Estimating the Cost of College
Our family recently had the experience of car shopping during the final days of 2024. While that is traditionally a great time to buy a car due to year-end specials, the pressure was still there. Perhaps we felt it even more due to the holidays and the added chaos of totaling our vehicle while juggling life with two kids under five—who, naturally, chose this week for their annual stomach bug extravaganza. Either way, it had me thinking a lot about how similar the car shopping process is to that of paying for college.
When planning for college, families often start by looking at the sticker price, which is the published cost of tuition, fees, room, and board. This number can be shocking, with many private colleges listing annual costs well over $60,000. However, this price is rarely what families actually pay. Understanding the difference between the sticker price and the net price can help families realistically plan for college.
A better measure is the average net price, which represents what students typically pay after grants and scholarships are applied. Many colleges provide net price calculators (NPCs) on their websites. NPCs allow families to enter basic financial information to get an estimate tailored to their situation. Looking at a school's average net price, rather than its sticker price, provides a clearer sense of affordability and allows families to compare schools more accurately.
For a more precise estimate, families should consider income-based net price calculations. Since financial aid is largely determined by household income, schools often provide breakdowns of what students from different income brackets actually pay. Low-income families may pay significantly less than the listed tuition, while higher-income families may not qualify for as much aid. Federal and institutional aid, along with merit-based scholarships, can greatly impact final costs.
Much like our car shopping experience, the key to saving money is understanding the real cost rather than sticker prices. Through research, comparison, and a proactive approach, families can navigate the aspect of paying for college with confidence. It will most likely feel overwhelming and while that is completely normal, it does not have to be debilitating. Through utilizing the tools that are available, families can make well-informed financial decisions when planning, saving, and paying for college.
Here are some tools for your toolbox:
Net Price Calculators (NPCs): Most colleges provide a Net Price Calculator on their website, allowing families to enter financial details (such as income, assets, and household size) to receive a personalized estimate of the actual cost after financial aid. This is one of the best ways to get school-specific estimates.
College Scorecard (U.S. Department of Education): College Scorecard offers data on average net price by income level for many colleges. Families can compare schools based on real affordability, graduation rates, and post-graduation salaries.
BigFuture by College Board: BigFuture provides net price estimates and financial aid insights for thousands of colleges. It also includes scholarship search tools to help lower costs.
FAFSA and CSS Profile Estimators: The FAFSA Forecaster helps families predict how much federal aid they might receive based on their income. Some private colleges also require the CSS Profile (via the College Board), and they provide estimators to gauge eligibility for institutional aid.