To enroll: Choosing a college within my budget constraint

To enroll: Choosing a college within my budget constraint

Maria, Norma, Xiaotong

When evaluating where to go to college numerous aspects come into play. Conversations about budget constraints are predominant. For some, this conversations arise when starting to look at schools, others don’t even have this conversation.  We will discuss two cases in which two individuals make decisions depending on their budget constraint.

Someone’s decisions will be affected by the following:

1.     The type of education that your are interested in Liberal Arts College vs. University

2.     Intended degree / Program

3.     Rankings

4.     Size of school

5.     The amount of financial aid or Scholarships they can receive from an institution / “financial aid package”

6.     Location

Sarah and Clara are seniors in Milton Academy a private school. The main difference is that Sarah comes from a very wealthy family and pays full tuition in Milton Academy whereas Clara comes from a middle class family and has a full scholarship at Milton Academy. Both of them are in the top 10 percentile of their class, got SAT scores above 2,100, they are dancers and want to major in Finance. Thus Clara and Sarah have different budget constraints, which will lead to make difference choices.  Because of their similar interests they started to look at schools together yet what they paid attention to within the catalogues was quite different.

We will first look at Sarah’s college decision process by looking at the two factors location and type of education. Sarah had a higher budget constraint because her income was high enough so that she could afford any school that she wanted in the location that she wanted. Sarah was interested in attending a topnotch college but she knew for sure that she wanted to be in a city. For her she preferred to sacrifice going to a very great school for going to a school in the city. Sarah got into Amherst College, Boston College, Wellesley College and Cornell University. Sarah decided to rank her options she discarded Amherst College and Cornell University because they where in rural areas that she did not want to be in although they were better schools but she knew that being in a city would make her happiest. She faced a decision between Wellesley College and Boston College they were both great schools that where in suburbs right next to Boston, MA and she could be in the city in 15min by train, yet one was an all Women’s College while the other was Coeducational, she was indifferent between both. She decided to go to Boston College because she had more friends that were going to that school.

Now we will look at Clara’s college decision process by looking again at the same factors location and type of education. Clara’s budget constraint was limited by the fact that she needed a scholarship or financial aid. In her position she was willing to make a tradeoff between going to school in the city and/or a top-notch school. Her decision would be based upon what was the cheapest or most affordable combination of a topnotch school and a location that she could get with her income. Sarah got into Harvard University where she would only pay $22,000, University of Pennsylvania paying $25,000 plus $8,000 in student loans, Wellesley College for $15,000 and $3,000 in work-study and Amherst College for $15,000 and $3,000 in work-study. She discarded U Penn right off the bat because she considered that it was too expensive for her. She finally made the choice to go to Wellesley College where she was able to afford and at the same time get a great education but it was also in a great location. It was near Boston, MA and she could visit Sarah frequently too.

In conclusion the two girls’ budgetary constraints and preferences lead to different choices. This shows how two people have different budgetary constraints and how one’s limit is not necessarily the other one’s limit. In short in economics, no two people are the same, each and every case is different and unique.