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What does College Really Cost?

Aug 25, 2021

Before buying expensive goods such as cars and homes, consumers have a very good idea of the purchase price and how they will pay for it. So why isn’t this true when it comes to buying a college education?

Four years of college can easily cost more than a car or even a home.  But too many consumers of education do not know how much it might cost before making the purchase.

It does not have to be that way.  This article will help you understand why purchasing a college education is confusing and how to estimate the cost of walking across the stage to receive the diploma.

Why is purchasing a college education so confusing?

There are several answers to this question, but there are two primary factors:

  • The final purchase price is different for each student.
  • The jargon and process of applying to college and getting financial aid is unique and unfamiliar

Let’s start with some jargon that explains why the price is different for each student.

Sticker Price vs. Net Price: 

Unlike any other consumer purchase, the actual cost of buying the same education is different for each student. Colleges, unlike most students seeking admission, understand that this is a business transaction. They seek, and will pay for, a well-rounded, geographically, ethnically, religiously diverse group of interesting kids that includes academic all-stars, great athletes, and talented musicians.

Colleges post a price on their website, a.k.a. the Sticker Price.  Then they adjust the price for each student by offering merit scholarships and grants. This tuition discount reduces the cost to attract top-rated students. The adjusted price, the price that a student must pay, is known as the Net Price. A college’s publicly advertised Sticker Price might be $60,000 per year.  But that does not matter to a student who is offered scholarships and grants of $30,000 on their personalized Financial Aid Award Letter.  This 50% discount reduces their Net Price to $30,000.  

Sticker Price: 

Just as on a new car, the Sticker Price for college is meant to break down the cost of purchasing one year of college. But there is a lot of fine print. A college’s Sticker Price is the average cost to attend the college for one year, including tuition, fees, room, board, transportation, living expenses, books, and supplies – together known as the Cost of Attendance.  Remember: this is for one year.  Most students typically purchase at least four years of education. The cost for each subsequent year usually increases.

Net Price:

The Net Price is the price of a college to a student after their financial aid is subtracted from the Sticker Price. In a Financial Aid Award Letter, the college will show the Sticker Price and subtract the amount of financial aid it will offer a student. This “aid” likely includes student loans that must be repaid and work-study that must be earned.

The National Association of College and University Business Officers reported in this 2020 study that the average tuition discount for first-year students at 361 private colleges increased to a record high of 53.4%. In our example above, a student who received a financial aid award of 53.4% would be expected to pay the Net Price of $27,960.

Back to our initial question: What Does College Really Cost?

After receiving a Financial Aid Award Letter, the student will know their Net Price to attend the college, but that is not their actual cost for the year. The total bill for a year at school will also include the student’s unique costs.

The word “average” in the definition of Sticker Price above is purposely italicized. How far off the average will your student be for the variable expenses such as travel, living expenses, books, etc.?  College really costs the Net Price plus the student’s actual cost for incidentals.

So, how can you save money on variable expenses?


According to the College Board, the average student spends about $1,500  on course materials and textbooks per year. The college bookstore is convenient, but there are most likely cheaper options.  

Online bookstores are a great source for finding new and used books, often with options to rent or buy a used book at a discounted price. Some professors may also put materials on reserve in the college library so students can have free access to the materials.

Renting textbooks instead of buying them is a great way to save money. However, if you must buy textbooks, selling them at the end of the semester, either online or at a textbook buy-back event is the next best option.

Transportation and travel: 

Whether your student attends college in-state or across the country, transportation is necessary. Setting price alerts in advance for air travel might help reduce the cost. Before solidifying any lodging plans, check with your student’s college to see if they’ve partnered with hotels in the area to provide better rates.


Each college has its own system for meal plans and understanding them can save money. Some have à la carte plans; others offer all-you-can-eat options. It’s important to note that what you think your student will need for food might be different than what gets used, be flexible and willing to switch plans in the second semester if needed.  

Living expenses:

Living expenses obviously vary from student to student.  Students may sign up for student reward programs with major companies such as, Adobe, Amazon, Spotify, and Verizon. These companies often offer substantial discounts of up to 50% off for students with an Edu email address for verification. 

Other Costs:

  • The cost of attendance covers the average cost for the student to attend, but what about your cost of visiting for Parent’s Weekend or other occasions?
  • Many colleges also permit students (sometimes not including freshmen) to have cars on campus – a potentially large initially unbudgeted expense: insurance, gas, maintenance, parking fees.
  • Greek fees. Some campuses have robust fraternities and sororities with their own fees and expenses.

The Final Word

Consuming education is expensive, but it can be affordable if you understand in advance what will be factored into the total cost of college for your son or daughter. Unlike purchasing a TV, car, or house, the cost of the same product, a diploma, can vary greatly from one student to the next.

You will be ahead of the game if you approach purchasing an education the way you would buying any other consumer good or service.  Know the jargon, realistically estimate the cost and plan to pay for a college that is affordable for your family.  This process will help you be a smart consumer of education.