A few months ago my (now) son-in-law - a financial planner - asked me what I thought about the ongoing annual increases in college tuition. If he could reduce that annual increase input in his models, his clients would … well … be happier. “Absolutely” - I told him. “We’ve been on such an increase for so many years and for so many decades that it has to start stabilizing.” - I said with authority. Literally the next day, several colleges announced 3-5% annual increases again and the headlines were abuzz with “College will Cost up to $95,000 this fall.” (AP newswire April 2, 2024) That got The College Sage thinking. While our paying clients aren’t generally seeking financial aid, at what point might they begin to qualify? Surely the old rules of thumb ($150,000 household income and $1.5m assets) are surely out of date with many colleges now having a cost of attendance approaching six digits.
That’s when Lilly walked in. To gain more insight into establishing the current rule of thumb for college financial aid, I turned our fabulous College Sage summer intern Lilly loose on a great college cost estimator tool called “MyinTuition.org” that I have long admired. This quick college cost estimator allows families to input their personal statistics to fairly accurately gauge whether or not they will be offered financial aid. Now not all schools participate in the calculator tool so it doesn’t provide universal assistance, but the schools that subscribe to this website are made up of largely “Ivy Plus” private universities and well-ranked public colleges that are either on many client college lists or at a minimum, indicative for similar colleges not yet on the website.
Here’s a snapshot of what you can learn using UVA’s page on MyinTuition.org as a demo. The images included below are examples of the types of questions each college poses. Not all ask about the state of residence or home equity, but most will include questions similar to these. Once you have finished answering each question, you will be shown a pie chart similar to the one below. The number listed in blue (need-based scholarship) represents the amount of financial aid you can expect based on your personal statistics. Word of warning - your output is only as good as the validity of your inputs! But if you’re honest with your inputs, the findings produced by MyinTuition provide a useful tool for predicting the parent/student expected contribution for a year of expenses at your dream college(s).
The first question from My inTuition asks about citizenship and living status.
Some colleges, including UVA, will ask for your state of residence.
This question is probably one of the most important ones, as you will see later in this blog.
Here you are asked to input your family’s total annual income.
More questions about investments/equity.
These questions ask about home equity value.
Almost done!
This is what your final outputs should look like. The number in blue (need-based scholarship) is what we’re looking for.
OK now let’s see what trends Lilly found while spending hours playing around with the site using the schools Boston College, Boston University, Tufts, Duke, Colgate, Georgetown, Notre Dame, UVA, Richmond, William and Mary, Washington and Lee, University of Pennsylvania, Cornell, Dartmouth, Yale, Harvard and Brown.
Do siblings matter? If so, how much? While holding all other variables constant (i.e income, home value, investments etc.), we aimed to figure out how much having a sibling (or more than one sibling) affected the amount of financial aid predicted. Our conclusion is that there are big jumps in amounts of financial aid from having no siblings enrolled to having just one sibling enrolled. For example, the Duke University model generally implies $14,100 of aid to students with no siblings currently enrolled but the expected aid jumps to $41,400 if a sibling is already in college and $51,700 if two siblings are currently enrolled in college. That said, once a family reaches 2+ siblings currently enrolled in college, the financial aid amount remains the same. So conclusion number one: if you have one child enrolled in college but received no aid for that child, try try again with the next child!
What’s the new rule of thumb regarding income and assets? Switching gears to focus on income and net assets, we observed that no aid is likely for families reporting household income above $300,000/year or who have $2 million or more in net assets (your primary residence is almost always excluded from net assets). We computed the average aid amounts for families who report an annual net household income of $100,000, $200,000, $300,000, and $400,000. For families making around $100k/year and net assets below $2m, the average financial aid you can expect to receive approached approximately $58,000. Families making around $200k/year can expect about $25,000 in financial aid. For those making $300k/year or more, this calculator suggests that financial aid is unlikely, with the exception of some of the well-endowed Ivies like Cornell, Dartmouth, and Brown who continued to grant aid at the higher income levels. The average amount of financial aid predicted from those three schools when making $300k + per year is around $6,300.
Are there any regional comparisons to note? We decided to look at some of the hot spots for applications to see if we could gauge where families might find more aid. For example, we compared Boston College, Boston University, and Tufts, as they are all located in Boston. Out of the Boston schools, Boston University’s model implied the most aid for low-income students ($100k/year) coming in at $57,200, and middle-low income ($200k/year) coming in at $27,100. When comparing the Virginia schools (UVA, Richmond, William and Mary, and Washington and Lee), Richmond offered the most aid to lower-income students at $52,200 and middle-low-income students at $19,000 while William and Mary’s model predicted the least aid.
Is there a correlation between financial aid forecasts and endowment size? Lastly, we looked at whether or not “richer” schools, as measured by endowment/student, tended to offer more financial aid than lesser-endowed colleges. Typically, you would think that the greater the endowment size, more financial aid is able to be offered, but that is not always the case. For example, in Duke vs. Colgate, we found that Duke provides more aid for lower-income students, at around $66,600, and $29,900 for middle-low-income students but Colgate, with a significantly lower endowment/student, is still attempting to match Duke level aid. For Georgetown vs. Notre Dame, Georgetown offered significantly more aid for lower-income students, at around $57,500 and $25,800 for middle-low-income students than Notre Dame even though endowment statistics might suggest the opposite. By and large, the Ivies seem to offer more aid than most others. In analyzing the Ivy League schools, we concluded that Dartmouth offers the most financial aid for lower-income students, at $84,300 and Brown offers the most financial aid for middle-low-income students at $44,550. Another interesting point of note is how the Ivy League schools are generally offering more financial aid to middle-low income students than the rest of the schools pictured. The chart below shows a snapshot of willingness to provide financial aid and average endowment/student.
*When calculating the maximum aid for each of the schools given the student comes from a middle-low income family, we used the same number of assets and income throughout. Notre Dame proves to be an outlier, stating that they only provide $200 of aid for middle-low income families. However, according to their website ( https://admissions.nd.edu/aid-affordability/estimate-your-cost/ ) , it says students can expect to receive around $33,000 of aid, given that they are middle-low income. In case of any confusion, we wanted to mention the differences between the MyinTuition website and the Notre Dame admissions page.
What will happen when more and more families need more aid? With the ongoing rise in the cost of college, more people are in need of financial aid. Will the high cost of college finally knock the bloom of the rose? At The College Sage, we believe it is vitally important for students to have a full understanding of family implications from these rising prices alongside their parents, as they may also be needed to pitch in for certain college expenses and/or at a minimum, prioritize academics when they get to college. Even completing college a semester or year early is a helpful way to offset the total cost of college - a trend we increasingly see and advocate for. Who says four years needs to be a standard? With so many students completing a full year (or more) of college credits during high school, perhaps three is the new four? And if you’re on the six-year plan, well … ouch! We hear from parents time and time again that one of the benefits of engaging a counselor like The College Sage is that we help the student recognize that college is a material life cost. It needs to be taken seriously. We help find the right fit, investigate the appropriate major choices to minimize costly changes, and we help the students enter college with appropriate respect for the academic obligations that come with the gift of a college education. So while college counseling might come at a price, we feel pretty confident that The College Sage helps families make better decisions, especially in ongoing rising college costs.
We continue to expect the college environment to shift, bifurcate, and morph further into “the haves” and “the have-nots.” The “haves” generally have strong endowments and low acceptance rates. Studies prove that the percentage of undergraduate families who pay the full price of college generally decreases as the acceptance rates increase. There are many reasons why this might be the case, but one of the most important ones is that people place higher perceived value on more elite colleges based on their rankings and acceptance statistics. According to studentaidpolicy.com, it is shown that for schools with acceptance rates of less than 10% to 19%, approximately 50% of incoming freshmen will pay full price. As the acceptance rates increase to 20%-29% and 30%-39%, the percentage of students who pay full price decreases to almost 30%.
It’s no surprise, then, to find that Early Decision students often similarly make up around half of a total incoming class for “The Haves.” Most Early Decision students make an agreement with the school that they will attend if they get accepted since they are generally willing and able to pay full price. When looking at the College Investor’s 2024 list of the 30 most expensive colleges, 23 colleges reported data about their ED admit statistics. Of the 23, 14 of them had 50% or more of their total class taken up by ED admits. We will say that again … over 60% of the most expensive colleges take in over half of their annual enrollment through Early Decision! Why do the colleges that are more expensive than most have a majority ED population in their classes? Well, the answer comes from what we just covered. When ED students form an agreement with the school, they effectively agree to pay full price, thereby giving the university more secure funding.
Here we compared ED admitted students (in percentages of their total incoming class) to the top 23 most expensive schools (it is actually Top 30, but 7 schools did not report).
There are many headlines about “the coming student enrollment cliff.” Over the coming years, there is predicted to be a decline in the number of college-bound students. This was initially caused by the 2008 recession, which resulted in the number of births declining thereby leading to fewer children who would begin college starting in 2025. But that’s not the entire story. During the pandemic, people began to completely reevaluate major life goals - including the value of college and careers. They could more easily turn to online learning, community college courses became free or very inexpensive in many states, job turnover increased and career ambitions took a backseat to wellness. Combined with lower ongoing birth rates, colleges are beginning to plan for a decline in the amount of students who will attend a typical 4-year college. And with many colleges already struggling with negative budgets and declining enrollments, the outlook is murky.
So should we expect college to be more expensive but maybe easier to get into? Unfortunately, the interesting point is that the predicted number of students who will attend an “elite” or Ivy plus school is expected to rise! Will these elite colleges be able to hang on to their full-price-paying students as prices continue to rise even higher? Well, at The College Sage, we would attest that yes, they will. Most of these elite colleges take over half of their profit from full paying, ED students. Since the US as a whole perceives a higher value in the more elite, low-acceptance rate schools, students will continue to apply to, pay full price for, and enroll in these colleges. Regardless of a price increase, the perceived benefits of “The Haves” make families willing to pay full price for quality education. In our view, the college roses will likely bloom like usual. But if you’re not a rose … ouch, you might get stung.
So keep saving and contact The College Sage now. We’ll do everything we can to help you enroll in your dream school and afford it too!
