Most people have heard some sort of statistic pertaining to tuition, student loan debt, or overall college costs. We hear about these giant figures that are supposed to reflect the costs of higher education, and these figures do just that, but only to some degree. For instance, according to the National Center for Education Statistics (NCES), the average cost of tuition, fees, and room and board was close to $20,000 for the 2011-2012 school year. Cost figures vary widely by the type of institution, averaging $14,300 at public institutions, $37,800 at private nonprofit institutions, and $23,300 at private for-profit institutions.
These types of figures are helpful in that they draw a distinction between the price of in-state and out-of-state schools, as well as public and private schools. They also shine a light on the rising cost of going to college. However, these estimates do not necessarily provide an accurate indicator of what you, the student, are going to pay for college. And that’s something you need to know.
To find out more about the real cost of college, we spoke with college finance expert Abigail Seldin, the vice president of Innovation and Product Management at ECMC and co-founder of College Abacus. College Abacus is “the Kayak of college cost comparison,” according to Seldin.
Sticker price versus net price
The sticker price of tuition is the dollar amount a school charges for tuition and fees prior to any grants, scholarships, or other financial aid. The schools with the highest sticker prices are generally private schools, like Columbia and NYU. These schools have sticker prices that are in excess of $60,000 when you add in tuition, fees, books, room and board, and personal expenses. Few people can afford to pay $60,000 for college, even with student loans.
Fortunately, the net price of college considers your individual financial and family situation. According to the NCES, “the average net price (total cost minus grants) of attendance in 2011-12 for first-time, full-time students was $12,410 at public, in-state 4-year institutions, $21,330 at private for-profit 4-year institutions, and $23,540 at private nonprofit 4-year institutions.” Notice in the chart above how those in the lower income categories typically receive nearly $10,000 in grant and scholarship money. This can make a big difference on a tuition bill.
Net price is different at every school, too. To help students find the true price of college, tools like College Abacus are designed to help students sort through and compare the net costs of two or three colleges side by side. There are data available for more than 4,000 colleges and universities on the College Abacus database, which is free to use.
For instance, a 24-year-old student in a family of five with no income may find that although the University of California, Berkeley has a sticker price of $32,706, after grants and aid, this student’s estimated net price is closer to $8,500, which is much more doable. On College Abacus, that student can also find out the four-year graduation rate at Berkeley, typical SAT scores among students who are accepted, demographics within the school, and even data on how many students default on their loans after graduation.
Cost of applying
Applying for college, of course, isn’t free either — it requires a degree of time, energy, and money that many students don’t account for during college planning. According to U.S. News & World Report, the average cost of a college application is $41. However, some schools charge as much as $90 in application fees. Therefore, if you apply to 10 schools, you may pay upwards of $410 for application fees alone. On top of those costs, you have to pay for SAT or ACT testing (around $55), test preparation, and visits to college campuses.
A 2012 publication by Fox Business found that families spend a combined total of around $3,500 on these costs.
You can reduce your application costs by narrowing your search. Conduct enough research to ensure you have a good mix of reach, target, and safety schools, explains Seldin. You can lower the cost of your college visits by using resources like YouTube to take virtual tours, carpooling with other families who are making the same trip, or hitting a few birds with one stone — maybe go on a vacation and college tour at the same time.
Tips on applying for college
When you make a major purchase — a car, a home, or even a large piece of electronics equipment — you usually find out how much money you have to spend on that item before you shop, right? Well, that same principle should apply when you’re choosing a college.
How much can you afford to pay for college? Asking yourself that question can save you a great deal of time, money, and hassle, so before you even search for colleges, come up with a budget and determine exactly how much you want to spend now and how much you want to borrow toward your future.
Second, “Don’t assume that your Estimated Financial Contribution (EFC), which is calculated based on your FAFSA forms, is the final word on what you’ll pay for college,” says Seldin. “Every school uses its own algorithm to allocate financial aid. Savvy students can use net price calculators, now posted on every college site, to uncover their actual bottom line — which could be either much higher or much lower than their EFC. Get your true number by using the net price calculators posted on the individual schools’ websites, or save time by accessing them all in one place at CollegeAbacus.org.”
Lastly, because net price and sticker price can differ so drastically, don’t rule out any schools until you’ve checked out the net prices on all of your choice schools. You may find that you can actually afford a school that you never imagined was in the cards for you.