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Financial Aid: How Do We Do? (1/2)

As the cost of higher education skyrockets across the United States, universities’ ability to provide financial aid to prospective students is often a deciding factor in where students choose to go for their undergraduate degrees. Schools competing for the best applicants therefore find it advantageous to be generous.

Dartmouth, as one of the richer schools in the country, should in theory be able to position itself ahead of the pack here. The College is the fourth-richest school in the Ivy League as measured by endowment per student, and although we lag behind Princeton, Harvard, and Yale by some distance, we are far wealthier than Columbia, Penn, Brown, and Cornell:

Dartmouth Endowment Per Student 2014.jpg

In order to get a general idea of how financial aid packages shape up across the Ivy League, I created dummy accounts for three imaginary students on the College Board website, which hosts financial aid calculators for five of the Ancient Eight. (Obnoxiously, Harvard, Yale, and Princeton host their calculators on their own websites).

Each student represented, roughly speaking, a different slice of the broader applicant pool as divided up by economic background: Student 1 was from a working-class family in rural Tennessee; Student 2 was from a middle-class family in the Twin Cities; and Student 3 was from a white-collar family in suburban New York. All had parents who were married and two siblings not yet in college. Because the calculators require detailed financial information, I came up with portfolios for each family:

Student 1, Tennessee
Income: 40K
Checking/savings/cash: 1K
Non-retirement investments: 30K
Home value: 150K
Home purchase price: 100K
Outstanding debt on home: 50K

Student 2, Minnesota
Income: 75K
Checking/savings/cash: 5K
Non-retirement investments: 75K
Home value: 300K
Home purchase price: 200K
Outstanding debt on home: 100K

Student 3, New York
Income: 150K
Checking/savings/cash: 10K
Non-retirement investments: 200K
Home value: 500K
Home purchase price: 280K
Outstanding debt on home: 140K

A few notes: The estimates for home purchase prices were based on the average sale price of a house in each area in the year 2000, and the outstanding debt figure assumes a 20% down payment and a 30-year, fixed rate mortgage at 8% that was refinanced down to a lower rate at some point in the mid-2000s. Additionally, I gave each student an income of $2000 for the previous year (from a summer job, for example) and savings of $1000.

The calculators also take tax deductions, investment income, and other factors into account; I entered zero for all fields not covered by the above information in order to make things easier for myself. The estimates given by the calculators will therefore not be entirely representative of what each family would actually have to pay, as these things will come into play for most people in real life. However, the important thing is that the same exact information was entered into each school’s calculator so that we can form a fair comparison between all eight Ivy League schools.

Tomorrow, we’ll reveal the results. In the meantime, feel free to amuse yourselves by guessing where Dartmouth stands for each scenario. Do we bring up the rear, or will McNutt have a surprise in store for us all?

Part 1, Part 2

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