Effective public college tuition vs. private college tuition

by JonahS2 min read14th Feb 20145 comments

13

Personal Blog

Harvard charges $42k/year and $61k/year including room, board, books and personal expenses. UC Berkeley charges $13k/year in tuition and $33k/year including room, board, books and personal expenses. As a part of research for Cognito Mentoring, I looked at UC Berkeley's financial aid calculator and Harvard's financial aid calculator to get a sense for the effective costs of attending the two institutions, and was surprised that it appears as though for people whose parents make between 80k/year and $160k/year, when financial aid is factored in, it's more expensive to attend Berkeley than Harvard. See the figures below.

A cursory glance at financial aid calculators for other elite private universities and public universities gives seems to give broadly similar to those of Harvard and UC Berkeley respectively. I've made a number of simplifying assumptions in filling out the forms I may be making errors of one kind or another (whether conceptual or otherwise), and would appreciate any feedback. 

About 83% of American families make less than $160k/year, so it seems that for 4 out of 5 Americans, were they admitted to an elite college, cost wouldn't be a deterrent. In practice, students who go to elite colleges come from disproportionately wealthy families: http://collegeapps.about.com/ reports that 62% of Harvard students get financial aid in the form of grants at all, which is less than the figure of 83% (as one would expect). The average grant size is $41,555, and Harvard reports that 20% of students don't pay at all, suggesting that the amount of financial aid that students receive is very high variance.

It would seem that the people for whom the UC Berkeley vs. Harvard choice would be the hardest on financial grounds are families that make e.g. $200k/year and have $300k in saving.

Harvard

No parental savings

Parental income / effective cost

  • $80k / $8,600
  • $100k /  $12,600
  • $120k / $16,600
  • $140k / $18,600
  • $160k / $24,600
  • $180k / $34,300
  • $200k / $49,200
  • $220k / $60,850
$300k parental savings

Parental income / effective cost
  • $80k / $18,600
  • $100k / $22,600
  • $120k / $26,600
  • $140k / $28,600
  • $160k / $34,600
  • $180k / $44,300
  • $200k / $60,850

UC Berkeley

Here I needed to enter the amount that parents were taxed, and used a figure of 25% of gross income.

No parental savings

  • $80k / $12,972
  • $100k / $17,419
  • $120k / $23,092
  • $140k / $28,765
  • $160k / $32,706
$300k parental savings 
  • $80k / $26,337
  • $100k / $32,009
  • $120k / $32,706

13

5 comments, sorted by Highlighting new comments since Today at 4:52 AM
New Comment

It's hard to compare them. Harvard includes work-study, but Berkeley apparently includes both work-study and loans (and doesn't disaggregate them).

It is interesting that Harvard seems to be acting as if it were engaging in price discrimination, even though the traditional conditions don't apply (the supply curve is inelastic, there are partial substitutes available).

are families that make i.e. $200k/year and have $300k in saving.

I'm having trouble understanding what was intended by "i.e.".

It's hard to compare them. Harvard includes work-study, but Berkeley apparently includes both work-study and loans (and doesn't disaggregate them).

My remarks above concern financial aid in the form of grants.

It is interesting that Harvard seems to be acting as if it were engaging in price discrimination, even though the traditional conditions don't apply (the supply curve is inelastic, there are partial substitutes available).

Presumably what's going on here is that elite universities want to maximize the quality of students with a view toward maximizing future prestige (and perhaps donations, although the cost-effectiveness is unclear).

I'm having trouble understanding what was intended by "i.e.".

That was supposed to be "e.g.", I just fixed it.

The UK university system is of course very different from that of the US, but there's a similar effect. Tuition fees are roughly constant, but Oxford and Cambridge have generous bursaries for students from lower income families and subsidised housing, so are generally cheaper than the less prestigious (and less wealthy) alternatives.

Do the higher tuition numbers for the "$300k parental savings" case imply parents shouldn't save for their children's college education?

They're not sufficiently high relative to $300k to nullify the value of saving.