The New York Times has a great Op-Ed today about the Expected Family Contribution (EFC) calculation, which I recently encouraged all parents with college-bound kids to check out.
My main take-away from looking at my own family’s EFC estimate on the College Board site was jaw-dropping because there is Just.No.Way.
Where would an ordinary (non-wealthy) family be able to come up with that kind of cash to pay for college? Every year? For just one kid?
The answer, of course, is that very few families can come up with that kind of money, so students and their families take out extraordinarily large student loans.
The New York Times Op-Ed explains the pernicious effect of the federal government-calculated EFC. When all families receive a ‘government number’ it sets an artificially high floor for college tuition prices.
The Op-Ed also explains why some high-priced private universities may offer cheaper educational access to students than public universities, via the private universities’ generous financial aid packages.
The article also helpfully reviews some of the not-applicable, and not-generous, federal grant money available to families.
Finally, the Op-Ed recommends that Congress drastically cut the EFC by 75%, to reflect the fact that tuition cost hikes since 1980 have drastically outstripped inflation.
This proposal will not go over well in higher education circles, to say the least. Fortunately for colleges and universities, according to the article, they have spent a half-billion dollars lobbying Congress in the past 5 years, the eighth-highest special interest category.
Please see related posts:
College Savings and compound interest
Interview with College Advisor Part I – The insanely rising cost of college
Interview with College Advisor Part II – is the 4-year college financial model broken?
One source of college costs: administrators!
New York Times on funding your 401K Account vs. 529 Account
And another NYTimes follow-up on the confusing issue of FAFSA – determining the expected cost of college.
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James Stewart writes an interesting piece this morning on a 55 year old NYC attorney who recently declared bankruptcy, after earning in the $375-500K range for the past 20 years for a series of high-powered New York law firms.
Stewart’s analysis is that:
1. Being a non-equity partner attorney is tough these days, and
2. NY City is expensive these days.
Both of these points are, undoubtedly true, as far as they go. On the other hand, what an idiotic piece.
Here’s a great example of making 2 true points, while overall missing The Truth of this unfortunate bankrupt attorney’s situation. The Truth is this: this guy’s lifestyle and expenses clearly didn’t match his earnings. Full stop.
This isn’t meant to blame or shame the attorney, who obviously is suffering from an inability to budget, and now has the ignominy of getting his personal financial situation described to the millions of readers of the New York Times.
But rather, its meant to point out that the Financial Infotainment Industrial Complex – of which the New York Times is the most important and highest quality member – can take a few pieces of data and shape an entirely bizarrely wrong narrative out of it.
When my four year old is given a Connect-The-Dots exercise in pre-K, we might be alarmed if she took the three black dots set up in the shape of a triangle and drew a highly accurate rendition of Edvard Munch’s The Scream. (Impressed, of course, but alarmed).
James Stewart, are you so far enmeshed in the New York City mindset that your main point about going bankrupt on $375K a year is that non-equity partners sure have it tough? That is alarming. Not impressed.
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