The Price You Pay for College summary

College is expensive; there’s no getting around that. In many parts of the US, spending four years at a state university costs over $100,000. And if you opt for an elite, private college, then you can triple that figure – coughing up about $300,000 overall.

That’s a lot of money – and we’re still only talking about a single student. Many families send several kids to college; multiply those figures by two or three, and suddenly you’re looking at a small fortune.

So, the stakes are high. But it’s worth pausing to examine that price tag. What really determines the price of a college education? And do most students actually pay full price?

The key message here is: Most students pay less than the list price.

A university’s list price is the standard, undiscounted figure that you’ll find in its promotional material. Often, it’s high – but the good news is that most students can expect to pay less.

Why is that? Let’s start with familiar territory: need-based financial aid. These are the grants and price reductions that colleges and the government provide to less well-off families. Because these discounts are need-based, they don’t take your academic abilities into account.

But, in addition to this type of price reduction, there’s the murky and often confusing world of merit aid.

Merit aid is designed to make a school’s offer more enticing. In general, schools offer merit aid for two reasons.

First of all, it’s a good way of attracting talented students. A student whose grades are good enough for an Ivy League school might end up registering at a less prestigious institution instead if the price is right.

Second, lots of colleges recognize that their list price is just too high for families to afford. If they want enough students on their books, schools often have no choice but to offer merit aid.

So what’s the upshot of this? Well, merit aid and financial aid can add up. At public universities in the 2019–2020 academic year, the average full-time, first-year student attending college for the first time got a discount of 52.6 percent off the list price of tuition. After discounts, families paid on average $15,400 for full-time, in-state students – including tuition, room, and board.

Students at private schools can expect to pay almost double that – $27,400 on average.