Pecuniary Matters
I was looking at the federal financial aid calculator and I noticed that the estimates it generates expect the student to pay 50% of his/her net income and 35% of his/her net assets per year for college tuition. It also expects the parents to pay 12% of their net adjusted assets and just under 40% of their annual income to college tuition. If we assume that a student's marginal propensities to save and invest are close to 0 (probably reasonable because students have low or nonexistant incomes), then this system demands that the student pay about 82% of their net assets in tuition over a four year period. Parents probably fair at least as badly considering they have higher expenses, and they generally pick up the slack for their children who really can't afford anything. The median income for a family of four in the US is about $65,000. This would imply that the family should pay $26,000 of its income for tuition each year. The average private university costs about $42,000, so the difference is about $16,000. So, if the family has adjusted assets of more than about $135,000 (which they had better if they plan on retiring), then they get absolutely no aid. Yikes!! This is all the more reason why I should go to Princeton where there is virtually no cap on financial aid. A family of four with an income of about $150,000 and net assets of about $600,000 receives roughly $10,000 of financial aid/year.
In other words, I'm slowly facing the realization that I'll probably go to some bad, cheap state school like Oregon State. I have a theory that the overall caliber of students there is actually lower than at my school. This is bolstered by the SAT statistic, which indicates that my high school actually has a higher average SAT score than their admitted students. That's pretty pathetic. The total cost is still about $15,000/year though.
College is such a money waster.
As long as you can take initiative, learn on your own, and be self-motivated, expensive colleges are rip-offs. The only other primary reason to attend a costly college is to be around smart people who are more likely to become your friends.
Name a single graduate school that values the difference between Harvard and OSU more than the difference between a 3.75 and a 3.25. In ten years, who will care where you attended?
College is what you make of it, and colleges waste extreme amounts of money with healthcare and facilities. I read an interesting comment by a Swarthmore professor about the monumental waste of universities. Swarthmore has enough endowments to contribute $25,000 to each student, yet the school spends $65,000 on each student. Compare that to state schools that often teach from the same textbooks and have teachers hired to teach, not perform research.
Despite this, I'm applying to mostly expensive colleges.
In my mind, undergraduate education does matter. You can be a 'go-getter' and get an excellent education wherever but it does make it easier with smaller classes because professors are more approachable on the topics of help and research/future things. But in all reality it depends on what you want to do. If you want to become a really good engineer, go to Caltech or MIT or Mudd and then get launched into the best grad school and then get launched into the best research/internships/jobs. However, you can still do pretty well if you don't go that extreme route.
In accordance to the issue of teaching versus research, everyone here (college, not university) is teaching. I think you'd find similar things going on at Mudd but different at Caltech and MIT since they really exist to be research facilities.
But yeah, the cost things is weird. I visited OSU over the weekend and their dorms are nicer than ours at Oxy when I pay more than twice as much. The facilities (classrooms/labs) are definitely nice here and I think you'll find that at most more expensive places but it really depends.
College may end up being a bad investment if you finish without any marketable skills to pay for your years in school. That said, I've got lots of friends who graduated from Stanford and make a lot of money.
I'd advise you to not spend any of your investments on College -- since it's probably difficult to learn investing without them -- and you'll need to learn how to invest if you have to pay for College.
I'd also suggest you get your parents to pay for College. Finally, given your situation, Princeton sounds like it might be a deal, go for it!
I also forgot to mention: if your parents forgo a significant amount of their yearly income for your College and you rarely see them, it goes a long way if you thank them once a year.
Statistically speaking, there is no doubt that four years of college is definitely a good investment. While I forget the exact statistics, I remember reading that the average person with just a bachelor's degree earns something like $1-3 million more over the course of their life than a person with just a high school education. For an exceptionally motivated person, this advantage is definitely less, but I'm guessing the education is probably still worth it.
The big question is whether it is a good investment to spend $40,000/year at an exceptional institution, or $10,000-$15,000 at a mediocre state university. I'm just guessing, but I would wager that the expensive university is not a good investment for a motivated student. Statistically speaking it is: people who graduate from Harvard make way more money than people who graduate from University of Oregon, but it seems unlikely that it would make a very significant difference for a good student, as long as he or she is passionate and driven in his or her studies.
Finally, for parents, spending money on their children's education seems to be a pretty bad investment. The only possible payback would be if the student became very rich and decided to give lots of money to the parents or was able to support them in such a way that they would be otherwise incapable of doing. Where a person goes to college probably has very little impact on their ability or desire to do this.
Of course, all of this is taken from a purely economic perspective, but maybe the happiness and fulfillment obtained in college is somehow worth the price. I will say that paying $8000 to take my classes at Lewis and Clark would definitely not be worth it. I'm hard pressed to say that they're even worth the $200 I'm paying for them. Of course, this presumably changes at an institution that is actually challenging.