College budgeting: don’t freak out over sticker shock – your tuition could be way lower than advertised

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Paying for college is a major financial concern for many parents, especially during times of runaway inflation. The prospect of paying tens of thousands of dollars a year in tuition is enough to send most parents into a panic attack. The good news is that you’ll likely pay far less than the advertised costs, according to a new report from Vanguard.

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The report found that almost two-thirds of all full-time students receive some form of financial aid – including scholarships, grants and loans – that significantly reduce costs compared to the list price. On average, grants and scholarships make up about 25% of a family’s total college funding, Vanguard noted, citing data from Sallie Mae and Ipsos.

The difference between published university price tags and actual costs can be substantial. For example, Vanguard found that the listed price for tuition, fees, room, and board at “highly selective” four-year colleges averaged $74,488 during the academic year. 2019-2020. However, the actual price paid by families averaged only $27,190.

Here are the shortcomings in other schools:

  • The average price quoted for selective private schools was $47,584, while the actual total paid averaged $23,026.
  • For selective public schools, the average price listed was $38,388 for out-of-state students and $26,364 for in-state students. However, the actual total paid averaged $14,360.
  • For non-selective public schools, the average listed price was $35,298 for out-of-state students and $24,806 for in-state students. However, the actual total paid averaged $14,326.

The drastic difference between what is advertised and what is paid should reassure parents who read about elite schools charging up to $80,000 a year for tuition, tuition, room and board .

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“In reality, the vast majority of students and their families will pay significantly less once financial aid and other discounts are taken into account,” Jonathan Kahler, certified financial planner and author of the Vanguard report, told CNBC.

Parents and students looking to cut costs have many options beyond just borrowing. These include private grants and scholarships, as well as U.S. Department of Education scholarships that total about $120 billion a year, according to CNBC. Another option is to apply for financial aid from states or individual colleges.

A good first step is to research the costs at different schools. Vanguard recommended to visit MyinTuition.org, a website that partners with over 70 colleges and universities to provide simplified net price estimates from a few personalized inputs. This site can help you get a general estimate that takes into account your income, assets and family structure.

Students in need of financial aid should also complete the Free Application for Federal Student Aid (FAFSA), which provides a gateway to federal funds such as loans, work-study programs, and grants.

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Finally, Kahler recommended starting a 529 college savings plan. These plans allow you to grow your income on a tax-efficient basis and then withdraw the money tax-free if the funds are used for expenses. eligible education such as tuition, fees, books, and room and board.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work has also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal, and Business North Carolina magazine. He holds a BA in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting has won awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A North Carolina native who also writes fiction, Vance’s short story “Saint Christopher” placed second in the 2019 Writer’s Digest short story competition. Two of her short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. Her first novel, Voodoo Hideaway, is published in 2021 by Atmosphere Press.

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