Wednesday, August 26, 2009

Some Feedback and Random Thoughts

Count on this post to be all over the place!

I take the feedback I get, both from commentors and my few friends who give me feedback, seriously. One piece of feedback I received on the post on Hybrid schools (est. cost $2500 for a 2-day a week day of core curriculum) would simply not be affordable for many people. My friend pointed out that many people are already paying similar amounts for a full week of school and that a hybrid model would strip much of the potential income for the secondary income earner.

Another piece of feedback is that once a parent becomes responsible for a great deal of education that they might as well just homeschool. Certainly, homeschooling is one of the options we think about. Perhaps I will be ready to give it a try in the not so far off future (there is a limit to how much more tuition we can bite off sanely), but presently I am still intimidated by taking full responsibility for my children's education. I know families that have taken advantage of tutoring, either one-on-one or in small groups, and this arrangement can easily cost multi-thousands as the cost is not shared over a large enough group.

Back to the comment about families already paying so little for school. .. I do realize there are a number of families who are contributing little to nothing for their childrens' education, perhaps even less than the cost associated with established hybrid schools. Perhaps my friends and I simply don't have enough pull, but we have been told that the tuition rates are mostly non-negotiable, and that for the first child they are basically non-negotiable. My friend tells me that I'd be naive to think that the tuitions set in stone, but I don't think that I have the will to find out. Once I no longer can write that check, I don't see myself signing a contract I don't have the money to comfortably back on the basis of yearly cash flow.

Additionally, I was struck by the conversation over at HaEmtza regarding tuition and assistance. Harry claims that in Chicago families are not expected to liquidate savings, but another commentor mentioned that this is precisely the expectation in her community. I'm not quite sure what the expectation is in my own community, but I was told by a friend who is on some sort of assistance (grandparents still contribute $24K to tuition beyond whatever they pay from household income), that only limited and "reasonable" deposits are allowed into a 401(k) and that other forms of savings are basically not allowed. Where my husband grew up, those receiving assistance were basically told that first (some) home equity needs to be used.

And speaking of tuition assistance applications. . . . . .why, in 2009, are tuition assistance applications taken with all identifying information on them??? I imagine that I have a bit of anxiety because I've dealt with a number of identity theft scares and because I've dealt with internal controls professionally, but I just don't care for the idea of putting sensitive information out there. I am certain that each committee takes privacy very seriously, but unless if I were applying for assistance and did NOT receive any, I'd rather my private information just stay private. It seems to me that will all the technology out there, it wouldn't be terribly difficult to design a system to transmit information on assets, income, and liabilities anonymously with some identifier and only if tuition assistance was a real possibility would the committee have the ability to verify information and seek additional information. But if the answer is no, I'd rather my financial information stay locked in my own mind and in my own file cabinet period.

And, there is no good reason to put temptation in front of even the most yashar people. Opportunity is one of the components of crime. I already worry enough about all of the information people might know about me. I'm sure my anxiety is speaking after having worked in a place where the HR database was hacked, after finding unauthorized charges on my credit card, and after being called to say that my loan application was approved (I never applied!), I have become very conscious about what sensitive information might be out there about me.

Thoughts on any of the above subjects. Sorry it is so convoluted.


Thinking said...

Good post SL!

A couple of thoughts:
By design there is a lack of consistency when it comes to determining tuition assistance. There are so many factors that administrators take into account it is almost impossible to create a policy around it (i.e. mortgage payments, student loans, size of family, grandparent contributions, dual workers). Let's face it, no administrator will tell you to sell your house, not pay your student loans etc. so they need to take it into account when determining the right amount of tuition.

That being said I am totally in favor of a minimum tuition. If minimum tuition was enforced (this would include rabbeim and teachers) schools would be in much better shape. What if they have no money? They should go and collect it. School isn't free, if they don't pay it either the school has to pay it or force others to cover it. This would also allow schools to better forecast revenue.

The information theses forms actually collect is silly and for the most part a formality. I agree with you SL, why isn't this info in some online format? Not only would it be easier to gather the information and make it secure, but it would also be easier to create reports and do some analysis of all the data collected to make better decisions.

Anonymous said...

I was the commenter on HaEmtza that said that savings, and retirements savings, needed to be liquidated. In all honesty, no one from the tuition committee told us that. It is just information that I pieced together. If that's not the case, I don't know why we didn't qualify for even a small reduction.

I think there are a lot of factors and it's not a set formula for every family, although it should be. What I said on HaEmtza and I believe to be true: once you have established yourself as a "full tuition paying family", the school does not want to start granting a reduction, even if your legitimate expenses have not risen with your income. You're known as a cash cow. I'm sure that the reverse is true, that aid is given year after year to some families even if their circumstances have improved.

JS said...

An anecdote to make your skin crawl. I'm good friends with a woman who raises money for a Jewish organization. One of the methods of getting names is calling Shuls and yeshivas and asking for contact info of those who are members or who send their children there. Some give it over for free, some say no, and some charge a fee for the names.

Anyways, in the course of business she heard a story about a yeshiva which turned over information to another Jewish organization the list of families that pay full tuition. It seems they kept this information for their own internal fundraising and a secretary who wanted to help that organization obtained the list and sent it out.

In short, nothing is private.

JS said...

The entire scholarship system is so broken it's beyond ridiculous.

If I was ever in a situation where I couldn't afford to pay in full and couldn't raise the money in a reasonable way, I simply wouldn't send my kids to yeshiva that year. There's no way I would open up my book and have every decision scrutinized by a bunch of strangers (or worse people from the community). I don't need to be told I'm saving too much, have too much tucked away from retirement, have too much equity in my house, or any other nonsense. The idea of being told how to run my finances so I can afford to pay for their yeshiva whose own finances are broken because of these same people is just laughable.

Anonymous said...

If someone wants someone else to pay for their children's education and that education is important to them, then I don't think it unreasonable to expect that they not have too many other assets. What needs to be done is to make sure that the process of divulging financial information is afforded some respect and privacy and that the schools have in place strong safeguards for protecting the confidentiality of the information that is disclosed. There also should be some standards as to how much in savings and home equity will not count toward assets that could be used to pay tuition. Those standards should take into consideration the age(s) and of the parents, whether they will have a pension (and if so how much), and the likelihood as to how long they will be able to work (i.e. a ditch digger probably can't work until 65, whereas a healthy doctor probably can).
For example, if a couple who is in their mid-50's and has a combined $700,000 in 401k's and IRAs and other savings and no pension coming, they shouldn't have to dig into savings, whereas a couple in their 20s who have $500,000 in savings due to an inheritance should have to dig into their savings.

Dave said...

Of course, there is the charming hypocrisy of a Yeshiva that wants every last bit of financial information for scholarships, but will insist on closed books while calling for donations from the community.

JS said...


It's simply impossible to do what you're saying, even though in principle it's a good idea.

It's just too easy to either "game" the system, or take unfair advantage of the system by making bad choices (purposefully or due to poor decision making).

For example, a couple could buy a house for $400k with 3 bedrooms, but decides to get a $550k house with 4 bedrooms and an extra bathroom. Now their mortgage is bigger which takes away money for yeshiva. You going to tell them to sell? They likely don't have any more equity in the more expensive house as they would in the cheaper house and besides home equity loans aren't an unlimited resource.

How about a couple that could get an advanced degree and doesn't? They like coming home at 5:30 every day and being able to relax and spend time with their kids. Going to force them to go back to school? Going to force them to look for a new, higher paying job?

What about a wife who would rather stay at home with her kids than go back to work? Force her to use child care services and return to her job?

A family is making payments on 2 cars - force them to sell one and get by with 1 car?

Point is, there are way too many decisions a family can make purposefully or through lack of caring or inadvertence that puts them in a good position to get a tuition break since no one (at least not yet) is willing to force parents to do more to pay.

Anonymous said...

OK JS, you got me. Your arguments all weigh in favor of mandatory minimums wit exceptions only for those who can't work due to illness/disability or child that needs intensive care dur to illness/disability or a temporary reprieve for those who get laid off.

ProfK said...

You left out one item that had me boiling years ago--those who are in businesses that have a lot of cash coming in. Even when yeshivas require tax forms, these people show relatively low incomes on them. A lot of their money gets "buried" in day to day expenses and luxury expenses, but go and prove that. When they come to the yeshiva the yeshiva can only work with the info on the 1040s or tax returns. Someone in our neighborhood--rolling in dough--had a kid at a federation camp on scholarship and got reduced tuition. Today they're more open about having money--no kids in school--but back then their attitude was "why shouldn't I get what is "legally" okay for me to get?"

Note: because of this case and a few like them, the yeshivas locally now also ask about how many cars you have, what years, what camps, household help, where you vacation, when and how many times. Our tuitions aren't in the disaster range yet and the schools want to keep them that way.

And Dave, you are so right. There is tremendous irony in the schools demanding transparency when they refuse to apply that concept to themselves.

Anonymous said...

How do colleges and universities address the issues raised by JS and ProfK when deciding on financial aid. Presumably colleges and universities in the U.S. have some very sophisticated and savvy employees who must have figured out some ways to address these issues and develop appropriate financial aid procedures. Is there anything that can be learned from them?

David said...

Universities and other Gentile schools don't do tuition reduction: they do financial aid. The difference is that the school gets paid the full amount for each student no matter what.

I think that this is a much better model than the "have a high tuition and discount it a lot for most students" model.

Anonymous said...

I'm not sure if what David writes is correct or not (doesn't Harvard steeply discount tuition for families making $180K or less?) But then again, Harvard's endowment is enormous.

Re financial aid, my father said at the time my brother and I went to college (early 1980s) that he would have ended up in the same place spending on luxuries or saving for college.

Anonymous said...

Re tuition reduction, in most ways I'm glad we didn't get any reduction, even though at the time I thought I would be happy seeing my $30K bill from one school reduced by $2K. Now I realize that I wouldn't want my every spending decision to thereafter be judged.

Anonymous said...

David: I don't think that is accurate. Colleges and private schools do have tuition reduction - they call them scholarships. Often financial aid is a package with some scholarship money paid by the school, some money from loans and some of the tuition paid through a work study job where the school provides the job, such as working in the cafeteria or in the liabrary.

Tesyaa - you are correct about Harvard. Other schools with smaller endowments and scholarship funds don't give tuition reductions that are as large, but they do provide reductions according to whatever financial aid formula they use.

One of the problems for the jewish yeshivas and day schools is that they don't build up safety cushions and endowments. Many private prep schools can provide scholarships because over the years they have developed a body of alumni and parents who donate generously. Instead of spending all those donations in one year, they invest the funds and allow them to grow. That's very hard to do when you aren't meeting or are barely meeting the current year's payroll and your alum aren't getting high paying jobs and/or have huge tuition expenses for their own children and are asking the schools for aid.

Miami Al said...

Anonymous, no, the private schools (I went to private school for high school, college, and graduate school) do NOT offer tuition reductions and call them scholarships, they offer scholarships.

A scholarship is a fund of money that pays for the education. If I have a $1,000,000 in the annual scholarship fund, I can have a scholarship committee award that much in money that reduces what the parents owe. The difference is that the operating arm receives the same money as if I took in all full tuition payers, the scholarship money allowed us to take in students that couldn't afford.

The Day Schools do NOT fund their scholarships, they simply collect less money. They may put the entire amount "billed" as a revenue line, but they don't expect to collect it.

That is a HUGE difference. In the former, tax deductible contributions are used to provide a service. In the latter, I simply squeeze the middle class to support the children of others.

The Day Schools CHOOSE to spend $1.10 for every dollar coming in. They CHOOSE not to prepare for the future or a rainy days. Rather than planning to provide Jewish education for decades, they decided to provide Rabbeim with questionable Semicha better and better standards of living on the backs of the working men and women of the community. Like a crack addict needing a fix, they engaged in theft and fraud. Not only did they conspire with the Kollel movement to suck dry all the wealth developed by the American Orthodox Jewish community post WW2, plus a lot of the secular Jewish wealth, they also turned to a life of crime, damaging the impression that other Americans, including non-Orthodox Jews have of traditional Judaism.

JLan said...

While I wouldn't go quite as far as Miriam Al did above, she's correct on how colleges (including Harvard) operate: tuition isn't reduced, but rather covered through one source or another. In Harvard's case, if you make under a certain (significant) amount, you pay significantly less, but that's handled through grant money from scholarship/endowment funds. Then there's government aid: grants, loans, work/study (students work jobs on campus, for which a significant part of the salary goes towards paying the school, and a significant part of the salary paid is provided by the government), etc. There's never a matter of tuition reduction, though: when you hear about someone who's only paying X amount, that's because various sources of aid have covered the difference between X and the full tuition.

Commenter Abbi said...

Just a point of reference, Ramaz has a pretty hefty endowment, which was unfortunately diminished in the Madoff scandal and the market crash, but it is still functioning.

YU does also, for that matter. So, it's not like endowments are a completely foreign concept in the Jewish community.

ProfK said...

Re the Harvard endowment, it's Harvard's goal to have ALL of its students going tuition free, whether their families have money or not. They had hoped to make this happen this year already but the economics didn't work out thanks to the recession. So, if you can make it into Harvard you're going to pay no tuition. I don't know for sure if the dorm and books and other peripheral expenses are also going to be freebies, but the articles I read seemed to indicate that they would be. Parents who might have paid tuition are asked to donate to the endowment instead.

Such a system wouldn't work for most yeshivas if they still retained their same adminstrators and their attitude of "spend today, tomorrow will take care of itself."

Anonymous said...

Harvard is an extraordinary case because it has been able to build a massive endowment over a few centuries. Most other private universities with large endowments also have had some time to build them up. However, that doesn't mean the yeshivas and day schools should be completely off the hook for not having some endowment money and long-term financial planning. After all, don't they teach about the 7 fat cows and the 7 lean cows?

Miami Al said...

Anonymous, the Day School movement is over 100 years old. The established schools are 60 - 90 years old. They have had alumni for decades. They get left gifts in wills all the time.

Then spend every dollar with a stated goal of doing as much this year as possible, not a goal of being strong in decades. Every year when US News and World Report puts out its rankings, I check them for undergrad and graduate schools, not because I'm applying for college anymore, but because the current ranking determines the value of my degree today.

The Day Schools should do the same thing. Even if we excuse the irresponsible investment of large sums with Madoff, it doesn't excuse nobody having long term planning.

Yael said...

As my husband is a Harvard graduate (only graduate school, Baruch HaShem! We never paid a red cent to them for tuition), we get the alumni magazines and my husband still talks to those there in various departments. Harvard, with its crazy-big endowment (before the economic downturn , well over 19 million), has been furlowing entire departments over the summer and laying off people all over the university. Even Harvard is having problems.

Anonymous said...

Yael. You are correct about Harvard having layoffs (I live in the Boston area so we hear all about everything at Harvard), but they are still able to give out tons of financial aid/scholarships, although they have delayed some of their big building projects.

Upper West Side Mom said...

One of the things that has really upset me regarding scholarships is that people who are receiving them are still sending their kids to camp (and expensive ones at that). Obviously there are certain situations where this is OK such as when camp is childcare for a family with 2 working parents but otherwise I find this outrageous. If the grandparents are paying for camp that money should be put towards school tuition.

I could never imagine asking for a scholarship if my kids were in camp. People seem to be under the impression that camp is a necessity when really it is a luxury.

I believe (and I could be wrong on this) that if all schools implemented a no camp if you are on scholarship policy that tuitions would be reduced by a meaningful amount.

Anonymous said...

Yael's comment on Harvard having problems is partially correct. They have seen a negative cash flow and reacted by reducing costs. This is clearly not a low balance sheet, but financial responsibility and a decision to always run at or close to break-even on an operating basis.

Many comments above are suggesting that Day Schools run on a similar concept, and not go deeply into the red without having defined cash flow coming in.

Miami Al said...

Anonymous, exactly, Yael's comments about Harvard misses the boat. Harvard has plenty of money, they could act business as usual, a la the Day Schools, but they aren't. In this tight year, they are tightening budgets, that protects their balance sheet and assets. Selling off their endowment in a bad year to keep "business as usual" would decimate the endowment... knocking their endowment down by 8% to survive the lean year unaffected might set them back 2-3 years. Instead, Harvard cuts costs and preserves the endowment.

How many Day Schools, if they WERE building an endowment, just ate a BIG chunk of it to keep things the same for this upcoming year.

7 Fat Cows, 7 Lean Cows... the gentiles took it to heart, but then, they read the Bible... we dismiss Chumash has children's stuff, and wonder why our religious leaders don't take its lessons to heart. :)

JS said...

Although I agree that the schools are mismanaged and have the wrong priorities - the problem starts with the entire philosophy of the system. Namely, we're going to provide private school education with a dual curriculum to everyone, regardless of ability to pay. On top of that, at least for Modern Orthodox yeshivas, we're going to have big, beautiful campuses with tracks and fields and basketball courts and science and computer labs, tons of extra-curriculars, and top-notch secular education. It's simply not possible to do this. The costs for such a program are astronomical and the fact that everyone is allowed to send their children even if they have minimal ability to pay dooms the system from the get go. Even with brilliant administrators, the cost per student is going to be very high for such a school. There's no way around it. So, if there isn't a huge endowment or steady, generous donors, the system collapses.

Even worse, is the fact that cutting down to "bare bones" would never work. People don't send their kids to private school to get "bare bones." No one is paying tuition on top of property taxes to get the minimum. They want the maximum and they've been conditioned to accept nothing less by the system. Add on to this all the other luxuries we've been conditioned by the system to think
are "essentials" such as sleepaway camps. There are serious sacrifices that need to be made by everyone in the system - from parents to teachers to administrators - but, we've created a system where this seems impossible.

Furthermore, the same system encourages parents to have as many children as possible and for people to expect scholarships and hand outs. It is perfectly acceptable to expect a yeshiva to accept your 5 children for only $5,000 each when the actual cost is $15,0000 each. And yes, even $25,000 is a large sum - but, what do you expect? You want the fancy school, but you don't want to pay for it. You'd rather have the fancy school at $25,000 and get a scholarship than pay $25,000 with no scholarship for a "bare bones" school. It's this attitude, perpetuated by the system, that is bringing the whole thing down.

The fallacy of the system is that we say it's a communal effort to make sure everyone gets a yeshiva education. But, the communal effort is unfairly and unevenly distributed and it's causing people to become resentful and angry. When a person busts his kishkas to do well in college, graduate school, land a high-paying job, and work long hours so he can pay tuition, that person gets rightfully angry when his neighbor takes it easy with a low-stress, low paying job while getting tuition breaks and sending his kids to sleepaway camp. The system has created a situation where people feel like suckers as opposed to working towards a communal goal.

Orthonomics said...

UWS Mom-
Cognitive dissonant reigns supreme. See regarding tuition vs. camp where camp is declared a "necessity."

I have no idea how anyone can say that camp is a "necessity" where there is adequate care. Rav Schacter (REITS) disagrees and in his tuition lecture stated that camp is NOT necessary and said how he would go to different aunts and uncles for the summer and recalled some nice moments.

I don't favor the cradle to grave position that kids must be out of the home even where care is available.

Anonymous said...

Rav Schachter also said in his shiur that he would not make women go back to work to earn tuition $$$ (even though he also said that his wife always worked). His positions are very unrealistic if all are taken together.

Orthonomics said...

True tesyaa. I have yet to see any Rav who seems to completely grasp the entirety of the the situation. And, the financial challenge isn't the only challenge.

Great Idea Person said...

The issue of who pays full and partial tuition is a scandal in our community. If two young couples start out roughly the same, and earn about the same, and have equal numbers of children, they can end up in very different positions when they come before the tuition committee, even when their life situations are roughly the same. Let's leave out the kollel issue, these are working folk!
Example: Couple A spends a lot of their wedding gift money on vacations, jewelry, and furniture. Couple B saves the money and buys second-hand furniture or IKEA stuff. Couple A buys lots of baby clothes, Couple B uses hand-me-downs. Couple A buys a house for 450K and takes on a $4200 a month mortgage, Couple B buys a house for 275K and has a $2200 a month mortgage. Then they both come to the tuition committee. Well, guess who has more money coming into the bank? Couple A has expensive furniture, big house, and the wife has diamond earrings worth $2000 that nobody will ask her to sell. Couple B has a smaller mortgage and money in the bank. You guesses it, Couple A will be rewarded for not saving their money and buying the big house they couldn't afford. Who asked them to take out a huge loan they couldn't pay without cheating the yeshiva? And the yeshiva will NEVER say, sell your house. NEVER. They will NEVER ask women what their diamond rings are worth. A woman can be wearing an $8000 ring, but she can never be expected to sell it. Well, she got it from her mother-in-law, it's supposed to be passed down in the family, yadda yadda yadda, shalom bayit, yadda yadda. The $1000 gold bracelet her husband bought her for their first anniversary? Well, that's a sentimental thing too...the silver wedding gifts stuffing up the breakfront (and many people who are not collectors have a few thousand dollars of silver, every kiddush cup can cost more than $100, well, that was a gift fromAunt Leah and that one is my $800 menora that my wife gave me for my get the picture. I see kids in my neighborhood who don't pay full tuition but their mother takes them for pizza more often than I take my kids, have more cleaning help every is just a totally unfair system, and I don't know how you can resolve it.
It isn't so simple to tell people to sell a house. I have two excellent ideas though:
1. BLANKET NEW RULE: Community A should consult with real estate agents and come up with the average price for a 4 BR house in that community every year, i.e. in 2009, a 4 BR in Passaic NJ averages 375K. Anyone who buys a house in 2009 for anything over 400K will not be considered for a tuition break for the next 5 years. Period. Even if they get laid off. That's a risk they are going to have to take, and if they fall on bad luck, they will have to sell the house and rent.
That might convince people to follow the rule of not buying a fancy house and then asking for a break.
2. Anyone getting a tuition break of ANY amount is obligated to give EVERY penny of charity money to the school. People actually pay less tuition and then support Lakewood yeshiva because they used to learn there even though they live in Monsey. I know lots of people who see no problem with this. I realize it is hard to make rules about not buying your kid pizza or art lessons (but they "need" it, the parents argue), but the tzedak rule seems a no-brainer.
SL, are you with me?

Anonymous said...

Great Idea Person: you are describing in detail what my father discovered about college financial aid 25 years ago. He realized he would have ended up in the same place financially had he spent on luxuries instead of saving for college. If those people who do financial aid for a profession can't get it right, how can a bunch of untrained, biased yeshiva board members?

Offwinger said...

GIP - Your examples are a good one.

The easy way to avoid that is simply to set up scholarship amounts that are related solely to income as it relates to a no-frills cost of living figure. not someone's personal standard of living. If someone can demonstrate an unusual cost of living expense messing with their balance sheet (e.g., a severe illness in the family), that information would be taken into the equatin as well.

Even if you account for # of children in the family (which also is a lifestyle choice) and you ignore the potential dishonesty going on (people who are not reporting their true income), the problem with doing this is that you are disincentivizing lifestyle choices that would earn more income. Whether it is the choice between being a SAHM or SAHD vs. a 2d working parent, the choice of which job to take or even which career path to pursue, any system that solely looks at income (money going in) will be influencing these choices. That's why the best scholarship system ought to look specifically at income in & maybe family size (maybe not), but be based on a sliding scale that does not "tax" additional income at such a high rate.

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