It is a HUGE mistake to conclude that a particular college is unaffordable because the price you see on their website is beyond your means. Why? Because almost no one pays that price. Really. (Update for 2018)
There is often a big difference between the sticker price and the net price of a college.
The sticker price is the price you’re likely to find on the website: the total of tuition, room and board, fees, books and other expenses, a.k.a., the Cost of Attendance. The net price is the amount you will pay out of pocket, often thought of as the sticker price reduced by grants and scholarships. 
To illustrate these points, we have to dig into the data a bit – sometimes a fool’s errand with education data but made easier here by some very credible data sources. The College Board’s annual reports, “Trends in College Pricing” and “Trends in Student Aid” are recognized as excellent annual compilations. I relied on the 2018 report. Another go-to source is “How America Pays for College,” published annually by Sallie Mae.
To get to the bottom of this sticker vs net price issue, let’s start with a look at sticker prices using the College Board’s data on costs published by colleges tuition, fees, room and board (TFRB) – the lion’s share of college cost:
- published TFRB at four-year private colleges: $48,510
- published TFRB at four-year public in-state: $21,370
To get closer to COA, here’s the College Board ‘s estimated annual budget for students at:
- four-year private colleges: $52,500
- four yr. public in-states: $25,890
Yikes, those big numbers for one year and worse when you multiply by 4: $100,000 to 200,000 for four years. Could $300k be on the horizon?
Why shouldn’t you be scared to death of those numbers?
Over the past decade, colleges nearly doubled the amount of free money (grant aid and scholarships aid) they provide. In Academic Year 06-07, colleges reported total institutional grants of $30,939 billion. Ten years later, they awarded $58.63 billion – a 90% increase!
Over that same period:
- state grants increased 22%: from $8.719 billion to $10.596 billion
- private and employer grants increased 29%: from $12.35 billion to $15.94 billion
According to a National Center for Education Statistics report, 90% of undergraduates at four-year private colleges received aid in AY14-15, 84% at public four-year colleges. The New York State Lottery ‘s slogan applies to the college financial aid game as well as their lottery: “You can’t win if you don’t play.” In this game, the odds are very good that you will win something.
The question: how much might you expect to win? Let’s look at College Board data on Net Prices (based on TFRB):
- Four-year private colleges: $26,740 (49% discount)
- Four-year public in-state: $14,940 (42% discount)
If you want even more encouragement, take a look at The National Association of College and University Business Officers (NACUBO) 2016 report: the average institutional discount rate for first-time freshman rose to new highs of 48.6% — up from 38% a decade ago. That’s right, at some colleges, the net price you pay out-of-pocket may be almost 50% less than the advertised sticker price.
If nothing else, I hope this article helps you understand that you should look past sticker prices to the net price of a college. You can find a Net Price Calculator on every college website. Although these provide a good quick-and-dirty, preliminary indication of your net out-of-pocket cost, the only way you will know for certain is to apply for financial aid and carefully compare the financial aid award letters. You may find that a college with a high sticker price, but a generous grant program offers a net price to you that is a lot less than a college with a lower sticker price.
You should start the process by filing the Free Application for Federal Student Aid, a.k.a. the FAFSA. Some colleges also require the CSS Profile. Check the college’s website too so you file the proper forms – and check the deadlines while you’re at it.
Remember, you can’t win the financial aid game if you don’t play, so be sure to play!
John Hupalo is the Founder and CEO of Invite Education, co-author of Plan and Finance Your Family’s College Dreams and host of the Podcast, My College Corner.