Navigating College Costs: Your Guide to Paying for College
Understanding college costs, college tuition and cost of attendance
Got a student attending college next fall? Discover how you can help with both the admissions and financial aid process to ensure your student has the best chance at a college to pursue their purpose.
Every year, as families apply and plan for college, students and parents ask the same question: “Why is college so expensive?” The reasons are many, from historical forces to inflation, changes in government funding to the rise of private loans.
But — even as the listed sticker prices for higher education have grown — the actual cost families pay has remained steadier than it appears. As you determine how to pay for college, it’s important to understand college costs. A comprehensive knowledge of what drives the cost of higher education — and the tools in place to help you pay for it — will help you evaluate this investment in your future.
Why Does College Cost So Much? A Brief History of College Tuition & Paying for College
Our views on college — who should attend, and what a higher education should include — have shifted over time. In the past, college was considered a civic good, as well as an individual investment. A college degree was believed to help to create a well-educated population that could make good decisions in a democracy. Because of this, college was considered worthy of community investment.
After World War II, college enrollment significantly increased through the passage of the GI Bill, which helped make higher education affordable for service members and veterans. In the following decades, state governments and the federal government also invested in the growth of higher education. Government programs helped students pay for college, which made it significantly more accessible to regular citizens — including women and minorities.
Over time, as the economy struggled in the 1970s, private loans began to replace federal grants to help cover tuition costs. Government funding for higher education decreased while private borrowing to cover college costs increased.
The perception of college, and what it’s for has also slowly shifted over time. Now, college is expected to prepare individual graduates for careers, helping them to maximize professional opportunities and earnings. As a result of this shift in perception, a greater amount of college costs have shifted to the individual. According to NPR, over the past thirty years, adjusted for inflation, the listed sticker price for college tuition has doubled. Declines in government and state funding have caused public and private universities to raise tuition. For some schools, decreasing enrollment has also necessitated tuition hikes.
Yet, even as the sticker price of college has increased dramatically over the past few decades, studies show that the price students actually pay for tuition has not. This is why it is essential to understand how a college’s sticker price is different from the net price.
What is College Sticker Price vs. Net Price?
When you’re trying to determine how much you’ll pay for college, it’s important to pay attention to the net price rather than the sticker price. College sticker price is the advertised amount of tuition. That’s what you’ll see on college websites when they list the cost of tuition. But the sticker price is often not what students actually pay. The net price is what students pay after receiving financial aid and is generally significantly lower than a college’s listed sticker price.
According to the College Board, while college sticker price has been rising, college net price has actually been declining or stabilizing in recent years. A recent Brookings report shows the net price of college remaining mostly stable since the 1990s. Because of the vast difference between a college’s sticker price versus the net price, it is very important to go through the financial aid process in order to determine what you will actually be asked to pay at a particular college.
A net price calculator can help you to determine how much you will actually be asked to pay at any given college or university. You can enter your information into the calculator and learn what your total cost of attendance may be, including your tuition and fees, room and board, books and supplies, and other expenses. The calculator will also help you to predict what you may receive in grant aid and what the net price of the college could be for you. The net price calculator, however, is not exact. You may, for instance, receive scholarships or additional aid that are not included in the calculator’s general estimate.
Understanding College Tuition
There are many costs involved in running a higher education institution. Faculty must be paid to teach courses. Buildings and grounds need to be maintained. Student activities and resources, like health centers, recreation centers, and campus safety, must be funded.
At private universities, students generally receive more individualized attention, more research opportunities, shorter times to graduation, and are able to work with more full-time faculty than they do at larger public institutions. This often makes the sticker price for private college higher than for public, although financial aid packages can make up the difference or even make a private university more affordable.
Private Universities Offer High Financial Aid
Financial aid packages at private universities can often be significantly larger than families expect. Through scholarships, grants and loans, private universities are often much more financially accessible than they initially seem if you only look at their sticker price tuition.
Private universities often have an abundance of scholarships open to incoming undergraduates. Private universities often have highly invested alumni networks and so these scholarships may be funded by alumni donors and university endowments. Some scholarships can even help you cover other school-related expenses, like study abroad. Grants are also a great way to cover private university tuition. And, for any additional cost that isn’t covered through scholarships and grants, federal and private loans can help make up the difference.
How to Understand College Costs So You Pay Less
In order to understand what you will actually need to pay at any particular college, it’s important to not only look at the listed cost of attendance for the university, but to also complete the FAFSA and apply for financial aid. This will help the university to determine your eligibility for need-based grants, scholarships and loans. It will also give you a clearer sense of what you are expected to contribute to college costs, given your income and specific financial situation. Remember, the listed sticker price of a university is often very different from the net price, or what you will actually be asked to pay.
Once you receive your offer of financial aid from the university you plan to attend, you’ll want to look at what is offered in scholarships and grants (money you don’t have to pay back) versus what aid is offered in the form of loans that you will have to pay back over time.
You can also reach out to the financial aid office at the university you hope to attend. Financial aid administrators are trained in assisting you in applying for financial aid and helping you to understand your financial aid award and other kinds of financial aid for which you may qualify.