O.C. Families Get Education in College Cost

The story of how the eldest son in the Tan family of Irvine will fulfill a dream to attend Harvard could begin several years ago, with the boy first entering school and his persistent parents urging him to study hard, get good grades and shoot for the Ivy League.

That surely is part of it, for Michael Tan now has a 4.3 grade-point average, scored 1520 on his SAT and developed an activist spirit that led him to serve on the statewide student council, Amnesty International and the city school board as a student representative.

But behind the decision to send Michael, 18, to the most prestigious school in the country lies another tale, one of a soul-searching family, with bright children, reeling from the sticker shock of higher education and wondering if they should sell the house for a smaller one, postpone uninsured medical treatments, take on additional jobs and incur more debt than they feel they can handle.

Every year, Orange County sends a bumper crop of star students to the Ivy League and other elite schools with an unbreakable mystique and often unbearable price tag to go with it.

And every year, around this time when students have just sent their final notices to enroll in the fall, families like the Tans in the middle to upper-middle income brackets begin to come to grips with the skyrocketing costs of higher education--especially for private schools, where tuition has jumped more than 60% in the last 10 years.

This year it will cost $32,130 to send Michael, a senior at Irvine High, to Harvard. Over four years, the cost for tuition, room and board and other expenses will exceed $128,000, not accounting for inflation.

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On paper, the Tans seem well-to-do. Domingo Tan, a chemical engineer, earns more than $70,000 a year; Paz Tan is now a homemaker, having left a pharmacy career several years ago to take care of their three children. They have lived in Irvine for three years, in a two-story house assessed at $300,000, and have enjoyed a comfortable life here, with annual family trips, weekend outings and the benefits of nearby schools that are among the most highly regarded in the state.

But in recent months, as they reviewed mortgage payments, impending uninsured medical expenses and debts from an unsuccessful business and other expenses, it became clear that perhaps even their affluence wasn’t enough for Harvard.

They must pay $17,600 of the first-year expenses, with Harvard’s strictly need-based financial aid--it offers no merit or athletic scholarships--and outside scholarships, government Stafford and Perkins loans picking up the rest. Over four years, the family contribution will surpass $80,000, if they negotiate similar financial aid arrangements every year.

This year it took three rounds of negotiations--led by Paz Tan and her son--before Harvard lowered the family’s obligation from its initial $22,802. In the end, Michael says, “we basically just begged.”

Like many families, they didn’t budget adequately for college costs--they didn’t start investing in college savings until Michael entered high school--especially for a school like Harvard or the other private institutions to which he was accepted: Yale, Swarthmore, Amherst and Cornell.

The Tans initially thought outside scholarships would cushion the blow, but Harvard, like many institutions, counts a large portion of that money as earnings and thus reduces the level of its financial aid.

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Savings, and a much tighter family budget, will let them get by for now, Paz Tan says. Already the annual family trip--China was last year’s; Vancouver was the destination this year--has been canceled. When Michael was invited to attend President Clinton’s volunteerism summit in Philadelphia last weekend, he had to scramble to find a foundation to pay his way.

But looking to the future, the Tans must do more.

Second son Mark, already eyeing the Ivy League, heads for college in two years, at a time when Michael will have two more years left at Harvard. The Tans know they must consider taking on more debt through bank loans, or perhaps selling the house.

“We might do that if it gets real bad,” Paz Tan said, more with resignation than despair.

Both Paz and her husband have entertained the idea of setting up an unspecified business, perhaps even in their native Philippines where they could collaborate with relatives.

As part of Harvard’s aid, Michael will take a university job, and may take another outside in the Boston area, even though it may jeopardize his shot at graduating in three years instead of four.

“Unfortunately with my brother entering college in two years, we’re really not going to have the time to cash in on last-minute investments, round up some new scholarships, or bring any substantial extra income to the family,” Michael says.

“What’s even more pathetic is that when my baby brother hits college in nine years, my family’s life savings will have been exhausted, and me and my brother [Mark] will have to fund his post-secondary education.”

To be sure, all the children could go to less expensive state colleges or universities. For much of his high school career, Michael fully expected to go to Berkeley, a top 10 school to which he was accepted. Berkeley estimates first year costs, including tuition, room and board and other expenses, amount to $13,800--a third of Harvard’s.

He figured he could go to Berkeley, then try for an Ivy League law school education that would help boost him into his planned career as an international affairs or human rights lawyer, perhaps working with the United Nations.

But last December, when he received a letter of acceptance from Harvard, “the realization of my deepest, deepest, deepest childhood dream,” his parents agreed with Michael’s sentiment: “How could I pass that up?”

Michael now wrestles with the decision. He says he is grateful to Harvard for ultimately increasing his financial aid but the idea of buying into the cachet of the Ivy League, and scraping for the cash, leaves him somewhat uncomfortable.

“It’s not that bad of a thing to not go to Harvard,” he said. “I’d be very happy at Berkeley; I know they do a lot of great things. But at the same time, you shouldn’t have to make that choice based on money. You shouldn’t have to give up the best educational experience you can get just because you can’t afford it. You shouldn’t have to cause your family so much suffering in seeking the best education possible.”

Such concern is common in this age of rising college costs, which perennially exceed inflation.

USC economists have estimated that half of low-income students must attend a two-year community college because they can’t afford the full four years at the University of California or California State University, where tuition costs, respectively, are an average $4,165 and $1,751 to $2,204.

Nationwide, average tuition at four-year public schools is $2,966, an increase of one-third to 50% from a decade ago, depending on how the numbers are counted.

But much of the anxiety over college expenses stems from private school costs. The national average for tuition alone is $12,823, according to the College Board, but the Ivy League and other elite schools often charge more than double that.

“The kid in the family works so hard to get admitted and then the family turns around and finds out they can’t afford it,” said Al Zamora, a consultant with College Foundation Planners Inc. in Anaheim, a private firm that advises families on college choice and financial aid.

“You just have to be careful. You have to ask yourself what is the return on the investment? Does it guarantee getting into the best medical school? The best graduate school? The best job?” said Zamora, a former assistant admissions director at the private, prestigious Occidental College in Los Angeles.

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Over the past several years, Zamora and others at the firm have observed a shift in college financial aid packages. Before, the schools fronted 60% of the cost by way of scholarships, grants and work study, leaving 40% to be covered by the family, usually through savings or bank loans. Now, it’s more common for families to shoulder 60% and the colleges 40%, said Connie Cooper, president of College Foundation Planners.

The colleges attribute their rising costs to expenses associated with technological improvements on campus, faculty salary and benefits, capital improvements and providing financial aid grants, according to a recent survey by the National Assn. of Independent Colleges and Universities.

Still, they take that defense only so far.

Harvard, for one, believes the education, resources and access to top scholars make the expense a bargain.

Nevertheless, says Jim Miller, Harvard’s director of financial aid, the university realizes the fiscal burden it places on families and is working to increase the financial aid it offers. It is in the midst of a campaign to raise $200 million toward that effort. This year, it will give out $39 million in scholarship aid to the 2,150 enrolled freshmen, with the average award about $20,000.

“I would say we do a great job” with aiding families, he said, and notes that the school’s financial aid package ranges from virtually nothing for the most affluent to nearly full freight for the most destitute. Harvard’s “yield”--the percentage of admitted students who enroll--is close to 80%. Graduation rates fluctuate around 97%.

That is not to say financial hardship is avoided. He acknowledges that families face hard decisions about siphoning savings, refinancing homes, borrowing from pension funds and taking out loans that balloon debt. More than three-quarters of Harvard’s undergraduates work at the university or in nearby communities.

And the school takes a hard stance against students declaring themselves financially independent from their parents, an option that often boosts aid offerings tremendously because such students typically don’t have many assets or much income.

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In a primer to admitted students at its Internet site, the school says it refuses independent applications in “99% of the cases. We feel strongly that your parents have an obligation to help finance your college education. . . . A decision to attend Harvard must be made by you and your parents.”

All in all, when it comes to affording Harvard, Miller says, “I certainly would not say it’s stress-free. It is a choice and I would never argue that it does not take a commitment. But I don’t think it’s the norm that people’s lives are led to financial ruin.”

Indeed, the Tans’ situation is not so dire. But the their crash course in college financing has left them a bit shell-shocked.

“It’s so hard because I really do believe in need-based financial aid,” Michael says, his social activist spirit rising. “I’m not into the idea of meritocracy at all. If you’re from a particular socioeconomic level and you deserve to go to an Ivy [League school] then yes, you deserve more aid than I do.

“I’ve had a lot of privilege living in Irvine. I’m very privileged. At the same time, I think my issue with financial aid in general is I think all students should have more aid to go to college. Everyone should have more aid to go to college. It’s absolutely ridiculous to ask a family to pay $17,600 a year.”