Understanding College Costs: A Guide for Parents

Written By Monica Meng

Navigating the cost of college can feel like a daunting task, but having a clear understanding of what goes into these expenses—and how financial aid can offset them—can help make it more manageable. The Trends in College Pricing and Student Aid 2023 report offers insights into the current costs of college and how families can best plan for these expenses. Let’s break down what you need to know about college costs, tips for managing non-tuition expenses, and resources to make the process easier.

Breaking Down the Sticker Price vs. Net Price

One of the first steps in understanding college costs is distinguishing between the sticker price and the net price. The sticker price is the published cost of tuition and fees, which varies widely:

  • Public Four-Year (In-State): $11,260 (2.5% increase from last year)

  • Public Four-Year (Out-of-State): $29,150 (3.0% increase)

  • Private Nonprofit Four-Year: $41,540 (4.0% increase)

Though these numbers may look high, most students don’t end up paying the full sticker price. The net price—what families are responsible for after grants and scholarships—is often much lower. This is a more realistic figure to focus on as you plan for college. For example:

  • Public Four-Year (In-State): Net price averages around $2,730 after financial aid.

  • Private Nonprofit Four-Year: Net price is closer to $15,910 after aid.

Helpful Tip: Each college website offers a Net Price Calculator, a tool that can help you get a better sense of your actual cost after scholarships and grants are factored in. This calculator can usually be found on a school’s financial aid page or by searching for “Net Price Calculator [School Name].”

Understanding the Total Cost of Attendance

While tuition and fees are major components, the total cost of attendance includes other essential costs like housing, food, books, transportation, and personal expenses. Understanding these non-tuition costs and planning for them early is crucial, as they contribute significantly to the overall college budget:

 

Planning Tips for Non-Tuition Costs:

  • Housing and Meals: On-campus housing may be required for first-year students, but off-campus housing could be cheaper in later years. Look closely at different meal plan options and assess what’s likely to meet your student’s needs.

  • Books and Supplies: Encourage students to consider used, rented, or digital textbooks, which can be much cheaper than buying new.

  • Transportation: Factor in the cost of travel, especially for out-of-state schools. Some families set aside funds specifically for trips home during breaks.

These non-tuition expenses often vary widely based on the school’s location and the student’s choices, so discussing ways to budget for them ahead of time can help reduce surprises.

Factors Affecting College Costs Over Time

While college tuition has been rising for decades, inflation-adjusted costs have actually leveled out in recent years. For example, public four-year tuition is about 2.09 times higher than in 1993-94, but recent increases have been modest. This trend offers a bit more predictability as you budget over the next few years.

Another important trend is declining enrollment. Since 2019, undergraduate enrollment has dropped by 5%, particularly at two-year colleges. This shift has led some smaller colleges to close programs or, in extreme cases, shut down. Use resources like College Navigator to check on the financial health of colleges your student is interested in.

Steps to Take Now to Manage College Costs

Here are some proactive steps you can take to help manage college costs:

  • Complete the FAFSA: Filling out the Free Application for Federal Student Aid (FAFSA) is essential for accessing federal, state, and institutional aid. The FAFSA for the 2024-25 academic year opens in December 2023. Access the application on the FAFSA website.

  • Use Financial Aid Estimators: To better understand your eligibility for financial aid, you can use the Federal Student Aid Estimator. This tool provides an early estimate of the aid your family may receive.

  • Compare Financial Aid Offers Carefully: Once you have multiple financial aid packages, compare them side-by-side to see which schools provide the best combination of grants, scholarships, and manageable loan amounts. Many families find it helpful to use a financial aid comparison worksheet.

  • Understand Scholarship Displacement: Some schools may reduce the amount of need-based aid if your student receives an outside scholarship. This is known as scholarship displacement. Always check with the school on their policy before relying heavily on outside scholarships. For more information, see this Business Insider article on scholarship displacement.

Financial Conversations to Have with Your Student

As you plan for college, it’s helpful to have open discussions with your student about budgeting, financial aid, and managing their expenses:

  • Set Clear Budget Expectations: Outline how much the family can realistically contribute and discuss any limits on borrowing. Many families agree on a maximum amount they’ll take in loans to avoid burdensome debt later.

  • Encourage Student Ownership of Expenses: Suggest that students consider working part-time or during the summer to help cover personal expenses, reducing the need for additional loans.

These conversations can help students feel more financially prepared and responsible as they transition to college.

Additional Resources and Tools

As you continue your college planning, here are a few helpful resources:

  • CSS Profile: Required by many private colleges, this form assesses eligibility for institutional aid. You can complete it on the CSS Profile application page.

  • Student Loan Repayment Simulator: This Loan Simulator on Federal Student Aid lets you explore how different borrowing scenarios affect repayment, helping you make better-informed loan decisions.

Final Thoughts

Understanding college costs involves more than just looking at tuition. By focusing on net prices, factoring in non-tuition costs, and using the right tools, you can feel confident in making the best financial decisions for your family. Remember, this process is manageable with the right planning and resources. Your student’s college experience can be a smart investment with the right preparation.

Citations:

Monica Meng https://www.educatedpathways.com
Previous

2025-26 FAFSA is Open
Next

Your Ultimate Guide to Writing Supplemental College Essays