High School Series Part 1 – Understanding College Costs
December 27, 2013

Shopping for a college isn’t like shopping for a pair of shoes – the price isn’t simple to understand and is far more than just a few numbers on a tag. And while the White House recently launched the College Scorecard to help you try and decipher what a given school will likely cost you, even that isn’t as helpful as we’d hoped. Instead, we recommend looking at The Chronicle of Higher Education’s College Reality Check tool to get a better understanding of college costs. Today, we’ll take a high level look at explaining sticker price, net price and the bottom line for you to attend a given school.

Components of College Costs

Sticker Price– This is the cost of college if you have no scholarships, grants or any financial aid. At most institutions, this is a big number – even more so at private and for-profit schools. Community colleges will leave you with less sticker shock.

Out of State Fees– This is tacked onto the sticker price of most colleges if you are from another state (or country) than where the college is located and will increase your cost of attending the college. This is a reason to consider staying in-state for college.

Net Price– This is the price you will have to pay after any scholarships and grants have been deducted from the sticker price and any out of state fees. This is what you will have to pay out of pocket or borrow in order to attend the school but isn’t all you’ll have to pay.

Textbooks and Fees – These are costs that can take you by surprise. Textbooks are hundreds of dollars each semester and can run into the thousands each year. If you don’t have ample financial aid or loans to cover the costs, you’ll have to pony up out of pocket.

How to Know Exactly What You’ll Pay

There is no way to know exactly what your net cost will be until you are accepted by a particular school and receive your financial aid offer. Your financial aid package reveals what you’re being offered to help cover the costs of your school. These come from a number of sources and can be based on financial need, grade point average, merit, organizational associations, etc.

Federal Aid – This consists of grants, work-study opportunities and loans. Loans are the last aspect to consider because you want to minimize these as much as possible.

State Aid – Some states offer grants and incentives to entice residents to attend school in the state they reside rather than leaving the state.

Financial aid is critical to college affordability

Financial aid come come from many different sources.
Image source: CampusReporter.com

College Aid – Colleges also offer grants and scholarships to entice prospective students. These may be need or merit based, academic or athletic, or based on other criteria.

Private and Non-Profit Organizations – These are grants and scholarships that can come from a wide array of sources including your job, your parents’ employers, private groups, companies and more.

Give Yourself Options

While there is likely one school that you have in mind as your first choice, if the net price after your financial aid offerings will result in you having to borrow heavily to attend, you may want to consider a second choice school if it can greatly reduce (or even eliminate) the amount you have to borrow. Applying to more than one school (several is preferable) of different types – out of state, in state, community colleges, etc. – will give you the most options to get a good education affordably.

Student loans can last anywhere from a few years to a decade or much longer. This must be a consideration in your school selection. The less you can borrow, the more financially stable you will be after you graduate and the more flexible you can be in your career choices if you aren’t tethered to a monumental student loan balance.

Sign up for our free Tuition.io student loan tool as soon as you sign on for your first student loan so you can always know how much debt you’re accumulating. This will keep you on track from the get-go. Also be sure to read our blog for more in this ongoing series for high school students on understanding the costs of college and making your education more affordable.

Read all of our blog series for High School students:

High School Series Part 1 – Understanding College Costs

High School Series Part 2 – Applying for Financial Aid and Scholarships

High School Series Part 3 – Evaluating Financial Aid Packages

High School Series Part 4 – Making Your College Choice

High School Series Part 5 – Strategies to Minimize Borrowing

High School Series Part 6 – Understanding Debt: Federal vs Private Student Loans