Let’s be real. For most families, affordability is a significant factor when deciding which college to attend. Wise families realize that being able to pay college costs is just as important as being admitted. And they realize that building affordability into the college list is better than blindly hoping they can “make it work” by stringing together small outside scholarships and big parent loans. When you consider college affordability, think about your family budget, financial aid practices, and where your student is likely to receive substantial financial aid.
College Costs: What to Count
When weighing the cost of attending a college, it’s important to consider both direct costs, what you pay directly to the college, and indirect costs, other expenses that come from being a college student. Tuition and fees, housing, food, and books are examples of direct costs. Transportation, bedding and other dorm supplies, entertainment, clothing, toiletries, computers, laundry, club & activity costs, and fraternity/sorority expenses are examples of indirect costs. Housing and food may be direct or indirect costs, depending on whether the student chooses to live and eat on or off campus. When you add up direct and indirect costs, you get a total price for attending that school.
Total Cost of Attendance = Direct Costs + Indirect Costs
Some colleges make a reasonable effort to estimate the overall cost of attendance, but it pays to look at the assumptions. James Madison University, for example, includes transportation, personal costs, and even loan fees in their cost of attendance estimate. But students who live far from Virginia might find the estimated travel costs too low, and students with more expensive entertainment and recreation habits may find they have to boost their personal expenses costs at most of their colleges.
College Costs: In State vs Out of State Tuition
You might notice a difference in the tuition costs based on the student’s state residency. This tuition difference recognizes the fact that public colleges receive some financial support from state governments. In essence, residents of the state are already supporting the college through their tax dollars. Some colleges list two separate tuition rates. Other colleges list one tuition rate, but charge an additional non-resident supplement or surcharge. According to the College Board, the 2022-23 average price of tuition and fees for a public four-year college in-state was $10,940, while the average cost for a public college out-of-state was $28,240.
Residency for College Tuition
States set their own policies about what qualifies a student as a resident for the purpose of tuition. Requirements vary, but typical considerations include where the student lives or graduated from high school, what state of residence the parents claim, and administrative evidence of residency such as paying income tax or registering to vote. Military families, expat families, and students who split their time between divorced parents may need to provide additional information in support of state residency claims.
It can be difficult to establish residency after starting as a student at the college (most states don’t count a move for educational purposes as grounds to change residency classifications for tuition). I recommend finding the college or state guidelines for residency and reading them carefully. What worked for your neighbor a decade ago or your cousin in another state might not prove useful for your family’s situation. Don’t be afraid of asking questions of the college or requesting an appeal based on additional information. Usually the registrar or bursar’s office handles this type of question, but military families may also want to reach out to the veterans’ service office on campus. (These can have different names, but are the office where the School Certifying Official for VA educational benefits like GI Bill works.)
In State Tuition for Military Families
Military families may have residency in one state, but live somewhere else because of military orders. This can create challenges in qualifying for in state tuition, but they may also find that their kids are eligible for in state tuition rates both where they live on military orders and in the state where the parents maintain residency. But a college may require annual verification of status and revert to out of state tuition rates if the military parent takes orders to another location.
Federal law requires colleges to charge no more than in state tuition to students using VA educational benefits such as Post 9/11 GI Bill, Fry Scholarship, or Chapter 35. But colleges are also allowed to require additional documentation of an intent to establish residency in the state where the college is located. This might include a state driver’s license, proof of address in the state, or other documents. Federal law addresses what happens when the student is using VA educational benefits, but does not require the college to continue charging in state rates if the student stops using GI Bill or other VA funding. Some colleges keep the student at in state rates, and others will immediately revert back to the higher out of state tuition rate. I’ve found the veterans’ service office is the best first stop for these questions.
College Costs at Private Institutions
What about private colleges? The average cost of tuition and fees at a private non-profit college was $39,400 for the 2022-23 school year. But this figure is too general to mean much for most families. There can be huge differences between actual net costs at individual private colleges, depending on how they award financial aid. So don’t assume that a private college would always be more expensive than a public college (especially a public college where the student would be a non-resident). In other words, try to compare estimated costs rather than lumping all private colleges and all public colleges into the same baskets.
Types of Financial Aid
There are two main categories of financial aid and several ways that aid can be provided. How a college determines eligibility for financial aid and how they package it depends on a combination of the college’s resources and institutional priorities and the family’s financial resources.
Assistance can be in the form of grants (money that does not have to be paid back), work study (money earned through specific campus jobs), and loans (money that will have to be paid back — with interest). This aid might come from the Federal government (ex, Pell Grants, Federal Work Study, or Federal Student Loans) or from the college itself.
Need-Based Aid is financial aid that is offered because the college has determined the student and their family have fewer financial resources that could be used to pay for college costs. This determination is made through a review of financial aid applications, specifically the FAFSA (Free Application for Federal Student Aid) and/or the CSS Profile (a separate financial aid application used by about 300 colleges).
The FAFSA is required if students wish to use Federal Subsidized or Unsubsidized Loans, Federal Work Study, or Pell Grants. There is no cost to submit the FAFSA, which opens the October before the school year in which financial aid would be used and considers income from the “prior-prior” tax year. In other words, students who are seeking federal aid for the 2024-25 school year would submit the FAFSA that opens in October 2023 and would use income data from the 2022 tax year.
Related: Learn About FAFSA
The CSS Profile is used by a smaller number of colleges, that are usually private or highly selective, and that often give large amounts of need based aid to help pay for heftier costs of attendance. This form is administered by College Board, and there is a charge to submit each application (there is no charge to families earning up to $100,000). The CSS Profile asks more questions in order to create a picture of family financial resources that goes beyond income and savings. The colleges that are most generous with need-based aid, tend to require the CSS Profile in addition to the FAFSA. [List of CSS Profile colleges and programs.]
Merit Aid and Scholarships
Non-Need Based Aid, sometimes called Merit Aid is financial aid that is not tied to the student’s family financial status. This aid might be labeled as scholarships and could be automatic, based on grades and test scores, or be competitive, with additional application requirements. Sometimes colleges will discount tuition for students in order to encourage them to enroll. These colleges might find that families think better of a college that offers a $20,000 discount labeled a “scholarship” than another college that simply prices its tuition $20,000 lower.
Both the FAFSA and the CSS Profile produce a number that represents how much each formula thinks a family should contribute EACH YEAR towards the cost of attendance. This is labeled the Expected Family Contribution (EFC). The EFC isn’t all that a college might expect a family to pay annually. Very few colleges meet 100% of demonstrated need. Instead, students may find that after federal and institutional aid is subtracted from the cost of attendance, there is a difference between the EFC and what the family has to pay. This is often called gapping.
The EFC will be renamed the Student Aid Index (SAI) in 2023 along with other changes to the FAFSA. More about these changes will be coming out in 2023, but for now, Jeff Levy has a good overview.
Paying for College with Outside Scholarships
Another factor to be aware of is Scholarship Displacement. This is when colleges reduce financial aid offers in response to outside scholarships. Students may find that there is no real reduction in what they have to pay to a college even though they earned outside scholarships, from local organizations or support groups.
There are a few states where legislation banned scholarship displacement at public colleges. But it’s still widely practiced, so students should ask colleges about their policy for “stacking” outside scholarships and institutional aid.
3 Ways to Estimate College Costs
So, how do you come up with an estimate of how much your family would have to pay?
Net Price Calculators Estimate College Costs for Individual Students
Net Price Calculators (NPC) are available on most college websites*. They ask for some of the same information required by the FAFSA or CSS Profile and usually produce an estimate that includes federal aid (including Federal Student Loans!), applicable state grants, and typical discounts from the college. The more detail an NPC asks for, the more accurate its results are likely to be. However, they are only an estimate and are not binding on future offers from the financial aid office.
Colleges usually update their NPCs shortly before the new application cycle begins in August. The easiest way to find them is to do an internet search for the name of the college and “Net Price Calculator”.
*Federal law requires colleges that accept federal aid to have a Net Price Calculator. Some colleges that do not accept federal aid will not have this tool on their website. If that is the case with a school you are considering, contact the college financial aid office for more information about expected costs and institutional aid.
Common Data Set Records Need Based and Non-Need Based Aid
The Common Data Set (CDS) is a set of questions and responses that use a common format across all participating colleges. This provides information about admissions, costs, class size, number of degrees in each major, and financial aid.
Section H reports Financial Aid data. It lists how many students requested need-based aid; how many were determined to have need; how many received need-based grants, self-help (work study), or other grants; and what percentage of need was met. Another set of responses shows how much non-need based aid was awarded the same year. Pay attention to both the percentage of students awarded aid and the size of the award.
Question H5 shows how many students took out loans and the average size of the loans. Be aware that this may not include all loans taken out by parents, such as home equity loans used to pay for college costs. You can find a CDS by searching for the college name and Common Data Set, then selecting the most recent year available.
Need Based and Merit Aid Spreadsheet
Another valuable resource is an annual Need Based and Merit Aid spreadsheet compiled by Jeff Levy and Jenny Kent of Big J Consulting. They pull data on need-based aid and non-need based aid from several hundred colleges and put it into a spreadsheet that you can sorted by field. If your family has high need, look for colleges that has a high number in “Average Percent of Need Met.” If your family has a high EFC but wants to control college costs, look for colleges that have a high number in “Percentage of Non-Need Undergraduates Receiving Merit Aid.” But keep a close eye on the amount of “Average Merit Aid Award” and remember that it might discount a higher cost of attendance, leaving a total cost of attendance that is still higher than you might want to pay.
College Fit Includes Affordability
I know this can feel both confusing and overwhelming. It might seem like a lot of alphabet soup and looking at the costs can trigger strong emotions. But denial isn’t a great coping strategy. Some families ignore the cost of attendance. Others tell their children “just get into the best college and we’ll make it work.” Spring of senior year comes around and they realize that only a few of the colleges that offered admissions are actually affordable. One of the best resources on college affordability is The Price You Pay for College by Ron Lieber, a financial columnist for the New York Times. I recommend this book to the families I work with.
It’s better to have an awareness of cost and affordability earlier in the process. When I am supporting client families through this process, I ask them to make an honest assessment of their college budget and estimated need. Then when we create a student’s college list, we work hard to include colleges that are affordable and likely to admit the student. If this is an area where you’d like help, use the Contact page to schedule an appointment.