Is paying for college a bit like buying a new car?
In some ways it is, says Amy Bergerson, associate dean for undergraduate studies at the University of Utah and director of the Student Success and Empowerment Initiative.
Most families don’t pay the sticker price
“Many of us know that most people don’t pay the full sticker price for a car,” said Bergerson.
Likewise, for most families, there’s no reason to pay the sticker price of a college or university.
Many families who apply for student aid are likely to receive loans and grants that can substantially offset the published fare.
But if you don’t apply, you’ll end up paying the full sticker price.
50% Off Sticker?
“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 may be less than half as much as the sticker price,” according to UESP News, a publication of the Utah Educational Savings Plan, a popular and highly-rated college 529 savings plan.
Colleges aren’t trying to overcharge you. But it’s up to you to look into all available grant and loan programs.
Many parents aren’t aware of the importance of applying for aid, whether in the form of grants or loans. Some aid is need-based, and is given to lower- and middle-income students. But other aid has nothing to do with the ability to pay, and will depend on the individual profile of the student, and whether he or she applies for aid.
So how much do most families pay?
To get a realistic idea of what the average family pays, check the online “net cost calculator” of your school of choice.
Here’s an example from Carnegie Mellon, where my daughter graduated. The school is known for its tech, engineering and theater programs. The sticker cost of tuition, fees, room and board is a whopping $63,822 per year (frightening, I know!).
But 58% of all incoming students receive financial aid or loans, with an average grant award of $28,322 and an average loan of $7,880. (As a reminder, grants do not need to be paid back; loans do).
Thanks to that aid, the expected average net price per year drops from $63,833 to $35,500.
For students with lower household income, the cost drops to about $20,839. That’s less than in-state costs at many public state universities.
- College aren’t out to get you, but it is true that many people pay more than they should or could because they don’t look into financial aid. Some is need-based, some is not.
- Don’t assume you need to pay the sticker price. Check the online “net cost calculator” for each school to get a reasonable estimate of average costs.
- Don’t be discouraged by high sticker prices and hesitate to apply to an expensive school; the true cost of attendance may be much less than you think, and that elite private university may end up costing less than State U.