The Real Cost of College
The Real Cost of College
Higher education may not be as pricey as you think
At the risk of stating the obvious, college is expensive.
Over the last decade, the sticker price of tuition and fees at public colleges and universities has jumped an inflation-adjusted 40 percent while family incomes have stagnated, according to the College Board.
At private colleges, tuition and fees are 26 percent higher in the 2015-2016 academic year than in 2005-2006. The average price of two-year schools is 29 percent higher after adjusting for inflation, the College Board estimates.
But what many families don’t know is that most students pay much less than what colleges and universities publish on websites and in brochures. Because of grants and scholarships, the net price of tuition and fees on average can be less than half as much as the sticker price. Add in how much a family can save through a tax-advantaged 529 plan like the Utah Educational Savings Plan, and the task of financing college isn’t nearly so daunting.
“Most families do not understand this difference,” said Amy Bergerson, associate dean for undergraduate studies at the University of Utah and director of the U.’s Student Success and Empowerment Initiative.
“In fact, even in my own social circle of friends—we are all sending kids off to college next fall—there is a lack of understanding that very few people who apply for aid of any kind actually pay the full price for college,” Bergerson said.
Blame this lack of understanding on the media, which focus mostly on the rising cost of a college education and not on the avenues families have for reducing the cost, Bergerson said.
But she also faults higher education institutions and says they should do a better job of informing students and families that there are many ways to help reduce the price of a college degree. The alternatives to paying the published cost of tuition and fees of a school can be hard to sort out, so many parents don’t fully understand all available options. Utah, she said, has one of the lowest rates of applications for grant aid, which doesn’t need to be repaid.
“A family that explores the net price of college will probably end up paying less than a family that assumes the sticker price is the only option and pays that without questioning,” Bergerson said. “It’s a bit like buying a car. Many of us know that most people don’t pay the full sticker price for a car.”
Besides paying more than required, there can be a more subtle penalty for not exploring the net price of tuition and fees. By concentrating on the published price, families risk ruling out a college or university that may be a better fit for their child, but feels financially out of reach.
“Finding the right school with the right fit is so important to persistence in college, and having the latitude to look at a broader choice set (of colleges) would make a difference for a lot of students who think they can’t afford their dream schools,” Bergerson said.
Fortunately for families, there is an easy way to estimate the true cost of a higher education. Most colleges and universities publish a simple-to-use “net cost calculator” on their websites that asks about household income and other family matters. The result—the amount that a family must pay with savings or loans—does not represent a final determination of cost, but is usually a reasonable approximation.
“I strongly encourage families to use the calculator to get a ballpark idea of net cost, and then make an appointment to talk with someone at the institution to learn more about what their options for aid are,” Bergerson said.
An important note: Bergeson urges every student to fill out the Free Application for Federal Student Aid (FAFSA) form. If a student is offered a loan that he or she doesn’t want, it can be turned down. But the net cost calculator of most schools assumes that families will apply for federal financial aid. So if a family does not fill out a FAFSA form, their net price estimate probably will not be accurate.