Sticker Price vs. Net Price: What You’ll Actually Pay for College

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What’s Covered:

 

The expense of college continues to climb. According to a study by the fintech company Self, over the past five years, the after-inflation price of a university education has risen by 4.94%, outpacing the costs of other goods and services and costing students more than $1,344 extra per year. 

 

As college costs continue to increase, so does the need for prospective students to understand not just the sticker price of college, but also the “real” cost of earning a degree—or, more simply, what they will actually pay for college after financial aid. 

 

How Expensive is College?

 

Over the past two decades, the average cost of college has risen to $35,720 per student per year and is growing at an annual rate of 6.8%. Even more eye-opening is that the ultimate cost of a bachelor’s degree can exceed $400,000 when student loan interest and loss of income are accounted for. 

 

One factor that plays a large role in the overall expense of college is the type of institution a student attends. According to the website EducationData.org, the annual cost of college is: 

 

Type of Institution 

Tuition

Total Cost of Attendance

Four-Year Public In-State

$9,580

$25,864

Four-Year Public Out-of-State 

$27,437

$43,721

Private Four-Year Non-Profit 

$37,200

$53,949

Private Four-Year for Profit 

$13,475

$34,548

 

Sticker vs. Net Price

 

The sticker price of a college is the total yearly expense, and includes the cost of:

 

  • Tuition
  • Books
  • Room and board
  • Other fees the school might charge

 

It’s common for high sticker prices to scare off some students, but it’s important to note that they’re often poor indicators of what a student will actually end up paying. A better metric for understanding what college will cost is net price, which deducts any scholarships, grants, and aid a student has received from the sticker price.  

 

When you compare sticker prices, a public in-state institution is much cheaper than a private college, but after financial aid, the cost may actually be comparable for some families. In fact, some families may have a cheaper net price at private colleges than at their state schools! This is because private colleges tend to offer better financial aid.

 

Wondering what the net price for college is at your dream school? It depends on many factors, including the sticker price, income, assets, and more. Finding out is simple, though—almost every school has a net price calculator on its website. Our free chancing engine / cost calculator is another great tool for prospective college students. In addition to estimating your odds of acceptance at over 600 schools, our tool can also calculate the expense of particular institutions based on your family’s financial situation.

 

Types of Financial Aid 

 

Colleges award distinct types of financial aid: merit aid and need-based aid. Merit aid is awarded based on a student’s academic or extracurricular achievements. Need-based aid is the most common type of financial aid awarded and is allocated based on the financial need of a student and their family. 

 

Need-based aid is generally awarded through four different methods: grants, scholarships, loans (federal and private), and work-study.

 

Grants

 

Grants are based on financial need and do not require repayment, which makes them one of the most sought-after forms of financial aid. Both federal and state governments award grants, along with many colleges and universities. Completing the FAFSA is required to become eligible for grants—the sooner a student submits their FAFSA, the more opportunities for aid they’ll have.

 

The Pell Grant Program is the federal government’s largest grant program and provides millions of awards to students with exceptional financial need who are pursuing bachelor’s degrees. The maximum Pell Grant award in 2020-21 is $6,495.

 

Students who do not qualify for government grants can still receive significant grants from colleges themselves.

  

Scholarships

 

Scholarships are awarded by the institutions themselves and by private organizations.  Scholarships are awarded on merit, but some also consider financial need when evaluating candidates. Similar to grants, scholarships are considered a monetary gift, and students do not have to pay them back. The application for scholarships is generally more time-intensive than that of grants, requiring everything from an essay to a resume to letters of recommendation.

 

We at CollegeVine have our own $500 scholarship which is easy to enter. Just sign up for your free account and earn “karma” by reviewing your peers’ essays or answering questions in our community forums. You can then bid that karma in scholarships drawings. If you don’t win, the karma will be returned to you.

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Work-Study 

 

A work-study program allows students to earn money for school while employed on campus or at an approved location. Wages and hours vary based on the type of position a student secures. Jobs commonly include work in places such as: 

 

  • Residence halls 
  • Student centers 
  • Athletic facilities 
  • Career service center 
  • Academic departments 
  • Campus bookstores

 

According to Sallie Mae, in 2020, 18% of families used work-study to pay for a portion of college. On average, a work-study participant earned $1,847.

 

Federal Student Loans

 

Unlike the aforementioned options, students must repay federal student loans, which makes them the least advantageous form of need-based aid. Despite the drawback of repayment, federal student loans do offer some benefits to students with financial need. They’re typically easier to get and have better interest rates than private loans. Federal loans are also given at a fixed rate for the life of the loan and don’t accrue interest while the student is in college.   

 

Another benefit of federal student loans is that there is a chance that the government will forgive them in the future. There is gaining momentum in Congress, the Senate, and the White House to cancel some student debt. While it’s hardly a reason to incur new loans, it is a plus over private loans, which have significantly fewer options for those struggling to keep up with them. 

 

Which Schools Give the Most Financial Aid?

 

The sticker price of a college is deceiving and can easily lead you to believe a certain school isn’t in your budget; however, many of the nation’s most expensive and prestigious schools are also the most generous with financial aid. 

 

The schools with the best financial aid will promise to meet 100% demonstrated need of a student. A school that meets 100% of demonstrated need commits to covering the costs exceeding students’ expected family contribution (EFC)—a calculation of how much a student and their family can contribute to college costs. 

 

Some schools even guarantee to meet 100% demonstrated need without loans. These no-loan colleges are:

 

 

If you don’t qualify for financial aid but still want to save money on college, consider these schools that give out the most merit aid.

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Short Bio
A graduate of Northeastern University with a degree in English, Tim Peck currently lives in Concord, New Hampshire, where he balances a freelance writing career with the needs of his two Australian Shepherds to play outside.

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