College Search Error #3: Careless Consuming

Don't overlook one of the most important features of a college - it's cost!

Imagine you were shopping for a new car. Would you go to a dealership and start looking at the cars on the lot with no consideration of the price? Conversely, would you refuse to consider all cars with sticker prices above what you were willing to pay - even if the dealer swore he could offer you steep discounts on some of them? Unfortunately, families shopping for colleges often make both of these errors. Some compose their college list with no regard for the cost. They reason that they will not know what each college will actually cost their family until they receive their financial aid award letters, so they'll wait until then to factor price into their college selection. The problem with this strategy is that if most or all colleges on their list turn out to be financially unrealistic, it will be too late to go back and apply to others. At the other end of the spectrum are families who limit themselves to in-state public universities whose sticker prices are within their budget. This might seem like a prudent approach, but it overlooks the fact that many colleges with high sticker prices offer exceptional financial aid that can make them as affordable as (or more affordable than) schools with lower sticker prices. So how do you avoid these two pitfalls? College Shopping: Price Check - Please! College is a big ticket item. Indeed, the cost of a college should be one of the most important factors considered by a family, so you might think a college's price tag would be easy to find on its website. Sadly, it generally isn't. Let's take New York University as an example. If you perused its website looking for the cost, you would probably click on the Tuition and Fees link under Admissions. This page would allow you to determine that a full-time undergraduate student at the College of Arts and Sciences paid tuition of $27,440 for Fall 2021. Pricey, but perhaps not as bad as you were expecting - until you realize that the $27,440 price tag was only the cost of taking classes for one semester. It doesn't include tuition for the other semester, nor books, additional fees, or the cost of living in Manhattan for a year! If your child is considering NYU, what you really want to know is what your total costs will be for a full year of school. The term for this is Cost of Attendance (COA), and every college that participates in federal aid programs must determine it. COA is defined as the sum of: tuition and fees for a year, room and board, books and supplies, and an estimate of personal expenses and transportation. Compare the COA's of different colleges and you'll be comparing apples to apples. For example, a search for Cost of Attendance on the NYU website will eventually reveal that for the 2022-23 school year, it's estimated to be a whopping $83,250. No wonder it's not prominently displayed! After Sticker Shock, What Next? Sticker prices for colleges are scary. Here in Virginia we're fortunate to have excellent public universities that are considered good values for in-state residents, but even so, the 2021-22 COA for our flagship, UVA, was still $36,314 (according to College Navigator, a governmental search engine that's a great source of financial data about colleges). By contrast, every one of the Ivy League colleges had a COA in excess of $75,000 in the 2021-22 school year. Does this mean that you'd pay a lot less for your daughter to go to UVA than Princeton? Possibly, but not necessarily. Many of the priciest colleges also have the most generous financial aid, which can mean that even with their exorbitant sticker prices, you might end up paying less to attend an Ivy than a public university. In short, many families do not end up paying the full sticker price - or Cost of Attendance - at the college their child attends. What your family actually pays is defined as your net price - the college's Cost Of Attendance minus any grant money you're awarded. Grant money is financial aid money you don't have to pay back. Your net price at a college is determined by your financial resources the less you have, the more financial aid you qualify for, and the lower your net price will be. You won't know your exact net price at a college until after you've applied for aid and your child has been accepted, but you can get a ballpark estimate of your net price at any college right now. Thanks again to the federal government, every college that participates in the federal student aid program must provide an online calculator that allows families to generate an estimated net price at the college. How do these work? The calculator asks you to answer 20 to 30 questions about your income and assets, and uses that information to calculate an estimate of what your net price would be at the school. So after using the net price calculator for Luxury Lawns University - sticker price $72,000 - you might find that you would likely pay a more modest $45,000. The information you supply to net price calculators doesn't have to be exact. However, the more accurate your answers to the questions, the more accurate your estimate will be. Even if you answer questions precisely, you shouldn't expect the estimate to perfectly predict your eventual costs, but it should provide a reasonable approximation. You can find the net price calculator for a college by googling, "College X Net price calculator." Finally, be aware that using a net price calculator does not constitute applying for financial aid. That's an entirely separate process that begins with completing FAFSA in the fall of your child's senior year. Using Net Price Calculators to Compose the College List Generate a net price estimate for every college on your list as a first step to savvy shopping. What then? Should you cross off all schools whose net price is more than you're willing to pay? Not so fast. Your teen may be offered merit-based grant money that brings down the price tag. Even if he isn't, you may decide it's worth paying top dollar for a school that offers a genuinely unique academic or career opportunity. Just don't rack up large student debt for no good reason. Consider this scenario. Your daughter is looking for a scenic, rural college with a strong program in environmental studies. She finds ten schools that fit all of her criteria but only intends to apply to five. How should she choose which five? She could pick randomly, or select the ones that offer the most student-pleasing perks -the cafeteria sushi bar or the rock climbing wall. Or you could use each college's net price calculator, learn that your net price estimate for a couple of the schools is $10,000 less per year than the others and make the choice that way. Net price calculators have revolutionized college shopping. Check them out today.