The one area that I see that is unaccounted for in the calculated figures is for those that are self-employed. The figures that are used in calculation of financial aid are all based on a persons or couples AGI, and for those that are self-employed want this number as low as possible. The AGI is calculated after all deductions (standard or itemized deductions, depreciation, business expenses) etc. The mantra here is that you would rather spend the money than give it to the government. What I am saying here is that there are a lot of people that are really have a much higher standard of living than what their AGI says.
Also, the figures that are used by the university to even know what the incomes of the applicants are are derived from financial aid applications (FAFSA and CSS Profile). If an applicant doesn't think or knows they will not get any financial aid, they are not required to disclose what their income is or submit their tax returns. On some applications there are some checkboxes as far as what the family income is (0-25,000, 25,000-50,000, 50,000-100,000, etc.) but none of those numbers are backed up with anything, and many times the kids themselves fill the applications out and guess.
The ugly truth to all of this is that private institutions like the Ivy league schools, Duke, MIT, etc. all have gained prestige by being selective as they all accept less than 10% of applicants. But the selectivity is not by merit, it goes like this:
1. These schools first select kids from non-alumni that have families with money and/or power. The quotas vary, but think roughly a third here. This is the most important because the major thing a University president wants to do is increase the schools endowment through prestige.
2. The next step is to select the same types of kids from alumni. Think another third. Most of these kids' families are already contributers.
3. What is left is the kids based on merit that can pay for it. For universities that are 100% funded, after the federal money runs out and there is a large discrepency, the schools have to give some sort of merit scholarship to fill the gap and why would they do that when they can get kids to pay for it all on their own. So if their is a big gap and the loans would be out of sight or unattainable, then the kids dont get chosen.
4. Sadly enough, if there is anything left and there is some money to be doled out by the university, it is used to fill internal quotas with respect to race and gender in order to avoid negative publicity and lawsuits. Now, if there is a truly amazing kid that is a prodigy in something way beyond the standard weighted 4.0 and resume full of clubs and community service, they will fit in here.
Now, for public schools, they are subsidized directly much more than the private institutions and thus depending on this funding will depend on its acceptance rates. The universities, and even the special high school programs, are tiered by this funding and will direct its acceptance rates as they have quotas to fill. This is one of the reasons that a public institution will specialize in some discipline to attract out-of-state students which in turn pay much higher tuition rates.
On a sidenote, what is crazy about the whole scandal with hollywood people is that they did not have to pay all that money to a private party as a intermediary to a school. All they had to do is go to the school and they could have gotten their kids into virtually any school they wanted. As sad as that sounds, its true and for a half a million dollars like the one family paid could have gotten them into about anywhere.
