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What a $300,000 College Might Cost a $200,000 Family

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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.”