27th, 2007 at 5:03 pm
Well, you can always transfer.
September 27th, 2007 at 8:10 pm
‘10…you should re-apply for finaid, because I know people at Williams whose parents combine for considerably more, and still receive fairly significant finaid.
If you look at the numbers, Williams is actually one of the most generous of the top schools in terms of total package AND in terms of just grants.
September 27th, 2007 at 8:27 pm
I would guess that ‘10 and his family made the mistake of saving too much money for college, especially in the student’s name. Learn from Morty’s parents.
By the way, even though this article does not mention Williams specifically, kudos to Guy for the post. These sorts of articles are always of interest to the EphBlog community.
September 27th, 2007 at 8:51 pm
I’ve been wondering how the subprime/credit/dollar crisis is going to affect pricing strategies, including in-place awards. Presumably, a good deal of Williams’ aid packages/price demands are based on the alleged value of parents’ property, and the credit leverage such ‘valuations’ provided.
We run a real-estate development business out of the Nashville office, and a little over a month ago we started getting 2-3 calls a week from agents looking to unload properties. This week it has become 2-3 per day.
One interpretation of what Williams and peer institutions have been doing is maximizing economic return by ramping up the “sticker price” for those with available cash/credit, and adjusting the “discount price” to each buyer based on a wide variety of measurements and techniques, some of them roughly equivalent to a car dealership.
In this view, the ticket price of Williams is no more the “cost” of the product than the list price of a Y-class “First” coast-to-coast ticket, or various similar goods ranging from hotel stock to luxury vehicles. The cost adjusts based on will-to-pay, convenience and other factors, and there is a clear “bucket” market.
The irrational expansion of credit has simply allowed Williams (etc) to raise yield across the board, and engage in various speculative expansions…
One set of problems would seem to come here when (to use the example going ’round) a family whose purchasing decisions/cash position was based on a $450K home valuation suddenly finds the asset revalued at $275K, and their credit position overstretched to say the least.
Stanford (et. al.) as-quoted-by-the-Globe also seem a little duplicitous in using examples which do not take in longitudinal and other differential factors: a family making $100,000 post-tax today could be the “real-wealth” equivalent to a family making anywhere from $50K to $120K or so “a decade ago.” In something like “real dollars as assets” may be paying more to Williams or Stanford than they were a decade ago…
To bottom-line this, a lot of Williams parents are likely in the situation of having their financial situation drastically changed by the current financial crisis. How will Williams and comparable institutions, which have used the free credit phenomenon to raise revenues, react?
If we see a prolonged dollar crisis– which seems likely– how will that affect the long-term planning of educational institutions?
(And: anyone catch Calderon in the Camera yesterday? Speaking of “a leftist tide” sweeping Latin America, I do believe he stepped somewhere past Morales and into Chavez territory… )
September 28th, 2007 at 5:55 am
It’s not a mistake to save for college! It isn’t the smartest thing to put it in the student’s name, but it’s still not a mistake. I think I remember that the college can’t ask you to pay more than 1/3 of assets in the student’s name per year (the number is much lower if it’s in the parents’ names), so if the family was denied financial aid just due to savings in the student’s name, that would imply having at least $120,000 in savings ($40,000 being 1/3). If ’10s parents managed to save that much over ’10s lifetime, how is that a mistake? That’s amazing, it shows that the family really values education, it would go to the purpose for which it was set aside, and as it decreased ‘10 would be eligible for more financial aid. It’s better to save in case your kid doesn’t end up at a school with generous need-based aid; grants vs. loans and calculation of need even varies a lot within northeastern liberal arts colleges.
That hypothetical is probably not the situation, though, it’s probably a bit more complicated than that…definitely go to financial aid and ask WHY, because you should easily be on financial aid with that family income, and reapply with knowledge of why they denied it so you can try to work around whatever the reason is. Good luck!
September 28th, 2007 at 6:01 am
That last comment was me, sorry.
One other thing to add: I wish private colleges trying to make financial aid sales pitches like these would branch out the scope of schools they visit, because the idea that need-based aid is available for ANYONE who’s not dirt poor is pretty unknown in a lot of public school districts. So many kids have really limited options because their parents tell them, “We will only pay for state school, so don’t bother applying to private schools.” Colleges are going to attract different students if they talk this way in schools where $100,000-$180,000 is an average family income than in schools where it’s $50,000-$100,000, and I certainly hope they don’t think their work is done and the word in spread in the second type of schools.
September 28th, 2007 at 11:13 pm
“Maybe I should have gone to Harvard.”
I don’t know your particular situation, but in the 99% of the possible scenarios applicable to a Williams student, you should have.
September 29th, 2007 at 1:38 am
“My family’s combined after-tax income is about $75k”
Pre-tax income may well be about $120,000 — in which case Williams will expect a considerable proportion/all of the COA from the parents.