Challenging College

For about 10 years now, I’ve invited anyone to tell me about someone they personally knew, whose family did not have financial need, who got a free ride for all 4 years at college. By free ride, I mean all expenses paid, not just free tuition, and not just a one-year fellowship or grant of some kind. Finally, someone has come up with this plum, the result of a Facebook discussion. She sent me this list, which is interesting to review. Upon drilling down, however, many of the awards on this list are—you guessed it—tuition only. She also told me she knew of a student at the University of Delaware (un-named) and that her own child had gone to the University of Central Florida with only $500 in costs of books, and transportation costs to get there. Score! Someone did it!

One of the most generous on the above list appears to be the one at Duke. Drilling into their website, they currently have 122 people (across all four years) who are Robertson Scholars. Duke has a student body of 15,192, which means 0.08% of the student population managed to land this. There are currently 21 freshman Robertson Scholars. Duke received 41,000 applications for the freshman class, giving an individual student a 0.005 chance of landing one of these awards. In other words, slightly better than a snail’s chance in hell.

Here’s another list I found through our old buddy, Google. If you look at these, you’ll see that a lot of them are also tuition-only, or for one year, or you have to be on campus already, or they’re for a very small number (sometimes only 1) student in a huge student body.

You may think this has changed my opinion. You’d be wrong. But I’m now willing to acknowledge that someone, somewhere, has actually gotten a full “free ride”, for college. But don’t plan on it unless you can guarantee your student will meet all the following conditions:

Be willing to go to any school that accepts them

I’ve yet to hear about an Ivy League quality school. Indeed, even needy students that get free tuition from an Ivy often find themselves in deep debt for living expenses, because in many schools aid means loans as well. Getting in at all is a real challenge. The New York Times just published an excellent long-form piece on low-income applicants, and the calculus of admissions. Even though they mention that 89% of students get aid, guess what? That includes loans. It’s a must read for any family going through the application process.

If your student is pragmatic enough to choose schools by aid packages instead of prestige, you may have a chance at an award from a school where the profile of the student body is far less academically qualified than your student. Yes, I believe the student and their motivation is more important than the school, but having been to state schools and big-name schools, and having a daughter who also matriculated through both, I can confidently say there is a difference in quality of instruction and student experience. No one has ever asked me for my grades; I graduated magna cum laude from Northeastern Illinois, and well, I graduated from the University of Chicago—but the later is the only cred that has ever counted for anyone.

Be really, truly extraordinary

That means, be a National Merit Finalist, at least. There were 15,000 last year, of whom 2,500 actually got a lousy $2,500 scholarship—but schools look very favorably on them. Or win the Intel, or a Davidson or some other nationally-ranked competition. Publish a commercially edited book. Be an activist or humanitarian who’s been on national news. I don’t care if your kid tested profoundly gifted or has a perfect SAT—yawn, I know quite a few for whom that didn’t even guarantee admission.

Be absolutely certain to major in a field corporations want

This means engineering or computer science. Ha, ha English or Italian literature majors. Because you’re just not worth paying for if you’re not in an “economically useful” STEM field—what’s a liberal education worth anyway. Let’s all support college as a trade-training mill. And quit your major (engineering is one of the most dropped)? Bye, scholarship.

Be willing to go to a region where no one in their right mind from your area would go

Hello, northern urban person. Enjoy Podunk U. The football games are great. Lotsa school spirit.

Get in.

Any school that has even a slight whiff of full-ride programs will immediately get far more applications, which will mean that your student will have even less chance of actual admission than they might have had before such a “generous” policy was announced. And if you refer to the NYT article above, you’ll see that making the school aware that you need financial aid seriously impacts your chance of admission at all, whatever they’d like you to believe.

It’s not quite as hard as finding a virgin to catch a unicorn. But assuming your kid is smart and will get a “scholarship”–ergo you don’t need to save–is not a financial plan. You’re going to need one.


Baby in graduation cap

Financial planning for college: should you bother saving?

Nobody wants to pay for something, then watch someone less deserving who gets it for free. A dear friend recently raised this situation: are you a sucker for saving, while somebody else spends freely and their kid gets more money from a college?

I’ll give a very qualified yes to this—there are a few situations where it doesn’t pay (very much, at least) to save for college. Let’s say you make under $75,000 a year and have no investments beyond retirement accounts. Your family probably will qualify for some serious financial aid, and would get less if you saved into a 529 plan. But I really question how much a family would be able to save on that income, and if they can, they should be pouring it into their 401k and a Roth IRA. Can a family making $75,000 a year really manage to save more than $25,000 (the maximum into these accounts)? I seriously doubt it.

If your child doesn’t finish school or joins the military instead, you might have done better saving into your own accounts.

That’s it. That other family of merry spenders who got so much more than you? Did you see the award letter? Because lots of people lie. Especially people like to “reinvent” things in the best light possible—that “aid” might have actually been in the form of a subsidized loan, or the “free ride” might have been a waiver of tuition or some small amount of “scholarship” aid. If it was a state public school, and they are remotely middle class, it’s all going to be loans. If it’s a private school, it’s probably still some loans, or they have financial issues you don’t know about, or the school competes with publics by bringing the cost of attendance down to approximately what a state uni would have cost. Cost of attendance is the important number: what it actually costs to spend a year at the school, including tuition, dorm, food, books (can be a whopper), fees, etc. Add in transportation, moving the kid’s belongings back and forth or in storage, and the inevitable dorm refrigerator (not included in the school’s website estimates).

For nine years now, I’ve challenged anyone to tell me about somebody they know first-hand, who had family income over $100k, who’s child got all costs of attendance covered with no loans, for 4 years (athletic scholarships not included). I’ve yet to have someone come up with that family, but I’m still interested. It’s always 3rd hand, or a one-year fellowship (usually after the kid is already at the school), or tuition only.

It’s easier for a college to waive tuition than it is to cover the full cost. Why? Because tuition just requires paying professors and administrators, and those costs can be averaged onto other people. You can always stick a few more people into a given class. But coming up with an actual dorm bed, feeding the kid, and providing books actually costs money. Those “free rides” you hear about that go to low income families are usually free tuition, and then a loan package for living costs—and living costs are often the whopper.

But let’s say you have family earnings of $76K-150K, and maybe even another kid who will be in college at the same time. You might qualify for some aid. What if you were really careful and managed to amass $100,000 in a 529 college savings account? At worst, about $5,000 of that would be considered “available” each year for all your kids in college. (Same for parents’ non-retirement investments). Sadly, a reduction in aid of $5,000 is real money, but compared to the total cost of attendance, it’s a drop in the bucket. But having $25,000 available each year is going to make some serious difference to your child’s options and future indebtedness.

Remember, many colleges do not cover all demonstrated financial need. They’ll give you something, but sorry Charlie if you can’t scare up the rest—I’m not sure how they can assume you’ve been honest about your finances, then expect you to come up with more. Or maybe they just don’t care because there’s somebody right behind you on the waiting list.
Some schools have grandly announced that they’ll cover all need for families making under $XX a year. Note that that does not necessarily mean free—it only means they’ll cover the gap (as they calculate it) with aid rather than loans. For example, the University of Chicago says that if you make under $125K, they’ll cover tuition. But you have to make under $60K for them to cover the entire cost of attendance ($83,760 according to the school, compared to Northwestern’s $78,654).

But here’s the hitch—the kid has to get in, and any school that announces that will suddenly see an enormous jump in their applications, so your kid has even less chance of getting in than previously. I’d genuinely like to know how many kids attend who actually receive the full ride. Does anyone seriously believe that they will fill their class by allegedly need-blind selection, and then just randomly discover that they have to cough up more money from their endowments from all the kids they just admitted? I think I hear the sound of one hand clapping.

The exceptions to this are two: your kid is a world class athlete and gets an athletic scholarship that includes living expense, or your kid is a nationally desirable scholar (think published a novel, won the Davidson or Intel, has ground breaking published research or inventions) and is willing to go somewhere lesser than the ivy league. If your kid will outrank (grades + test scores + other achievements) 90% of that school’s current population, they might be willing to ante up something to entice them to come—but you should check that the guarantee is for more than one year.
Saving for the kid’s college means they won’t be burdened with very heavy debt incurred for living expenses, books, getting home for holidays, and every other surprising thing it actually costs to go to college.

BTW, if your child does get significant merit scholarship aid, you can withdraw the amount from the 529 penalty free. Or you can just leave it alone, because there’s always grad school…