Looks like the thresholds have changed, i.e. the $80k you mention. I have a colleague whose son went to PENN. He told me it cost them $0. This actually signaled to me at the time, that his household is < $60k of income. I had a friend whose daughter went to Yale who told me about the then 4.6% saver's penalty. She was a waitress so it did matter--she said not trying to look a gift horse in the mouth as her daughter getting in was like winning the lottery for she and her husband, but the 4.6% was a bummer, as if they struggle to save and have to pay an additional fee, as a result.
btw at the public HS that I went to, Williams College was where all the top ranking kids went. In a class of only 380, 7 went there.
edit p.s.--does this imply schools were "not" need-blind 30+ years ago? I know I required financial aid. And from memory colleges stated they were need blind, i.e. you don't get rejected because you need aid (others theorized i.e. parents). To hint at my age, the most expensive college in the nation was $17k back then and really, the most competitive colleges had a 19% acceptance, with the easier Ivys at 39%.
Determining need is the critical calculation in all of this. They figure out what you can afford to pay, and grant the difference between that and what they charge in the form of aid.
There are three “colors” of money used when determining financial need - a perspective gained by having done the FAFSA about 15 times, and having talked with financial aid folks at several schools.
First, there is the kid’s money. 529, education IRA, Coverdell, UGMTA, savings account, cash, whatever. If it’s in the kid’s name, it is 100% available for college.
Next, there is parent‘s money. Both in the form of salary, and cash on hand. This is where the “saver penalty” comes in. If you’ve saved money to pay for college, then, it is available for college. Some percentage of both salary and savings is available. The precise percentage varies by institution, but parents are expected to support their kid.
Finally, there is parent retirement savings. Parents 401(k), parent IRA, accrued pension, etc. this is not, repeat, not, available to pay for college.
When colleges look at ability to pay, that’s the supply side. What’s available.
Then, they look at the need side. Multiple kids in school simultaneously, increases need. Shortfall between need and ability is where financial aid is applied. Determination of the shortfall and aid varies by institution. More on this in a bit.
So, two important points:
1. The aid award varies by institution. Academic year 2011-2012 was a particularly difficult one for us: oldest step son in one college with in state tuition, middle step son at another college with in state tuition, step daughter at a third in state college and my daughter at an elite school. Yes, that was four kids in college at the same time.
Three in state schools. One elite school. The elite school was the cheapest, by far, even though the advertised price was more than double that of any of the three in state schools.
2. As a financial planning consideration, when prioritizing between your retirement and paying for kids college,
fully find your retirement first. Many parents get this completely wrong. Many financial planners get this wrong as well. There are lots of ways to pay for college; go to community college for two years and transfer, scholarship, financial aid, ROTC, serve in the military, work, borrow, or a combination of the preceding.
None of those options will work for retirement. Many parents feel a sense of obligation, and I understand and appreciate that, but saving cash for college at the expense of under funding retirement both decreases potential financial aid and ensures a shortfall in retirement that can’t be made up. A double penalty. A huge mistake.