What a $300,000 College Might Cost a $200,000 Family (Published 2020) (2023)


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More need-based financial aid is available for the affluent than you might expect.

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By Ron Lieber

College is so expensive that even the affluent can be considered needy.

Oct. 1 is opening day for financial aid season, but the Free Application for Federal Student Aid — the dreaded FAFSA that families were able to start filing on Thursday — is by no means the last aid form that many of them will fill out. If they want a discount on their favored schools’ list prices, which approach $80,000 annually at some private colleges, those forms will help financial aid administrators determine just how needy any given family is.

All that data entry can pay off, because lots of people can qualify for financial aid that is based solely on need. In fact, over a four-year span, families with annual household income of $200,000 can get a third or more of the cost knocked off an education with a $300,000 list price.

But that doesn’t satisfy everyone. Even if you have to pay a mere $40,000 per year — about what a $200,000-earning family could owe at Northwestern, Rice and Vanderbilt, according to the net price calculators on their financial aid websites — that can be a tough check to write. At the same time, outside observers often wonder why a $200,000 family is being subsidized instead of one making $20,000.

A fresh set of families encounters the undergraduate financial aid system for the first time each year, and only a small minority end up understanding exactly what is happening to them. Much of the confusion rests with the fact that there are different kinds of families, different kinds of aid and different kinds of schools.

Those $200,000 families are in the minority of people who are trying to afford college for their kids: There are far more people with much less money hoping that schools will give them scholarship money beyond the maximum $6,345 that the federal Pell Grant makes available to most lower-income families.

The families with less money often end up with less help over all by at least one measure, according to Mark Kantrowitz, publisher and vice president of research at Savingforcollege.com. He has crunched federal data to determine what percentage of their incomes go to the net price they pay to colleges, and his conclusion is that the percentage is higher for lower-income families than for people who earn more.

Then there are the two main types of grant aid — the kind you don’t have to pay back — that come from the schools themselves. Last week, I wrote about the first kind, merit aid discounts, which can be higher if your grades and test scores are better. Merit aid also entices wealthier families to pay, say, $45,000 instead of $65,000 and makes them feel good about the pat on the back that comes from having “earned” a $20,000 “scholarship.”

The second kind, need-based aid, is the subject of this column — and what would be available to a $200,000 family at Northwestern, Rice and Vanderbilt. (Rice and Vanderbilt do offer some merit aid, too, while Northwestern offers “talent” scholarships to musicians.)

Undergraduate institutions distribute need-based aid in many different ways. A few admit applicants no matter how much financial help they need and agree to meet every dollar of their need without asking families to borrow a cent. Others have the same admissions rules but do ask families to borrow.

Still more admit everyone who needs help but may not give him or her enough grant money to be affordable. And then there are those that reject at least some qualified students because of their financial need. (In Jeff Selingo’s new book, “Who Gets In and Why,” he explains what happens at Lafayette College when it struggles through that particular situation.)

Students whose parents earn $200,000 and who get into Northwestern, Rice and Vanderbilt are theoretically among the lucky ones. Those schools are resource rich and pretty generous, though they start with list prices ranging from just over $69,000 to just over $79,000.

I ran the numbers for a theoretical $200,000 family from Ohio. I gave it $200,000 in home equity, $50,000 in a 529 college savings plan and no other children in college, and used the schools’ net price calculators. They produce nonbinding estimates, but they’re usually pretty accurate.

The schools would ask this family to pay between $39,000 and $45,000 for one year. That means students from those $200,000 families can save about $25,000 per year or more off the total retail cost of attendance.

Again, these are estimates, and the numbers might change when any such family formally applies for aid, especially for those that have their own businesses, which can offer parents various ways to alter compensation.

Many colleges treat home equity as an available asset, and they have different ways of doing so. Northwestern’s net price calculator presents a worst-case outcome for a family when it comes to home equity, said Phil Asbury, the university’s director of financial aid. Once humans review an application, the result can only become more generous.

Still, even $40,000 is a lot to fork over out of $200,000. The formulas in play generally assume that higher-income families can devote a large fraction of each extra dollar that they earn, beyond what they need to cover basic necessities, to the annual college bill.

But shouldn’t a $200,000 family have been saving all along? I put the question to Yvonne Romero Da Silva, who brings a Massachusetts Institute of Technology math degree and years at the College Board to her role as vice president of enrollment at Rice. (The College Board developed the aid-determination formula behind the CSS Profile, the other major aid form that many private colleges and universities use.)

Ms. Romero Da Silva could not say for sure whether the people who invented the College Board aid formula were assuming that more-affluent families would or could have been setting money aside. But the formula does give people in jobs like hers flexibility to define fairness as best they can and in their own way.

“We are not looking to pull every asset that families have at their discretion,” she said. “But there is a sense that some assets a family has could be put toward paying for a student’s education.”

If you’re a renter, for instance, would you want schools to ignore some other family’s large pile of home equity in doing the need-based financial aid math? Many private colleges and universities do examine it.

As to the question of whether the least needy are getting more than their fair share of aid, it is indeed tempting to send in every small violin from the Rice University undergraduate orchestra for its $200,000 families that have to pay $40,000. The school could devote all of its aid budget to lower-income families instead. So why doesn’t it?

Here, Ms. Romero Da Silva was politic, noting that Rice accepts every person it deems qualified regardless of financial need and discounts the bill accordingly. Not every college can afford that. Rice broadcasts its attempts at equal-opportunity generosity in plain English and round numbers on its website.

“We are not taking from one group and giving to the other,” she said.

The financial aid process can feel painful for everyone. For members of the upper-middle class, there is often an added element of surprise. Many of them don’t study up ahead of time the way lower-income people might, because few people warn those with a bit more money how complicated things can be for them, too.

When people immerse themselves in the details, they may realize earlier on that their “felt need” is much higher than what their child’s target schools are willing to offer.

So this is as good a time as any to remind everyone with younger children to do the math and test some net price calculators long before a child’s senior year. It’s also wise to do some research on schools that are sure to be affordable.

“Families always have the option of sending their kid to an in-state public college,” Mr. Kantrowitz said, addressing those parents who feel compelled to stretch for the expensive private institutions. “This is in some ways a matter of choice, not of necessity.”


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What a $300 000 college might cost a $200 000 family? ›

All that data entry can pay off, because lots of people can qualify for financial aid that is based solely on need. In fact, over a four-year span, families with annual household income of $200,000 can get a third or more of the cost knocked off an education with a $300,000 list price.

How do you calculate family contribution for college? ›

EFC Parent Contribution
  1. Add up total annual parent income. Use both taxable and nontaxable income, including any amount put toward retirement that year.
  2. Subtract allowances for federal taxes, state taxes, and Social Security paid.
  3. Subtract an Income Protection Allowance (IPA). ...
  4. Subtract an Employment Expense Allowance.

Does FAFSA check your bank account? ›

Students selected for verification of their FAFSA form may wonder, “Does FAFSA check your bank accounts?” FAFSA does not directly view the student's or parent's bank accounts.

How much did college cost in the 2000s? ›

Between 2000 and 2021, average tuition and fees have jumped by 69%, from $8,082 to $13,677 per year. In just the 10 years between 2010 and 2020, tuition and fees rose by 20%, from $11,397 to $13,677.

Is 200k a year a lot for a family? ›

Even if you reside in a high cost of living area like Manhattan, $200k a year would put you in the top 25% of households according to the U.S. Census Bureau. Yes, that's the top 25% among some of the highest earning households in the world.

Will I get financial aid if my parents make over 200k+? ›

The good news is that the Department of Education doesn't have an official income cutoff to qualify for federal financial aid. So, even if you think your parents' income is too high, it's still worth applying (plus, it's free to apply).

How do I read my FAFSA Expected Family Contribution? ›

A higher EFC means that your family has more substantial income and assets, and therefore can afford to pay more for college. On the other hand, a lower EFC represents that your family cannot afford to pay as much, and therefore you have a greater need for financial aid.

How does FAFSA calculate family contribution? ›

The financial aid staff starts by deciding upon your cost of attendance (COA) at that school. They then consider your Expected Family Contribution (EFC). They subtract your EFC from your COA to determine the amount of your financial need and therefore how much need-based aid you can get.

What is the formula for Expected Family Contribution FAFSA? ›

The student's EFC is determined by adding the student and spouse's contribution from available income to their contribution from assets and then dividing the sum by the number in college.

Does FAFSA look at parents savings account? ›

Parents as well as students must report the net worth of their assets when applying for federal student aid.

Should I empty my savings account for FAFSA? ›

Empty Your Accounts

If you have college cash stashed in a checking or savings account in your name, get it out—immediately. For every dollar stored in an account held in a student's name (excluding 529 accounts), the government will subtract 50 cents from your financial aid package.

How much cash is too much for FAFSA? ›

There is no set income limit for eligibility to qualify for financial aid through. You'll need to fill out the FAFSA every year to see what you qualify for at your college. It's important to make sure you fill out the FAFSA as quickly as possible once it opens on October 1st for the following school year.

What year did college become unaffordable? ›

And yet, by 1970, college access was disrupted by double-digit inflation and a struggling economy. Tuition and fees rose alongside the inflation rate, making college — once again — unaffordable for many students.

Why is college so expensive? ›

There are three main reasons for this: growing demand, a shortage of in-state funding and outsized investment in student services.

When did college become too expensive? ›

Cost Of College Over Time: The Past 40 Years

In 1980, the price to attend a four-year college full-time was $10,231 annually—including tuition, fees, room and board, and adjusted for inflation—according to the National Center for Education Statistics. By 2019-20, the total price increased to $28,775.

Is 300k a good family income? ›

$300,000 Feels Like A Middle-Class Income

Psychologically, earning $300,000 feels OK because it puts the household in the top 10% of household income earners. But making $300,000 feels like a middle-class income due to how little cash flow is left. A household needs to earn $470,000+ to be in the top 1% in 2022-2023.

Is 500k a year rich? ›

According to the most recent data available for fiscal year 2019, an income of $540,009 per year puts you in the top 1% category. Based on that figure, an annual income of $500,000 or more would make you rich.

Can a family live on $30000 a year? ›

So while it's comforting to know that it's possible to live on $30,000 a year, it's also a good idea to aim higher and save more when you're young, because you can't know for certain what the future will cost and you may want some flexibility.

What disqualifies you from FAFSA? ›

Other reasons for financial aid disqualification include: Not maintaining satisfactory progress at your college or degree program. Not filling out the FAFSA each year you are enrolled in school. Defaulting on a student loan.

Do millionaires get financial aid? ›

There are favorable non-need-based loans that students from even the wealthiest families will qualify for, so if you want your child to take on some of the responsibility for financing his or her own education, or if you want to consider federal borrowing options yourself, you will need to complete a FAFSA to access ...

Should you complete FAFSA if wealthy? ›

Rich parents or not—fill out the FAFSA

It's a legitimate question and the answer is yes, you should complete the FAFSA even if you think your parents make too much money for financial aid. You might be surprised that you are eligible for aid you didn't think you'd qualify for.

Why is my EFC so high independent student? ›

A high EFC is likely the result of high income or a high value of assets as reported on the FAFSA. Assets considered include bank account balances, capital gains and, sometimes, equity held in businesses and real estate.

What if my EFC is wrong? ›

If you believe that a college has calculated your EFC incorrectly, contact the financial aid office. Financial aid administrators can explain how they determined your EFC and discuss your options. Your EFC may be lowered if your family has had a significant change in income or expenses since you applied.

What if EFC is higher than cost of attendance? ›

If your EFC is greater than the cost of attendance, there's a very slim chance you will receive any financial aid. The only option for you, then, would be to take out a federal direct loan or PLUS loan in the event that you needed assistance in paying for school.

What is the highest expected family contribution FAFSA? ›

Use of the expected family contribution

Generally speaking, the lower the EFC, the higher the financial aid award will be. Zero is the lowest EFC number (indicating that the family cannot afford to pay anything) and 999,999 is the highest.

What percentage of parents income on FAFSA? ›

The FAFSA formula doesn't expect students or families to use all of their adjusted available income to pay for college. The formula allocates 50 percent of a dependent student's adjusted available income to cover college expenses and anywhere from 22 to 47 percent of parents' available income.

How much do colleges expect parents to contribute? ›

First, in general, parents are expected to contribute up to 47% of their net income to the cost of college every year. Before you freak out, stop!

What does an EFC of $50000 mean? ›

An Expected Family Contribution (EFC) of $50,000 means that the family is expected to contribute $50,000 toward the student's education expenses for the academic year.

Why am I not eligible for Pell Grant? ›

Once you have earned a baccalaureate degree or your first professional degree or have used up all 12 terms of your eligibility, you are no longer eligible to receive a Federal Pell Grant. Learn more about staying eligible for federal student aid while you're in school.

How much is the average EFC? ›

2: The EFC for the average American household with an AGI of $50,000 will usually range from $3,000 to $4,000. There is no cap on EFCs so some very wealthy families will have EFCs that exceed the cost of an expensive private university.

What assets don't count on FAFSA? ›

Cars, computers, furniture, books, boats, appliances, clothing, and other personal property are not reported as assets on the FAFSA. Home maintenance expenses are also not reported as assets on the FAFSA, since the net worth of the family's principal place of residence is not reported as an asset.

Does FAFSA ask how much is in bank account? ›

The FAFSA will specifically ask “As of today what is the cash balance of checking, savings…” accounts for the student. Because the question is phrased “As of today” it leaves room for interpretation. If all money was pulled from checking and savings the day before the FAFSA was filed, the answer is zero.

Will my parents checking account affect my financial aid? ›

Do Parents' Assets Affect Financial Aid? Both parent and student-owned assets can have an impact on financial aid eligibility. However, generally-speaking, parent assets have a more limited impact because parents are expected to contribute a smaller proportion of their wealth to pay for their child's college education.

How do I hide assets for financial aid? ›

Non-reportable assets

Qualified retirement plans , including 401(k), Roth 401(k), 403(b), IRA, Roth IRA, SEP, SIMPLE, Keogh, profit sharing and pension plans. Qualified annuities are also not counted on the FAFSA.

How far back does FAFSA look at savings accounts? ›

FAFSA looks back 2 years to determine what your income will be for the upcoming school year.

What affects FAFSA the most? ›

Income and assets are the some of the primary metrics on which the FAFSA measures your financial need. If your family has a high relative income, you may receive less financial aid than a family with a relatively low income, because the FAFSA will determine that you have a higher expected family contribution (EFC).

Does FAFSA consider cash? ›

Assets you SHOULD include on the FAFSA

These are counted as assets that you need to include on your FAFSA: Money in checking accounts, cash and savings accounts. Real estate. While FAFSA does not consider your parent's primary residence as an asset, you need to declare the net worth of any additional property.

What GPA does FAFSA require? ›

To be eligible for federal student aid and college financial aid, a student must be making Satisfactory Academic Progress (SAP). This generally consists of maintaining at least a 2.0 GPA on a 4.0 scale (i.e., at least a C average) and passing enough classes with progress toward a degree.

How much should I accept in financial aid? ›

However tempting it might be to use that extra money to buy a brand new $1,800 laptop or textbooks or anything else, if you can cover those expenses out of pocket then that is what you should do. Only accept enough financial aid to cover the 25% of tuition not covered by your parents' savings and your scholarship.

What is the most expensive US college? ›

Most Expensive Colleges List
CollegeTuition Cost
1. Franklin & Marshall College$65,652
2. Columbia University$65,524
3. Reed College$64,450
4. Vassar College$63,840
16 more rows
Apr 23, 2023

What is the average student debt after college? ›

University graduates owe an average of $33,500 a year after they leave school. The average private nonprofit university student borrows $33,700 to complete a bachelor's degree. For-profit students borrow $49,700.

Why college should be free? ›

Free College Would Eliminate Debt Burden

One of the central reasons as to why should college tuition be free is that not all students and families can afford college. It is widely accepted that while college is increasingly necessary, it is also increasingly unaffordable.

Is college overpriced? ›

Both college tuition and student loan debt are now higher than they've ever been. In the past 10 years, from 2008 to 2018, tuition fees have increased by a shocking 36%. And while inflation of course still exists, in the same time period, the median income increased by a mere 2.1%. So why is college so expensive?

Is college worth the cost anymore? ›

Bachelor's degree holders generally earn 75% more than those with just a high school diploma, according to “The College Payoff,” a report from the Georgetown University Center on Education and the Workforce — and the higher the level of educational attainment, the larger the payoff.

Will college ever get cheaper? ›

In fact, the average net tuition and fees paid by in-state students at public four-year colleges is on track to be at the lowest point in 16 years, when adjusted for inflation, according to the report. For 2021-2022, it's estimated to be $2,640 this year, down from an inflation-adjusted high of $3,720 in 2012-13.

How can I make college cheaper? ›

6 Ways to Make College Less Expensive
  1. Start Saving. It's not quick, and not easy, but saving for college is the single biggest way to make college affordable and attainable. ...
  2. Look for Scholarships Early. ...
  3. Earn College Credits in High School. ...
  4. Consider Community College. ...
  5. Attend College Online. ...
  6. Apply for Financial Aid.

What makes college so hard? ›

Yes, college classes are typically harder than high school classes because the course work, topics, and depth of materials are more complex, set at a faster pace, and require more studying.

Why is college so stressful? ›

College students commonly experience stress because of increased responsibilities, a lack of good time management, changes in eating and sleeping habits, and not taking enough breaks for self-care. Transitioning to college can be a source of stress for most first-year students.

How much does the average family pay for college? ›

The average cost of attendance for a student living on campus at a public 4-year in-state institution is $25,707 per year or $102,828 over 4 years. Out-of-state students pay $44,014 per year or $176,056 over 4 years. Private, nonprofit university students pay $54,501 per year or $218,004 over 4 years.

What does the average family pay for college? ›

The average total cost during the 2021–22 school year for a public four-year university for in-state students staying on campus was $27,330 a year and $44,150 for out-of-state students, according to the College Board. A year at a four-year private college cost an average of $55,800 for all expenses.

How much should a family save for college? ›

Ideally, you should save at least $250 per month if you anticipate your child attending an in-state college (four years, public), $450 per month for an out-of-state public four-year college, and $550 per month for a private non-profit four-year college, from birth to college enrollment.

What percentage of college costs do most families pay? ›

During the 2021/2022 school year, the average parent covered about 43% of their student's college costs using income and savings. Parents covered an additional 8% of that cost by taking out loans, according to the Sallie Mae study. The average total parent contribution came out to $13,000 per year.

Are parents still paying for college? ›

California. It's only until the child reaches 18 years of age that parents should provide support. However, it can continue until the age of 19 if the child is a full-time high school student and not self-sufficient.

Do most kids pay for college? ›

California's robust student aid program, coupled with federal and institutional grants, ensures that the majority of California public college students do not pay tuition.

Does anyone pay full price for college? ›

Higher income students are more likely to pay full price. As this table shows, college students are about twice as likely to pay full price at a public four-year college as they are at a private, non-profit four-year college (28 percent and 13 percent of freshmen, respectively).

What is the average cost of college in the US? ›

Data Summary. The average college tuition and fees at four-year schools in 2020-2021 was $19,020. The average total cost for a year of college at a four-year school — including tuition and fees, on-campus room and board, books, supplies, and other expenses — was $35,551.

How many people can afford college? ›

A college education is widely perceived as unaffordable for most Americans, with 77% of U.S. adults saying a college degree would be difficult for someone like them to afford. 82% of women said a college degree would be difficult to afford, compared with 73% of men.

Should you pay for your kids college? ›

Parental financial support can send a message about the importance of education and inspire a student to work harder. In addition, these experts suggest that paying for a child's education is an investment in a child's future — giving them a shot at better career options.

How much should a middle class family save for college? ›

A good rule of thumb is to save 1/3 of projected college costs, and cover the remaining 2/3 with current income, financial aid, scholarships and student loans. The more you save, the less your child will have to borrow to pay for college.

How much spending money should you have for college? ›

What is a reasonable monthly budget for a college student? As you can see from the above, college students spend approximately $2,000 per academic year on additional expenses beyond tuition, room and board, books and supplies, and transportation. That amount may cover clothing, laundry, toiletries, entertainment, etc.

What to do if your parents are rich but won t pay for college? ›

No parental support for college students? 7 ways to pay on your own
  1. Fill out the FAFSA.
  2. Apply for scholarships.
  3. Get a job.
  4. Look into tax credits for qualifying college expenses.
  5. Minimize your college costs.
  6. Research tuition assistance programs.
  7. Consider taking out federal student loans.
Jan 27, 2023

How much money do most college kids have saved? ›

Most Students have $51-$500 in their Bank Accounts

399 student responses over 82 schools. The majority of students (23% of respondents) reported having $51-$500 in their bank accounts. This is a very low amount and can definitely be concerning.


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