The Price You Pay for College Summary

Does a college’s high price tag truly reflect its value, or is there a better way to measure what you’re paying for?

1. Most Students Pay Less than the Sticker Price

College might look unaffordable at first glance, with listed prices for tuition often exceeding six figures. However, the actual cost for many students is considerably lower due to financial aid and merit aid discounts. These discounts help bring college within reach for countless families.

Merit aid plays a significant role in making schools more accessible. It’s not need-based like government grants, but rather functions as an incentive for students with strong grades or scores. Schools may reduce costs with merit aid to attract talented individuals who might otherwise choose more prestigious institutions. This competitive strategy helps both the student and the school.

In addition, need-based aid ensures lower-income families also have opportunities. Data shows that for the 2019–2020 academic year, first-year, in-state students at state universities paid an average of $15,400 annually, thanks to a roughly 52.6% reduction from the list price.

Examples

• Discounts from public colleges: Families paid $15,400 on average instead of the listed cost.
• Private schools also reduced costs, with families paying about $27,400 annually after aid.
• A talented student was offered a scholarship to a smaller college instead of paying full price for Ivy League tuition.

2. FAFSA Isn’t Perfect But Is Worth Applying For

FAFSA, the federal financial aid application, isn’t just for low-income families anymore. Many families earning over $200,000 annually also qualify for some assistance if they have multiple children attending college. However, its results can be disappointing for many, as it often overestimates the financial contribution families can afford.

The FAFSA calculates an Expected Family Contribution (EFC) based on income and other financial data. Unfortunately, many families find the EFC too high, leading to less money being awarded than expected—adding stress instead of easing it. Some schools also require an additional form, the CSS Profile, to determine aid amounts.

While this system isn’t ideal, families are advised to apply anyway. Even if FAFSA doesn’t deliver substantial help, applying opens the door to other types of aid and shows colleges you’re serious about seeking financial support.

Examples

• One family felt burdened when their EFC did not reflect real costs they could afford.
• A school offered better-than-expected scholarship funds using CSS Profile data.
• Another family with multiple children in school qualified for unexpected assistance.

3. Colleges That Focus on Teaching Are Better for Students

Many colleges now emphasize research rather than teaching, even though parents pay tuition expecting high-quality instruction. Professors are rewarded for publishing papers and grants, rather than mentoring their students. This shift sometimes leaves undergraduate teaching in the hands of adjunct or graduate instructors.

Graduate students and adjunct faculty might not have the time, resources, or job security to connect deeply with students. On the other hand, schools that prioritize undergraduate teaching and mentorship help students thrive academically and socially. Strong mentorship is linked to higher life satisfaction and academic success.

To gauge teaching quality, parents and students should check faculty titles, courses they teach, and mentorship initiatives. Look for professors actively involved with undergraduates rather than professors whose main focus is research.

Examples

• Some colleges reimburse professors who host dinners with students for mentoring.
• Programs that directly pair students with mentors contribute to post-college satisfaction.
• Visiting a department’s faculty list can show who actively teaches versus who focuses solely on research.

4. Earning Potential Varifies Based on the College You Pick

Choosing a college is an investment, and like any investment, families should consider the potential return. Some colleges provide better career and salary outcomes for graduates than others. A school’s reputation, the industries it connects to, and the quality of its alumni networks can all impact a student’s earning potential.

The College Scorecard, maintained by the U.S. Department of Education, offers a wealth of information about schools, including graduation rates, average salaries of graduates, and more. By using such data, families can compare the potential outcomes of different institutions.

It’s also worth noting that the stakes are higher at schools with poor retention or graduation rates. Forcing students to drop out leads to wasted time, effort, and money with no degree to show for it.

Examples

• Engineering graduates earn significantly more after attending specialized schools than liberal arts students.
• Public College A has a near-perfect retention rate, while Public College B struggles to keep students past freshman year.
• A graduate from a well-ranked program landed a higher-paying job compared to someone who studied the same field at a less-regarded school.

5. Underrated Colleges Can Offer Surprising Value

Not every high-quality school has instant name recognition. Schools like Yale and Princeton will always impress for their prestige, but smaller or less well-known colleges can offer excellent programs and a great overall experience.

Looking beyond a school’s headline reputation is key. College websites, especially their chancellors’ or presidents’ pages, often provide insights into institutional goals and values. Other sources, like strategic plans and Common Data Sets (CDS), can reveal honest appraisals of their strengths and weaknesses.

Analyses of the CDS can help families decide if merit aid or financial assistance will realistically meet their needs. Comparing test scores, enrollment data, and aid policies from these documents allows parents to evaluate colleges more clearly.

Examples

• Centre College in Kentucky ranks alongside Ivy League schools for alumni happiness.
• A strategic plan for one college revealed ambitious goals to improve student counseling services.
• A school’s CDS reports disclosed that 40% of students receive non-need-based scholarships.

6. Understanding Financial Percentages Simplifies Planning

Saving for college can seem overwhelming. However, breaking the total cost into manageable chunks makes the goal less intimidating. Financial planner Kevin McKinley recommends saving for about a quarter of the amount needed and using a mix of loans and ongoing income for the rest.

By thinking about college tuition in terms of manageable monthly savings rather than a daunting lump sum, families can create realistic budgets. In many cases, saving $75 monthly over 18 years is enough to cover a quarter of tuition costs.

This approach also factors in part-time jobs for students, which can help contribute to paying tuition or other college expenses.

Examples

• A family divided their $100,000 tuition cost by four: savings, loans, current income, and student summer jobs.
• $75 saved monthly for 18 years at 5% interest results in $25,000 – a crucial fraction of the total cost.
• Students making $6,000 from summer job earnings helped reduce overall borrowing needs.

Takeaways

1. Research your options thoroughly using tools like FAFSA, the College Scorecard, and school strategic plans.
2. Save little by little—$2 to $3 a day can grow into a significant amount over time through investments or college savings accounts.
3. Emphasize schools that prioritize undergraduate teaching and mentorship over those overly focused on research.