“That's the value of a college education... I don't know anywhere in the world where you can make an investment and make that kind of return.” —Gaston Caperton
No two students pay the same amount for college. Your bill is partly the result of the college you choose to attend, since tuition and financial aid differ considerably among the diverse array of colleges. The most expensive portion of a college education tends to be tuition, followed by room and board. Of course, a number of college costs are not included on any financial aid report or bill. These are often referred to as the “hidden” costs of college. Offsetting these outflows are scholarships and other forms of financial aid. As such, the “real” cost of college is a fairly simple, though wordy, function:
College Cost = Tuition (including room and board) + Supplies (books and technological needs) + Hidden Costs (transportation, eating out, student organization fees, etc.)] - [Financial Aid (merit- and need-based scholarships, outside scholarships and grants, federal aid) + Work (work study or other part-time employment)]
Breaking down this function allows you to determine the real cost of college.
Tuition, Room and Board: The first item to research is your college’s “sticker price,” which is the sum of your tuition (i.e., the cost of your load of credit hours or classes) and your “room and board,” or the cost of living on campus. Depending on the location (urban, suburban, or rural) and type (public or private) of your college, these costs vary considerably. Private universities in urban areas tend to have the highest sticker prices and most expensive room and board fees. At most colleges these costs grow each year for a number of reasons: new construction on campus, cost of living adjustments, and inflation. It’s important to note that most tuition fees do not cover the cost of attendance. As a result, most colleges subsidize their students’ tuition using other sources of revenue like donations and their endowments.
Looking at tuition costs, particularly for private universities, can certainly induce sticker shock! But it’s worth remembering that even though private schools typically have higher tuition prices than their public peers, they may also provide more generous financial packages. As you apply to college, admissions officers review a number of materials (like the FAFSA and the CSS Profile) to calculate your financial aid. We’ll look more closely at financial aid shortly; the point here is that regardless of tuition, we need to go through the whole function to truly determine the cost of college.
Supplies: Every college student will need to purchase textbooks and supplies. Often, the most expensive of these is a computer, followed by textbooks. This is one area where students can save money; for instance, you may reuse your computer from high school and buy used textbooks, or even rent them. Many books are now available as ebooks as well.
Hidden Costs: The most obscure part of our function is the hidden costs. These vary widely among families. Should you attend college across the country, you’ll need to account for the cost of traveling to and from college for holiday breaks. Maybe you have an affinity for Chipotle or Panera; in that case, consider how much money you may “need” for eating out. For some students, outfitting a dorm room may cost hundreds of dollars; for others, that old blanket is just fine.
Maybe you want to join student organizations that have steep membership fees (e.g., fraternities, societies, and traveling competitive clubs). Or you have an unpaid internship that requires you to take public transit twice a week. As in other areas of our function, these costs can vary widely. Having a frank discussion about needs and wants will give families an idea of what some of these hidden costs may be at a student’s particular college.
At this point, you’re probably starting to worry that costs are stacking up. Thankfully, there are a number of options that may significantly reduce the cost of college beyond a diet of instant ramen and rented ebooks.
Financial Aid: Most colleges offer a number of need- and merit-based scholarships. Need-based scholarships use a family’s financial background to determine the amount of scholarship or grant money a student receives. Merit aid, on the other hand, is contingent upon a student’s demonstrated achievement, talents, or other qualities. Applied together or individually, these scholarships may significantly reduce the costs of college. In addition, students may earn outside scholarships or qualify for federal or state aid.
Work: Many students choose to work a part-time job while in college to supply spending money that may cover many of the “hidden” costs referenced earlier. Some students who qualify for federal aid may garner Federal Work Study jobs on their college campus. Other students may seek employment off-campus. We should note that any form of employment is not only beneficial financially but also provides helpful experiences to college students who will soon be entering the job market.
Taken together, these elements will give you a good sense of the cost of college. You might also consider using your college’s Net Price Calculator (NPC) to gain more insight about costs at that particular institution. Using some fairly basic financial information about your family as well as your academic record, the NPC can provide a snapshot of what you can expect to pay for college. We should note that the NPC is an estimate, and, because each college calculates this cost differently, your estimated costs can vary widely. As a result, you should consider using the NPC for each college where you apply. Of course, at the end of the day (or the admissions season), you won’t receive a truly accurate price estimate until you apply, are admitted, and receive your tuition bill and financial aid package.
There you have it: the “real” cost of college. College is among the most important investments you can make, and it’s critical to compare costs before making a final decision.