How many families who make about $65K a year are financially literate enough to know to shift their money into 401k/IRA/etc.? I'm going to guess "very few."
I am from a small town where many of my classmates would have qualified for this program. The top students at my high school often skipped applying to Michigan because it was known for being "expensive." Most of these students would have been first generation college students, so their parents didn't know that they could expect generous aid packages from an "expensive" school like UM. (Heck, my parents didn't know that either, and kept me from applying to OOS and private schools.) These kids ended up going to LCC/CMU/WMU to "save money," even though many of their expenses would have been covered in Ann Arbor or East Lansing.
Well, given that the median family has almost nothing saved for retirement - even those with just a few years from "retirement" - I am not sure financial literacy has much to do with it. You can know exactly what to do, but if you simply don't make enough to save, saving is very hard. But I agree, expecting the average taxpayer to get "crafty" to take advantage of tax/income-related benefits is asking a lot...
I think this is more or less why the University is doing this, to get more underrepresented groups to enroll.
Can't do affirmative action any more so they have to get creative.
Or maybe they just really want to do something good and help people?
"If you make less than $65k a year, you're probably not financially literate...." Wow. The things you read on the internets these days...
that made much more, but still made the same mistake wrt grad school. }:-|
It's probably based on AGI, so there's likely some games you can play to drop that a below the threshold, if you're close.
Guessing here... But it might be something like in-state tuition. You can't move to Michigan right before you enroll and get it. They might make you provide your last 3 tax returns or something like that. I doubt many people will know if their kid is going to get into UM that far in advance thag they'll start playing games to get their AGI down.
Although this could screw over a family that loses a job or something...
Um offers need based financial aide to families making up to $125k. Its not going from free to 100% at $65,001. Yes as with any policy there are some people who don't benefit, but this seems like a clear win.
FWIW when I attended in the last decade we made far less than that and didn't get a dime in need based aid.
There is a gradient. Details here: http://goblueguarantee.umich.edu/
This is an important point that a lot of us were missing.
Maybe I'm missing something because I'm at work and can't watch videos, but I can't find anything about a gradient. All I'm seeing for students above $65K is normal financial aid numbers. And those numbers are impressive, but the values listed are average values so it's not a guarantee that all students within those income brackets are going to get the amount of money listed, compared to this plan which is a guarantee.
What Happens if you make 66k? Full tuition?
I've said it elsewhere too but if you're that close you should increase your 401k or IRA contributions, or open an FSA to dip down below 65,000.
Do you think the university doesn't give out any financial aid right now? What's likely is that families that make 66k will get generous financial aid, but it won't be enough for "free tuition."
before posting, please.
("Pete and Repeat walked into a bar...)
}:-|
Now, if you'd just get off my lawn...
Damn. I would have qualified for this!
So hope that your parents don't get any raises or promotions.
Got to wonder how this affects kids whos parents make 70k, especially if they aren't helping to pay for college. Presumably it is increasing everyone elses tuition by some significant amount?
In state tuition wll be going up by about $300 a year. Considering student season tickets for football cost about the same I wouldn't say its that significant of an amount. Its not like the kid whose parents make 70k and aren't supporting them is in a great situation right now and is about to get screwed.
Good time to set up that LLC you've been meaning to and start paying yourself to qualify for something like this.
Source? Link?
I believe you, I just don't see it on the website and I assume this would be front page news.
I specifically asked, so you get an upvote. Freep link or no.
I think New York's free tuition thing set the bar at any households making less than $100 or $120k. $65k seems a lot more reasonable
Someone always pays......
When we say free, we mean free at the point of service. I'm rather certain we are all aware that the money comes from somewhere.
This year, the free tuition for SUNY schools is for families making under $100,000 this year, rising to $125K in two years. In upstate New York, that is a decent salary; downstate, $100K hardly covers your taxes. Seriously.
But tuition in the State University of New York system is half of Michigan's - around $6,500. Pell grants will cover most of that for the lower income families.
New York allotted $163 million for the program but has not said where it is coming from. And if you do the math for the number of students in 2 and 4 year schools in New York, it is not nearly enough to cover it for qualified students. An independent analysis estimates that NY is counting on most qulaified students to miss the deadline and not get the free tuition.
Living anywhere in NYC on that income is about equivalent to making $65k in other parts of the state, or much of Michigan.
which is probably why the ceiling is so high, but I live in New York state, and if you're making $100-125k in my city, you're pretty high up there. Another example of how it can be difficult running NYC and NYS under one state. Two totally different worlds.
One of the caveats with New York's plan is that you must remain in New York for 4 years AFTER you graduate, otherwise your free tuition becomes a loan. Graduate and get a job in California, then your free tuition just became about a $26,000 loan. Graduate and live in New York for 2 years, then move out of state, then the last 2 years of your free tuition just became a loan.
vs. "Michigan".
Not that different, after factoring in cost-of-living, I'd guess.
Awesome. But still bitter as all hell at the kids I knew with free FAFSA grants with better houses and cars than me whose parents just-so-happened to be divorced / managed to claim only one parent's wages. Dumb. Also. Amen to the people below. Better sure hope you aren't a normal, middle-class family with $120K and two kids in school -- God forbid.
damn those kids from broken homes!
I know a lot of the Michigan Endowmant is ear marked but I have been hoping that they would address the tuition issue. This is a great start. I hope they can eventually add a gradient as others have said.
For others who have said how it's unfair to the families that make $70,000 I respectfully disagree. This does not affect their current situation at all and helps people who make less. Hopefully this program builds so that the gradient is implemented so it helps people who make $70,000 too, and so on.
With free tuition for families <$65k, the number of applications will go up, making it harder to get into the University of Michigan.
The students at $70k+ will be less likely to get in, due to the increased competition.
Nonetheless, I am very proud of this move.
You see increased competition, I see better students at Michigan. May you be known by your talent and your efforts, etc.
I'm proud of the move as well. Perhaps it's not perfect (chill out straw men on this thread) but it's a big step to addressing tuition.
It's not about what I see. I was clarifying the impact on those who make $70k.
A better student pool would be the impact on the University.
Must be against the preferential admissions for minorities then right, since you are all about real competition and getting the best based on merit and ability.
It's funded in perpetuity? it will it not drive tuition increases?
Okay, who's got the formula? If X is your number of children and Y is the amount of a family's income above $65k, at what point is it more cost effective to take a pay cut to get under $65k versus paying full tuition for X children?
I would say somewhere in the 90K range but I have done no math lol but that's only at 2 kids. Gotta figure out the algorithm.
Well the Detroit News version of the article says in-state tutition at the Ann Arbor campus is $14,402. So that would be about $80k for one kid or $95k for two. Now if you're a parent of young kids trying to plan for the future and watching tuition costs climb faster than your paycheck, it really starts to get interesting.
I did the analysis. Using the terrible assumption that a family would pay full tuition for all of its children (it's either the Go Blue Guarantee or no aid), here's how it works out:
- 1 Child: $80,000
- 2 Children: $94,000
- 3 Children: $108,000
- 4 Children: $122,000
- 5 Children: $136,000
I used a full year of in-state lower-division LSA tuition for my calculation.
thanks, Bernie
delete
That's like 3/4's of America today, they're going to be giving out lots of free education.
most people whose income is under $65,000 do not have the academic standing to be accepted to Michigan
Seems like a catch 22 if that's true.