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College Shopping: Price Check Please

Posted on 05/30/2019, by Dr. Ellen Fithian to Parents of 7th and 8th Graders, Parents of 9th Graders, Parents of 10th Graders, Parents of 11th Graders, Parents of 12th Graders (0 comments)

It's hardly breaking news that college is a big-ticket item and that costs vary greatly from school to school. The 2019-20 cost of attendance (the complete cost of a year of college, including tuition, fees, room & board and other expenses) will be about $28,000 at Virginia Tech (for in-state students) and almost $79,000 at Duke. And that's just for one year!

In short, for many families, four years of college will approach the median cost of a house in Virginia - $258,400 in 2019, according to Zillow. Moreover, shopping for a house has more than a hefty price tag in common with shopping for a college; both are emotional purchases. House hunters don't just look for the best bargain, they look for a place that feels like home. Even so, they typically approach the shopping experience with a clear idea of what they can afford and then look for the house they like best within those parameters.

Sounds like a sound strategy, doesn't it? 

College Shopping: Price Check - Please!  

Some of you may be thinking that you'd take this same, common sense approach to shopping for a college if you could, but it's not nearly that simple!  Depending upon your family's financial resources, parents could end up paying anywhere from nothing at all to full sticker price, so until you submit your financial aid application and get your award offer in May, you won't know what the college will cost you. (Of note, students are almost always expected to contribute at least a few thousand in earnings from work.)

How in the world can you be a rational shopper in this kind of situation? The answer is that you can't, which is why Congress passed a law to help families become more savvy college consumers. The law requires colleges to provide a free online instrument that generates an estimate of what the college will actually cost a family (as opposed to its sticker price) based on the family's answers to an abbreviated set of questions about their finances. What your family will actually pay for one year at any college is called your net price - defined as the total cost of attendance minus any grant money (money you won't have to repay).

 One of the best things about net price calculators is that you can generally use them anonymously. Some colleges ask for contact information, but in most cases you can leave it out and still use the calculator. The more accurate your answers to the questions, the more accurate your estimate will be, but that said, there's no harm in providing ballpark answers to the questions if you're just looking for a ballpark net price estimate. 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. 
By getting a net price estimate for every college your child is considering applying to, you can apply the same type of cost comparison to college shopping that you would to any other large purchase. 

Using Net Price Calculators to Compose the College List

If you generate a net price estimate for every college, you'll be able to make meaningful comparisons between schools. Should you then 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, but consider this hypothetical example of how net price estimates could help you and your child avoid racking up large student debts for no good reason. 
Suppose 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? 

She could pick randomly, or select the ones that offer the most student-pleasing perks -the cafeteria sushi bar or the 24/7 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. For more information about how to find and use them, check out these articles from the Roadmap section of The Sidelines: Parent Guide to College Admissions.
Financial Aid Basics
Net Price Calculators
Merit Aid
Compose the List (of Colleges)

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Posted on 05/30/2019, by Dr. Ellen Fithian (0 comments)




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