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Undergraduates with family income below $200k will be tuition-free at MIT

(news.mit.edu)
581 points gnabgib | 5 comments | 20 Nov 24 16:59 UTC | HN request time: 0.724s | source
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TheJoeMan ◴[20 Nov 24 19:26 UTC] No.42197249[source]▶
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 family businesses. My parents had a small business, with my father taking home a salary of $XX,XXX. Duke University used the business assets to determine the EFC (expected family contribution) of literally 90% of the salary. Essentially saying to sell off the family business for the college fund, which was a non-starter.

Small businesses are allegedly the backbone of America, and I feel these tuition support programs overlook this segment of the middle-class.

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jjeaff ◴[20 Nov 24 21:54 UTC] No.42198518[source]▶
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.
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1. scarby2 ◴[20 Nov 24 23:50 UTC] No.42199427[source]▶
> This defers taxes and allows the funds to be reinvested without tax.

All business funds are re-invested without tax, this is actually a good thing. Also for the majority of business owners taking a loan against your assets to pay yourself is a terrible idea, yes it may defer taxation but that tax will still come due and now you have to pay interest.

> Someone who owns their own business could also easily drop their salary significantly for the year prior to applying to college.

This could be a problem but i think the amount of difference this would make would be negligible - most people don't plan like this. You could also emancipate your 17 year old or have them live independently for a period of time (my friend actually deferred his entry and worked for a year in order to get a full ride)

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2. spott ◴[21 Nov 24 03:38 UTC] No.42200862[source]▶
> most people don’t plan like this.

This is a pretty naive take. It is a $85k per year cost. If you can shift some money around and avoid $85k per year, you would absolutely do that.

> you could also emancipate your 17 year old.

This is complicated. Emancipation is not a “sign a form” kind of thing. The kid would have to be living completely independently (no support from the parents) and would have to convince a judge that they need to have rights and responsibilities otherwise given to adults. “Because the parents don’t want to pay for school” isn’t really a valid reason.

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3. nyjah ◴[21 Nov 24 04:00 UTC] No.42200958[source]▶
I do appreciate how nonchalantly emancipating the 17 year old was suggested tho. Too funny. Two Americas?
4. exhilaration ◴[21 Nov 24 04:55 UTC] No.42201250[source]▶
Marriage triggers automatic emancipation. Just sayin'.
5. 8note ◴[21 Nov 24 09:16 UTC] No.42202479[source]▶
> All business funds are re-invested without tax, this is actually a good thing.

Paying tax and investing in your kid is also a good thing. Putting your income into the S&P 500 is also a good thing, but being wealthy enough to do so should exempt your children from this subsidy