Fascinating book re: what ppl actually pay for college

[ohgillian]

I'm reading this fascinating book about what people actually pay for college, and it turns out that the whole landscape of college funding has changed since I went to college (late 1990s). 

One of my big takeaways is that MOST families do not pay sticker price, even wealthy families. And that in addition to what I typically think of as financial aid (i.e., grants or loans to low income students), there's a whole new misleading category called "merit aid" which is actually just discounting to get students into seats. The author likens college to airline pricing -- they will charge you the most they can to get you to buy what they're selling, and will give you whatever discount they need to get you to buy, and not one dollar more. (This isn't "merit aid" as you may think of it -- aid that is targeted to truly exceptional students.)

Here's an article by the guy who wrote the book but the book is so good -- I'm listening to the audiobook - author is the narrator. 

Article: www.nbcnews.com/think/opinion/inside-college-merit-aid-manipulative-lucrative-system-keeps-it-running-ncna1256800

Book: www.amazon.com/Price-You-Pay-College-Financial/dp/006286730X

Has anyone read this, or interacted with college financial aid in recent years? 

ETA: The book is specific to undergrad; masters and PhD funding are totally different based on my experience and from what I can tell. 

[mrsjuleshs]

I haven't read it but my DD just graduated from a pricey university (tuition alone is about $35K/year) in May and came out with $0 debt. Along with a 529 that covered about 1 semester plus 1 year housing, and her FAFSA (barely paid anything) she got a hefty grant from a program funded by alumni for her major. She also received the TEACH grant from fed in which as long as she teaches at a Title 1 school 4 of the first 8 years it does not need to be paid back. Her school is huge on assisting students get the most aid as they qualified to receive. The program even provided a lot of the textbooks on loan.

[ohgillian]

Aug 10, 2021 10:28:04 GMT -5 mrsjuleshs said:

I haven't read it but my DD just graduated from a pricey university (tuition alone is about $35K/year) in May and came out with $0 debt. Along with a 529 that covered about 1 semester plus 1 year housing, and her FAFSA (barely paid anything) she got a hefty grant from a program funded by alumni for her major. She also received the TEACH grant from fed in which as long as she teaches at a Title 1 school 4 of the first 8 years it does not need to be paid back. Her school is huge on assisting students get the most aid as they qualified to receive. The program even provided a lot of the textbooks on loan.

Thanks for responding. That's wonderful, and really encouraging. Did you find that your EFC was higher than you reasonably expected it to be? The book makes it sound like people often find the EFC to be higher than they can reasonably afford.

It's interesting to hear that you basically had the experience that the book is talking about. When I was going to college, I was *so frustrated* because everyone made it sound like there's so much scholarship money out there, but I didn't qualify for any of it. And my school definitely wasn't discounting at that time. 

May I ask if your financial aid offer changed during the process? Ie did they offer her X money at one point, then offer more later on before she accepted?

[mrsjuleshs]

Aug 10, 2021 10:36:58 GMT -5 ohgillian said:

Aug 10, 2021 10:28:04 GMT -5 mrsjuleshs said:

I haven't read it but my DD just graduated from a pricey university (tuition alone is about $35K/year) in May and came out with $0 debt. Along with a 529 that covered about 1 semester plus 1 year housing, and her FAFSA (barely paid anything) she got a hefty grant from a program funded by alumni for her major. She also received the TEACH grant from fed in which as long as she teaches at a Title 1 school 4 of the first 8 years it does not need to be paid back. Her school is huge on assisting students get the most aid as they qualified to receive. The program even provided a lot of the textbooks on loan.

Thanks for responding. That's wonderful, and really encouraging. Did you find that your EFC was higher than you reasonably expected it to be? The book makes it sound like people often find the EFC to be higher than they can reasonably afford.

It's interesting to hear that you basically had the experience that the book is talking about. When I was going to college, I was *so frustrated* because everyone made it sound like there's so much scholarship money out there, but I didn't qualify for any of it. And my school definitely wasn't discounting at that time. 

May I ask if your financial aid offer changed during the process? Ie did they offer her X money at one point, then offer more later on before she accepted?

The EFC was ridiculous.  I was never married to her dad so they only used my income (which is NOT a lot by any means) and there is no way I could have afforded their EFC.

She accepted before any financial aid was offered and figured she'd just have to do student loans.  It was during orientation that the head of the Dept. told us about the grants and helped her apply.  FAFSA was a pain every year and we would often have to sign up for a tuition payment plan while waiting for things to fully fund but we always got the refund once it all went through.

[mommin]

Dh and I were neighbors with a guy that worked in financial aid at a nearby college. He refused to save money for his three sons for college. He said that there are millions on dollars in aid that often go unclaimed and that since he is familiar with the ins and outs of the system he will be able to find money for his sons regardless of where they want to go to school. I didn’t dig too deep in to it because he was sort of an exhausting individual to talk to but I think there is some legitimacy to what he said. DH and I were able to graduate with three degrees (one for me, two for him) with right around $20k loans total. Not completely free but much better than many of our friends.

DH’s brother just graduated in July with his second masters degree and owes nothing. He was able to find grants, scholarship, and fellowships to cover most of the cost. What little was left he covered from his savings he had put aside while he worked between full-time schooling stints.

[waverly]

I haven’t read the book but I will put it in my list.

I’m having a hard time wrapping my head around the article and previous posters that seem to be bragging about their low costs if college. Apologies if bragging is the wrong word, I’m just not sure how to word it.

Are they trying to say that merit worked for them? But so many others have tons of student debt?

And if it’s all a secret number or secret logarithm how do you know? Is the key just applying to a ton of schools and waiting them out for the best number? Like what is the actual strategy?

[ohgillian]

Aug 10, 2021 14:05:56 GMT -5 waverly said:

I haven’t read the book but I will put it in my list.

I’m having a hard time wrapping my head around the article and previous posters that seem to be bragging about their low costs if college. Apologies if bragging is the wrong word, I’m just not sure how to word it.

Are they trying to say that merit worked for them? But so many others have tons of student debt?

And if it’s all a secret number or secret logarithm how do you know? Is the key just applying to a ton of schools and waiting them out for the best number? Like what is the actual strategy?

I'm not done with the book, but all of these questions are things that it tackles. The last part is about strategy and I haven't gotten there. I am happy to report back with a general overview of that part once I've listened to it. 

[ohgillian]

Aug 10, 2021 13:42:07 GMT -5 mommin said:

Dh and I were neighbors with a guy that worked in financial aid at a nearby college. He refused to save money for his three sons for college. He said that there are millions on dollars in aid that often go unclaimed and that since he is familiar with the ins and outs of the system he will be able to find money for his sons regardless of where they want to go to school. I didn’t dig too deep in to it because he was sort of an exhausting individual to talk to but I think there is some legitimacy to what he said. DH and I were able to graduate with three degrees (one for me, two for him) with right around $20k loans total. Not completely free but much better than many of our friends.

DH’s brother just graduated in July with his second masters degree and owes nothing. He was able to find grants, scholarship, and fellowships to cover most of the cost. What little was left he covered from his savings he had put aside while he worked between full-time schooling stints.

To be fair, I think [re: your old neighbor] that this is a case of how people in the field get preferential treatment. Similar to how families of physicians get better medical care, and easier access to it. In general, the book comes down on the side that it's better to save than not, because the EFC weighs your current income far more heavily than parental assets -- so if you have a lot of assets, but little income, your EFC would be lower than if the reverse were true.

Having said that ^^, I fully acknowledge that some families literally cannot afford to save anything. 

[plutosmoon]

I love books like this. PDQ poofed some personal stuff

[awkwardpenguin]

I haven't read the book but I plan to. I know a little about "merit aid" but my impression is that it is primarily given by non-selective or not particularly selective schools. Is that correct? It's definitely not something that Ivy+ and highly selective liberal arts schools do.

I went to an Ivy at the very beginning of "high tuition/high aid/no loans below a certain income level/meets full need" and that system has expanded quite a bit but not changed fundamentally. I believe a similar system is in place at all the Ivy+ universities. At an AGI of $200k with typical assets, a family of 4 has an EFC of about $45k based on FAFSA. But most highly selective schools use the CSS Profile and institutional methodology.

Anyway, anyone interested in this should play around with net price calculators of a few schools. They are complicated but give a good sense of how income and assets are factored to come up with aid.

[plutosmoon]

Aug 10, 2021 17:46:54 GMT -5 awkwardpenguin said:

I haven't read the book but I plan to. I know a little about "merit aid" but my impression is that it is primarily given by non-selective or not particularly selective schools. Is that correct? It's definitely not something that Ivy+ and highly selective liberal arts schools do.

I went to an Ivy at the very beginning of "high tuition/high aid/no loans below a certain income level/meets full need" and that system has expanded quite a bit but not changed fundamentally. I believe a similar system is in place at all the Ivy+ universities. At an AGI of $200k with typical assets, a family of 4 has an EFC of about $45k based on FAFSA. But most highly selective schools use the CSS Profile and institutional methodology.

Anyway, anyone interested in this should play around with net price calculators of a few schools. They are complicated but give a good sense of how income and assets are factored to come up with aid.

This is correct, poofed some personal details

[1yeartogo]

I would believe the landscape has changed. Many many schools are in a struggle for a declining student population. Some colleges are even combining with others or have a 5 year plan where if they don’t meet #s they will close. I think most schools will do what it takes to try and get bodies in seats and part of that is helping people to get the aid to come to their institutions. (This doesn’t apply to Ivys or highly selective schools with huge endowments, but is essentially every other school). Also this year and last year with CARES funds and American Rescue Funds etc. some students at lower cost institutions are actually getting checks back if their tuition was covered already.

With all that said I will still save in a 529 for my children because we have a high EFC and want choices when it comes to their decisions for college not lucking into some unicorn aid package.

[egishere]

I fully intend to hire a consultant to help us navigate financial aide etc when my triplets go to college. The thought of three in at the same time is overwhelming and I want all the help we can get! We should have a lot saved by then but if there is free money out there we could possibly take advantage of we will!

[Cappy]

mommin,

I don't save for college for my kids either. It could be that your neighbor gets free tuition at his institution as a part of benefits package, so he could be counting on telling his kids, "this is your option or else you find scholarships elsewhere". Many of us have our home universities as a backup plan. We also have low salaries (50-70k) so there's that aspect re: EFC. I know I'll find a way, not because there's a secret pot or I get first dibs on money, but because I know the ins and outs of stuff too.

An example of this "financial knowledge" within my allied realm (study abroad), I have families who come to me to insist on a provider semester in London that costs 25k but if they are willing to listen I can give them a more immersive program near Manchester that's 2x as long for only 12k. But they have to be willing to go to a place they have not heard of, doesn't have glossy brochures, or a side trip to Paris. Often people won't budge and pay 2x for branding.

Similarly-- students say they want a summer program bc it is "cheaper" but what they pick might only be 3 credits and 4 weeks for 8k and not fin aid eligible (due to being under 6 credits), whereas a semester program to the same place could be 12k and 18 credits. You have to look at cost/credit or cost/week to really understand. Yes, 8k is less than 12 but you didn't budget to enroll in summer so every dollar spent in summer is extra vs. looking at a cost differential for a semester program (2k) where you'd already budgeted for that credit load. That 2k is easily closed by scholarships.

Scholarship-wise 75% of study abroad enrollment is summer so you are also competing with a much larger pool for money. A summer student might get $500 and a semester student with lower grades could walk away with $2,500k just because of the competition pool and/or priority of the funder to support longer program lengths. In that scenario the semester student gets off cheaper than staying home to study.

For grad school: I was paid to go to grad school. I had a tuition waiver and 8k/year stipend at a state school in exchange for working 20 hours a week in an office linked to my field of study (which gave me work experience in my field). Counterparts who had never heard of a graduate assistantship paid 50k for a one year grad program elsewhere then had debt.

[winnied]

I'm going to look into this. It seems to really benefit the already wealthy, educated families who can navigate all this. When I went to college (I'm a Millennial), it was hard for me to navigate the different options. I had to apply for new aid every year and did get a lot covered. Most of my friends and their parents had no idea they had to/could do that. Most of my friends graduated with a ton of debt, if not from undergrad, then grad school.

[waverly]

I finished 2 books on this topic, one of which was in the OP. I guess there are all sorts of different ways that (mostly private) schools determine what to provide students (Golden ticket, Wild Card, Merit, Ivy's). It sounds like a complete black box to me. And you don't really know.

I learned a couple of things though like Don't apply for early acceptance when you have to accept because then you just have to accept the financial aid package they give you. Since state schools weren't really mentioned as much, they still seemed to me to be a better option/ value. This is very generalized, so not trying to include everyone's specific situations. But do apply for some private schools because you just don't know. You can negotiate packages, so if you get one package at one university and then go back to the other one and say well I really want to go here, can you match? I've never done this, but I have been successful at negotiating my scholarship.  Apply to schools where you will be in their range or higher range for test/ GPA and you might see more merit award.  You can see their ranges on their websites. 

All colleges are required to have net calculators on their website. It doesn't take aid into consideration, but nice to see them there now for perhaps a starting point.

One book seemed to think the bubble burst in higher ed wasn't really going to happen. Yes less population means less enrollment, but colleges have endowments or have seen alumni come to the rescue, so he didn't seem to think tons of schools were going to be closing.

They did agree that a 529 or such did not count much against a student, so both advised saving for college.

Also, I know you all know, but for the lurkers never ever go to a for profit school.

[circa1978]

I work in higher ed at a university where almost no freshman pays the sticker price. Almost every school has what's known as a discount rate. The average discount rate for first-time undergraduates was more than 50 percent nationally last year. Always, always, always apply for the aid even if you think you make too much. And yes, you must file the FAFSA annually. Even graduate students can file. Federal grant money is left on the table every year because people who do qualify don't realize they do and don't fill out the required forms.

Oh, and yeah, many universities have a remission and/or exchange program, so someone who works in higher ed is probably the least freaked out about paying for college. That's why most of my colleagues stay in the business as staff, not faculty, when we could make more elsewhere. List for tuition + room and board and fees at our two largest local private universities is $65-75K a year. Tuition there is free for kids of faculty staff (you still have to pay room/board/fees).

We mostly see students apply to multiple colleges this time of year, then take the best financial aid offer. That's the smartest thing to do.