Saving Money for College and Calculating the Cost of Education

Cost is one of the most confusing variables in higher education. For example, the College Board recently reported a difference of over $20,000 between moderately priced public colleges and comparable schools. These figures are pretty daunting, and often deter many students from applying to college at all. For some students, simply trying to figure out how to get money for college is enough to prevent them from applying at all.

But despite fears of high costs, millions of students pay far less than the national average, depending on the school they choose, their degree program, whether they attend an in-state or out-of-state institution, and their funding options. It's entirely possible, for example, to pay less than $5,000 a year on tuition to an excellent school, or score rock-bottom tuition at a community college to save money before transferring to a higher-priced public or private institution.

The key to determining—and reducing—your college costs is to understand the difference between the sticker price and the net cost of a college, and to line up funding resources with that data in mind. The difference between the two can be dramatic:

  • Sticker Price: The sticker price is the figure the college advertises as the total cost of attendance, including tuition, fees, and living expenses. However, tuition discounts, financial aid in the form of grants and scholarships, and different options for housing means that students very rarely pay the published "sticker price."
  • Net Price: Net price is the actual cost a student will pay in tuition, housing, and related fees after all discounts, financial aid, scholarships, grants, and living expenses are calculated into the sticker price. This is the figure you need to pay attention to.

How to Determine the Net Price

Now that you know that the net price is the real figure you need to calculate, how do you determine what that is? Since 2011, all colleges in the U.S have been required to include a "net price calculator" on their websites, so you can use the calculator provided by the school of your choice and get assistance from that college's financial aid office as well.

However, you can also do some "one-stop shopping" on the U.S. Department of Education's College Affordability and Transparency Center website, which includes a College Scorecard. The Scorecard allows you to search a wide variety of colleges by the following criteria:

  • Location (state, region, zip code)
  • Degree and major or occupation you wish to enter
  • School size and campus setting (rural, urban, suburban)
  • Financial awards offered by the school

Once you decide the kind of school you wish to attend and select the appropriate options, the Scorecard provides a list of schools that meet your criteria. When you click on each school, a new page will open with the school's costs (average net price), graduation rate, loan default rate, and median borrowing (average amount of student loans per student).

Things to Keep in Mind

The results you get from the College Scorecard or a college's own cost calculator are an excellent place to start determining your college costs. However, you can further reduce your own costs in several ways. For example,

  • If you decide to live at home with your family while you attend college, your housing expenses will certainly be lower than they would if you lived on campus or in an apartment.
  • You can save money on textbooks by renting them or electing to take courses that offer free online textbooks.
  • Many sources of funding may not be included in a cost calculator that only includes funding offered by the school. Seek out private scholarships and grants to lessen your college costs.

The most important thing to keep in mind is that you are in control of your own college choices and can tailor your education to fit your budget. With a little research into the different variables that can affect the net price, you may find the right school at the right price.

Learn more about how you can save on money for college with common financial aid options, such as loans, grants, and scholarships.