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I have a friend (I’ll call him Steve) who manages an IT group at a Midtown company. I don’t know Steve’s salary, but I have to imagine that he makes a decent salary — certainly above the median for New York.
Steve also has three kids, the oldest of which is three years old. The kids are, obviously, not yet enrolled in a yeshiva, but at some point in the not too distant future they will be. I don’t know where Steve would want to send his kids, but from what I know of him hashkafically and the location of his house (not in Brooklyn), I’m fairly certain that he’ll be facing steep annual tuition bills. Assuming he has to pay his mortgage and other bills, it may well be beyond his ability to pay despite his above average salary.
For the moment, however, Steve’s kids aren’t yet in school. Steve is a pretty astute guy when it comes to finances. He’s not a CPA, a financial planner or anything like that, but he has enough common sense and brains to be able to analyze a situation and a see what lies ahead in the future.
Let’s assume (since I don’t know this for sure) that Steve has the ability to put away some money from his job each month for savings. Simple logic would tell you that a person facing a long road of expenses in the future but with a current surplus would be wise to start putting away some money for that future expense. That’s the entire basis of some of the various savings plans (IRA, 401(k), 529, etc.) that are out there – you put away now when you have excess to pay for a later expense (be it retirement, college education, etc.). So, if Steve can sock away a few hundred each month now to pay for yeshiva education for his kids later, he should do it. That would be the responsible thing to do.
The problem is that unless Steve’s salary is very, very high, he actually has a disincentive to save.
If Steve’s salary is very, very high, and he’s able to carry the three tuitions in full (plus the tuitions of any other kids he may have in the future) in addition to his other expenses then he might have an incentive to save. But, in all probability, Steve does not have a salary quite that high. Three tuitions can easily add up to $25,000 a year or more — quite a big hole in just about anyone’s budget. So, in all probability, Steve (along with lots of other people) will be asking the yeshiva for a discount.
When Steve sees the financial aid application, there will probably be a question on there about how much he has stocked away in a savings account. Assuming that Steve has been responsible, he’ll probably have been saving up and have a few thousand stashed away by the time his oldest hits first grade. The administrators will probably take this into account when they evaluate Steve’s application for a reduction in tutition.
Now, Steve is an honorable, stand-up kind of guy. He’s the type of guy who, if he could pay full tuition, would. He’s not out to deliberately “cheat” the schools out of money that they owe. He’s also not going to use the money that he would have otherwise put into the savings account to go on an expensive vacation, buy a big screen television, or go on a gambling trip to Atlantic City. He would put the money to use in ways that most of us would consider responsible — he might pay off a high-interest credit card, or make an extra payment on his mortgage. But he probably can’t help but notice the difference between himself and his less responsible neighbor – let’s call him Mike.
Steve and Mike earn the same amount. Their houses are roughly the same price and they pay similar amounts in mortgages, bills, etc. Both have young children coming into the yeshiva in the next few years. Steve, being responsible, knows that he should begin saving now for the big upcoming expense. Mike, however, doesn’t have a long-range vision. He knows that he’s going to have to start paying tuition in a few years, but for now, it’s not “on the books yet.” He can take his discretionary income and spend it on whatever he needs or wants. So, Mike’s family goes on a vacation this year — because he knows that in a few years he won’t be able to. He may purchase large-ticket discretionary items now. Heck, he may even be responsible and take the money and pay off his credit card bills. But whatever he uses it for, it’s not going to be there when he enrolls his oldest in the local yeshiva.
Steve looks at Mike and his purchases and wonders to himself how he can buy these things. Doesn’t he know that his kids have to go to yeshiva in a few years? He’s just about positive that Mike doesn’t have some outside source of income. He figures (correctly) that Mike isn’t saving any money to pay for yeshiva in a few years. A casual conversation with Mike about the subject a few days later confirms his suspicions — unless Mike hits the lottery in the next few years, he’s planning on asking the tuition committee for a break on his kids’ tuition when it’s time to enroll.
Steve has to wonder to himself. He has the ability to make sacrifices to his lifestyle and to scrimp and save perhaps $30,000 over the next three years to pay tuitions. Of course, as the younger ones start enrolling and the savings account begins to deplete, he’ll eventually have to ask for a tuition break himself – but for the first few years, if he really watches the pennies, he can probably pay the full tuition for his oldest. And that would be the honorable thing to do. But then he looks at Mike and thinks to himself — “why should I save all that money when Mike will probably get a discount because he has no money in the bank? Why should I be “punished” financially for being responsible and being a roeh as haNolad*?” And so, Steve not only has no incentive to save — he actually has a disincentive to save — because if he does save, he’ll either have to pay the entire tuition out of pocket or else the administrators will see the savings account on Steve’s financial aid application and reduce his tuition based on the fact that he can draw on those savings.
In short, we’ve created a system where people are often rewarded for not being responsible and people end up worse off, financially, for doing the honorable thing and being responsible. And, perhaps, that’s part of the problem that we have with the “tuition crisis” today.
The Wolf
* Furthermore, if what Steve hears about tuition committees are true, then he might be in even bigger trouble once the savings account is depleted and he has to start asking for a discount. Most committees are loathe, from what he hears, to give up their “full payers.”
Wolfish – I’m not entirely sure what you mean by irresponsible people being ‘rewarded’ by the current system, unless you mean that they can buy things, go on vacations, etc, that Steve can’t.
If so, VERY good point. The tuition superstructure that we’ve created for ourselves is riddled with unintended consequences like this one. It’s broken and in desperate need of fixing, and is rapidly becoming unsustainable in its current state.
WolfishMusings-
“In short, we’ve created a system where people are often rewarded for not being responsible… “
-Steve will have to spend out-of-pocket to fall below a certain savings level if his spouse needs medical care.
What about:
-Buying fresh bread instead of day-old.
-Throwing out socks with holes, rather than sewing them.
-Giving your nephew a nice bar-mitzva check.
Three more points:
2) $25,000 may be a little on the low side for three kids in yeshivish, non-chadishe schools.
3) The kid who finishes his dessert first is more likely to get doubles. While it would be more fair to wait until everyone is finished their first portion before distributing seconds, gluttony is sometimes rewarded.
P.S. – this isn’t even touching the related subject of strategic incompetence.
A few people told me to renovate my house and buy a new car before my son goes into Yeshiva, otherwise we won’t be able to (if we can even afford to do it now…which I don’t think we can)
ICOT, I think your answer says it all, and is essentially the answer to the original query.
TheWolf wrote: “Three tuitions can easily add up to $25,000 a year or more”
ICOT wrote: “$25,000 may be a little on the low side for three kids in yeshivish, non-chadishe schools.”
ICOT, I assumed Wolf is talking about more modern schools with astronomical tuitions. But which yeshivish Yeshivas charge $8,000+ per child??? One of the “flagship” mainstream litvish yeshivas in Flatbush was charging (about 5 years ago) for a first child in the family enrolling in Kindergarten $3,500/year for a lower middle class couple. (They were charging $2,500/year at the time for a Kollel family.) Pre-1-A was the same price.
Any askan memuna al hatzibbbur will tell you the whole enchilada is unsustainable. Jewish mosdos run on “nissim” accounting.
Mezonos Maven-
But which yeshivish Yeshivas charge $8,000+ per child?
B”H I can verify that the average can be slightly higher among mainstream yeshivos & bais yakovs.
This includes tuition and all other mandatory expenses (kid’s lunch, the annual dinner, building fund, etc.) and does not include extras like dorm, or expenses like school supplies, clothing, Chanuka + year-end tips.
I have heard stories of people who bought houses to lower their tuition payments. After all, you have to pay your mortgage.
I have a friend who works in the business of helping people optimize themselves financially for college tuition. That means moving assets into IRA’s to lower available money, making you more eligible for need-based scholarships.
The government is the same way. They tax savings. Let’s say you invested $5,000 in a CD at 5% interest. They charge you 28% of the resulting $250 ($70) in taxes. That leaves you $180, or 4%. With typical inflation at a bit above 4%, you actually end up losing money.
Many people have also found it worthwhile to strategically walk away from a mortgage. Their house is so underwater financially it doesn’t pay to keep up the payments.
Many government programs create disincentives to switch jobs- the higher tax rates, loss of programs, etc. make it difficult to justify.
A famous archaeologist in the late 1800’s once paid tribe members a certain amount of money per bone fragment found. Sure enough, these enterprising tribesmen broke up the bone fragments into smaller fragments. Any human-based rules system is designed to be gamed, exploited, and loopholed legally.
ICOT, Is over $8K per child standard in mainstream Brooklyn litvish Yeshivas and BY’s? (How much is it by Chasidish schools roughly?)
And are you talking about “list price” that, perhaps, very few parents pay in full – or most parents in fact pay $8K+?
What does a $60K/year earner (family income) with 4 or 5 children pay in these same Yeshivas?
Or at least your best guesstimate.
[Mods – I put this in the wrong thread earlier. My apologies.]
There are some schools that require all people who are requesting a “tuition reduction” show their past year’s tax records. That way it avoids the whole issue. If they could afford to take an expensive vacation, then they can afford to pay for tuition.
I suppose the system is teaching you to “cheat”? Whatever you make, hide it, from the tuition committees and from the government(so you could recieve more benefits). I guess the solution is to be in kollel with your in laws supporting you! (sarcasm….)
Mezonos Maven-
Is over $8K per child standard in mainstream Brooklyn litvish Yeshivas and BY’s?
This is a somewhat rough averaging of different schools and ages.
In my experience, yeshivos are slightly more expensive than bais yakovs, high school is more expensive than elementary, and bais medrash is more expensive than high school.
(How much is it by Chasidish schools roughly?)
I am told about $2,000 – $3,000.
This is second-hand info from my chasideshe colleagues.
And are you talking about “list price” that, perhaps, very few parents pay in full – or most parents in fact pay $8K+?
I have no idea what percentage of parents pay in full, or what size the average discount is.
What does a $60K/year earner (family income) with 4 or 5 children pay in these same Yeshivas? Or at least your best guesstimate.
WolfishMusings-
$25K is just a round number — don’t get so hung up on it. Feel free to substitute $30K or $35K or more if it reads better to you.
Condensed version: “Don’t be so nitpicky”
Umm, OK.
So at what point do you think saving for tuition is supposed to happen? My husband and I took some nice vacations before we had kids. Was that wrong? Then we bought a house…now we don’t go anywhere (except my mother took me to Iceland recently).
How do we balance tuition vs life needs? My kitchen needs to be redone because there are nails sticking out everywhere and its dangerous. Is it wrong of me to redo it? Is it wrong if I use good quality (and more expensive) materials so it lasts 40 years instead of 10?
My post is serious…I know I will have to ask for a tuition break because my husband and I have 2 kids but don’t have a spare $30,000 to pay for our kids education. I hate asking for a break but there is no way around it.
Wolf,
The bottom line is, you have to be able to sleep at night with yourself. I made the decission to not load myself up with debt and refinish my house more than I had to until this point. When I needed a new car, I bought used and spent less, all so I could pay as much tuition as I could. I firmly beleive that the one above will provide me a new kitchen/floor/bathroom/car/ etc when I need it without having to go into unecessary debt and without affecting what I pay in tuition. The fact that others I know borrowed and spent all the money and are going on vacations while paying less tuition does not bother me. Hashem gives me what I need when I need it.
rescue, what a high level to be on (NOT SARCASTIC!)
I do wish I felt the same – My family is on scholarship and it mumash angers me to know that there are those who are taking valuable scholarship dollars and still going on family vacations and driving new cars, owning investment real estate etc.
There is a finite amount of scholarship dollars available and to give a family less of a scholarship because another family must go away for pesach and summer in the catskills etc – well that means less of a scholarship for someone else…
why is there such a difference in the prices of chasidish vs. yeshivish schools. do the non chasidish schools have better teachers, better programs etc.??? if the chasidishe schools can manage with the lower tuitions, why can’t all schools manage?
A friend of mine who has his child in a MO high school showed me his tuition bill for the year. It was over $24,000. For one child. No dorm.
A question to ask would be why is the tution at such a school be 4-5 times as much as tuition in Lakewood or even many in Brooklyn? And the school also cries poverty.
Anyway, te point is, full tuition at these schools for three children is hardly likely going to be in the 25,000 range, more likely it will be close on 40-50,000.
ICOT, I don’t either understand the large discrepancy in tuition between litvish and chasidish yeshivas. Perhaps it is explained by the costs of providing English/Secular studies. Maybe the MO schools put the most money into that, the litvish less but still more than the chasidish.
What if parents are unemployed? Or the parents jobs don’t even come anywhere near paying the tuition. Are the children refused entry to the yeshiva or even thrown out of the yeshiva??
Mezonos Maven-
You’re asking me questions about a subject I don’t know well.
(that’s just a disclaimer, I’ll still try to answer them.)
I don’t either understand the large discrepancy in tuition between litvish and chasidish yeshivas.
From what I was told, yeshiva is a community obligation among chasidim. The Rebbe gives a well-to-do community members a number, and that’s what he donates.
Perhaps it is explained by the costs of providing English/Secular studies. Maybe the MO schools put the most money into that, the litvish less but still more than the chasidish.
ALl of the followng are factors:
-Lower-salaried principals, administrators, and teachers
-Larger class sizes
-Smaller, less modern, less frequently maintained buildings
-The quality of the lunches and cooks
-“Optional” items: sports coaches and fields, music teachers, trips, etc.
What if parents are unemployed? Or the parents jobs don’t even come anywhere near paying the tuition. Are the children refused entry to the yeshiva or even thrown out of the yeshiva??
I know of at least one instance where a child had to go to public school, but I know of others where the school allowed the parents to work off the debt years after the child graduated.
Administrators aren’t bad people, and they are caught between parents who are truly unable to afford tuition and staff that must be paid.
<i>I know of at least one instance where a child had to go to public school, but I know of others where the school allowed the parents to work off the debt years after the child graduated.</i>
ICOT, How could a school EVER force a Jewish child into PS??? That is essentially writing him out of the Jewish people! And for money no less??
<i>Administrators aren’t bad people, and they are caught between parents who are truly unable to afford tuition and staff that must be paid.</i>
How much is the “incremental” cost of having an additional child? As long as the parent is covering the incremental cost of the child being in the school, does it detract from the staff being paid?
BTW can you explain what you meant by “strategic incompetence” a few posts back?
Mezonos Maven-
Strategic incompetence example:
At an out-of-town yeshiva the boys take turns preparing the Shabbos chulent.
One boy burns the cholent twice in a row.
The other boys decide not to chance it a third time, and for the rest of the year his turn is skipped.
I can’t really answer your other questions.
ICOT, IOW that bochur didn’t want to do it, so he purposely burnt the cholent to get out of the cholent duties.
How were you applying that here?
Mezonos Maven-
Not necessarily that he deliberately allowed it to burn, but due to his lack of competence he is rewarded by no longer having this chore.
This thread’s title is “What Do You Do When There Is An Incentive To Be Irresponsible?” – strategic incompetence fits that category/question.
ICOT, Isn’t the “strategic” in strategic incompetence indicate it is deliberate? (That also seems to be the take of the definition when googled.)
Mezonos Maven-
I always understood it to mean either deliberate or honest incompetence, so long as an advantage was gained.
But, who am I to argue with Google, the great and terrible.
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