14 ms·

This is a great step in the right direction. I can't speak directly for MIT, but there are issues with how these programs don't apply to parents with small fami

• JumpCrisscross 2y ago
  It’s incredibly difficult to structure these rules in a way that doesn’t discriminate against small businesses while not opening a giant loophole for the rich.
  • changoplatanero 2y ago
    Why is the price you have to pay for something dependent on how much money your parents make? Feels so unfair
    • mh- 2y ago
      In my opinion, you're reasoning about it incorrectly. What if I said: the price is the same for everyone, but people with less access to money get proportionally more assistance paying that price?
      • changoplatanero 2y ago
        still seems weird to me. is there any other product for 18-22 year olds where the price changes depending on their parents wealth?
        • mh- 2y ago
          Interesting question. I can't think of anything outside of the education sphere, no. Maybe someone else will chime in with an example.
          • bigstrat2003 2y ago
            I would argue that financing a purchase (say, a house or car) falls into this category. The object itself does not change price, but the financing will change price wildly depending on whether the parents have good credit and can cosign the loan.
            • changoplatanero 2y ago
              This one makes sense to me cause the price (interest) is related to the risk or repayment. The way the universities do it is they want to find out how much money is in your parents bank account and then take as much of it as possible.
            • orangecat 2y ago
              True, although that's sort of the opposite. If your parents have resources and choose to help you out, the car loan will be cheaper. If it were similar to the college scenario, the dealership would say "your parents are rich, so we're going to charge you more because they'll be able to afford it". Of course that would never work because there's competition in the auto market, while prestigious colleges are effectively a cartel.
        • dragonwriter 2y ago
          > still seems weird to me. is there any other product for 18-22 year olds where the price changes depending on their parents wealth? If by “price” you mean, “net price after available subsidies”, then, yeah: healthcare, housing, and food, among others. The difference is that the subsidies are usually public, whereas the education subsidies are by the seller—but the seller is also a 501(c)(3) nonprofit, the entire premise of which, and the reason donations to them are tax deductible to the donor on top of the nonprofit being tax exempt, is that the nonprofit functions serves social needs in lieu of the government doing so.
      • feanaro 2y ago
        So there is an upper limit, which is the real price?
    • s1artibartfast 2y ago
      Because it is really a discount to the parents, not the student. It is understood that few 17 year olds have saved enough money to pay MIT's tuition of $85k/year for 4 years and parents are usually footing the bill. Yes, students who's parents have money but choose not to spend it get a rough deal. You can make a pretty strong case that it is their parents screwing them over, not the school. The school doesn't owe a discount to prospective students.
      • bigstrat2003 2y ago
        > Yes, students who's parents have money but choose not to spend it get a rough deal. You can make a pretty strong case that it is their parents screwing them over, not the school. No you can't. The school is the one choosing to set their prices based on the parents, who might or might not have anything to do with the student's school budget. That is the school's faulty assumption, and they, not the parents, are the ones screwing over those students.
        • s1artibartfast 2y ago
          My point is that the school has zero obligation to a prospective student. If the parents have the means to pay, but dont want to, that seems to be a bigger question of responsibility and obligation.
      • ndriscoll 2y ago
        You can't make that case at all. The price these name-brand schools ask is pretty much "how much do you(r parents) have?", and your kids could instead go to state school (if they can get into MIT, they probably qualify for a full ride scholarship or at least close) and have that tuition go to an ~80% down payment on their first house.
        • s1artibartfast 2y ago
          I agree with that. I dont see how that is MIT's problem.
  • dragonwriter 2y ago
    The reason is because small business owners are often, by any measure that doesn’t explicitly discount ownership of the business, actually rich.
    • potato3732842 2y ago
      How so? I know a guy who has literally millions of dollars tied up in shit that moves dirt and rocks and another mil tied up in some gravel pits. The free cash he has, the house he lives in, the lifestyle he can afford is on par with "normal" white collar professionals (i.e. not people who get a bajillion monopoly bucks to implement linked list traversals for faang). He works 60hr weeks during construction season and has government agencies up his ass regularly (MHSA regulates him like he's running a pit mine, it's a huge f-ing farce). If you don't place insane value on being your own boss it's kind of a shitty life.
      • no_exit 2y ago
        > MHSA regulates him like he's running a pit mine, it's a huge f-ing farce Not as much of a farce as getting silicosis and dying at 50 because your idiot gravel pit boss refuses to maintain a sprinkler system.
      • dragonwriter 2y ago
        > How so? I know a guy who has literally millions of dollars tied up in shit that moves dirt and rocks and another mil tied up in some gravel pits Having literally millions of dollars in productive assets is rich by any reasonable standard. > The free cash he has, the house he lives in, the lifestyle he can afford is on par with "normal" white collar professionals And he has decades of support at that level of wealth in and realizable from the assets. Choosing to use it to generate a a “normal white collar professional” (i.e., reasonably well off to start with) income doesn't change that it is an enormous store of value that he owns.
      • thfuran 2y ago
        A few million bucks is all you need to immediately retire with the expectation of being able to draw a us median income from your investments in perpetuity.
  • HeyLaughingBoy 2y ago
    There really aren't that many rich people, relatively speaking, so who cares? That's throwing the baby out with the bathwater.
    • llamaimperative 2y ago
      At an upper end college? Yeah I guess it has to be like definitely below 90% of the population. Basically zero!
• Scoundreller 2y ago
  Heh, for my jurisdiction, to get gov financial aid for a 2nd degree, they expected me to withdraw from retirement savings to fund it, but no similar expectation if you had a locked-in defined contribution pension plan (lol I wish). Nor would they expect you to take a line of credit against the equity in property if you owned any, but stocks are always a rich person luxury that you can sell! Kinda cemented that we’re rewarding a failure to save and rewarding a failure to save in something liquid.
• nuancebydefault 2y ago
  Why are such things in the US so complicated? Where I live, studying is much much cheaper for most professions,for everyone! That's the only fair way. Also, a set of well educated people pays itself back later in the form of mostly income and added value taxes, which provides money to keep studying for cheap for the next generation.
  • s1artibartfast 2y ago
    Because education is largely an afterthought, and universities primarily compete on entertainment and prestige. High cost and exclusivity is the entire point. A university open to all with a fraction of the price would be a poorly ranked one in every competitive measure.
    • PittleyDunkin 2y ago
      > universities primarily compete on entertainment and prestige. I like to call this "resort-style education".
    • nuancebydefault 2y ago
      Still, I do not get it. Why would this competition / exclusivity rule be so much less prevalent in large parts of Europe? I don't want to say Europe is without problems, but I think this kind of legislation, together with social security in general, is a clear example of how it can be handled more efficient and fair for most people.
      • s1artibartfast 2y ago
        Good question. I wonder if labor competition in Europe is less reliant on University names and reputation? IT could also have to do with cultural difference is what students look for in a university. My understanding is that most universities in Europe look more like US bare bones commuter schools, opposed to an all inclusive recreational experience. The top ranked university in Europe is Oxford, which educates more than twice as many students as MIT with half the budget. I doubt this is because Oxford is cutting corners on educational curriculum.
• jjeaff 2y ago
  I can understand why they might do this. Many people who own a small business underpay themselves significantly and use the extra funds on the business to build up assets. This defers taxes and allows the funds to be reinvested without tax. They might even take out loans on those business assets. The same way the wealthy will pay themselves a tiny salary and just live off the asset value of their stock. Someone who owns their own business could also easily drop their salary significantly for the year prior to applying to college.
  • technothrasher 2y ago
    As an owner of a small family business, I have to pay close attention to making sure my salary and that of my other family members involved is "generally commensurate with our duties" or the IRS will be up my backside pretty quick. I obviously try to minimize it as much as possible, but if you drop it to something insignificant and the IRS notices, they'll adjust your income and expenses reported to reflect your non-compliance with tax code.
    • colechristensen 2y ago
      Will they actually though? You hear a lot of anecdotes both ways and it is quite hard to get a good picture of the real situation.
      • roenxi 2y ago
        Keep a weather eye out with that line of scepticism. One of the opinions down that path is that MIT should adjust its admission procedures to filter out the children of honest businesspersons.
      • adastra22 2y ago
        One hypothesis for why you see both anecdotes is that the IRS is extremely good at filtering out these cases… when they bother to look into it. A lot probably get by without ever being audited, but the small percentage that do regret it.
    • 2y ago
• s1artibartfast 2y ago
  Isn't the entire point of these assessments to look at total assets, and not just annual income? I dont think this was an oversight or mistake. I think the expectation was that yes, people should sell assets if they have them .
  • xboxnolifes 2y ago
    The "mistake" is that the assets themselves are the source of income. Sell them off, and the income goes away too. It's the equivalent of expecting the parents to use 100% of their income to put their kids into college, which is impossible.
    • Dylan16807 2y ago
      A bunch of stock is a source of income too, but it wouldn't be wrong to use some of it. If the business is worth enough then selling it can replace all the income you would have ever gotten from it. It's not as simple as "income goes away". The specific numbers make all the difference.
      • bb88 2y ago
        > A bunch of stock is a source of income too, but it wouldn't be wrong to use some of it. Normal US tax law that most people fall under says no, stock itself is not income. It's only taxed at the time of sale. If you ask for mark to market taxing then any increase in market value during the calendar year will count as income -- even if you didn't sell anything throughout the year. But usually those people are drawing a direct income from trading.
        • s1artibartfast 2y ago
          Yes, but I think these tests look at both income and assets (like stock). That is why people get dinged for owning assets, even if they are a source of income.
    • s1artibartfast 2y ago
• Dylan16807 2y ago
  Well, how big were the business assets? Specifically, what percent of the business would have to be sold off? My reaction is very different for 5% versus 50%.
  • jedberg 2y ago
    You usually can't sell off 5% of a small business. A sole proprietor is not going to issue stock for 5% and get any buyers.
  • baq 2y ago
    There’s no market for limited partnerships in mom and pop shops. The whole thing may go for a low multiple of yearly revenue, like 2 or 3x.
• cpufry 2y ago
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• deleted 2y ago
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• carabiner 2y ago
  I remember how the FAFSA was more complex than any tax return I've had to do as an adult (late 30s now).
• potato3732842 2y ago
  >but there are issues with how these programs don't apply to parents with small family businesses. That's a "happy accident". The college educated bureaucrats who joined hands with academia to create these programs were perfectly fine omitting the plumber's children. They sure weren't gonna do a huge amount of work to find away to avoid an edge case they were ok with.
  • llamaimperative 2y ago
    That's quite a claim. Got any evidence for it?
• awb 2y ago
  On the flip side, it’s possible to sell a business for 7+ figures and then have little to no income in subsequent years in which case quite wealthy families would qualify for assistance.
  • throwaway2037 2y ago
    I find it hard to believe that total liquid assets would not be considered during the financial aid application process.
    • awb 2y ago
      How would they verify?
      • throwaway2037 2y ago
        I assume these programmes all use something like: Free Application for Federal Student Aid (FAFSA). It is federal fraud to lie about your liquid assets on that form.
• adastra22 2y ago
  Similarly, I wonder how they’d consider shares of a non public company. Probably a common situation for people on HN, that take a pay cut to work as early employees at a startup.
• mhb 2y ago
  Isn't this another way of asking how they consider assets? Which never seems to be mentioned in these headlines about income qualifications.
  • j45 2y ago
    Small Family business assessment should be different than larger businesses for this kind of criteria.
• tinyhouse 2y ago
  This is not a step in the right direction. Tuition for undergraduate studies should be affordable. Not for a small number of very rich universities that can afford it. But to all universities, as it is in most of the world.
  • bluGill 2y ago
    Parents should not be allowed to support their kids in college. Make the kid like away from home buy thier car if they want one. work jobs not for the family. don't let them take loans for more than their yearly income. That is prove the kids are really responsible.
• kaitai 2y ago
  Had the same problem (with MIT among others). Somehow I heard farmland was treated a bit more generously (a recognition that you can't just sell the land to pay for college & remain a going concern). For a small biz with 4 employees, though, the math was impossible. Good thing Caltech was cheaper. s1artibartfast below is saying that it seems intentional. But how can someone with a small business sell the assets, eliminating their own income in the process, and provide for the remaining children/themselves/etc? Sacrifice is one thing; killing the job you created is another and far too short-sighted.
• yalok 2y ago
  Same problem for families with multiple kids of similar age - never saw discount for those. Also, no discount for the cost of living in a specific area…
• bigbacaloa 2y ago
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• typeofhuman 2y ago
  You wouldn't have to sell the business. You could convert it from an LLC to an INC. Yes it's a lot of work but it's a better alternative to selling it.
• matt-p 2y ago
  A difficult problem, if you own a business then your "income" is completely manipulatable. If your parents run a struggling corner store then you should be eligible, but if they own a successful chain of stores, maybe not. Why not just say Income of 200K, or if you own a business then income + pre tax profits <=200K and book assets <500K or something?
• deleted 2y ago
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• consteval 2y ago
  Politically, there are so many policies across the board that make having a small business untenable as compared to a normal salary. As time goes on, these policies increase in amount and severity. Looking around me I see the effects. Year over year small businesses continue to disappear.