Concerned about the rising costs of college? It’s easy to get discouraged.
Many private schools advertise costs that top $85,000 per year. Out-of-state public colleges are not far behind. Even the cost of attending an in-state or community college may seem expensive.
The good news is that many students do not pay the full cost of attendance that colleges post on their website.
As you might expect, low-income students can get government aid, college help — and even a full ride at many schools. But students from higher-income families can also get substantial discounts.
To bring down costs to affordable levels, you need to first understand how the college finance system works.
Cost of Attendance and College Aid
Advertised costs are called the cost of attendance on college websites. Colleges are required to estimate the full cost of attending for the coming school year. This include tuition and fees, known as direct costs, as well as estimates of personal or indirect costs, like computers and books, that students need to budget for.
This sticker price can look very high to families creating their college lists. But there is help.
The federal government and many states try to make college more affordable to all families, using a mix of grants and loans depending on a family’s financial need.
Then you need to look at the colleges themselves. Schools often provide far more gift aid than the government can.
Why Do Colleges Offer Gift Aid?
Admissions officers use gift aid to shape their classes and recruit students. Scholarships help attract a mix of students from all income levels and backgrounds. They’re also used to reel in talented scholars, athletes, artists — and any group the college community hopes to include.
College business officers use gift aid to try to fill every seat, just like the airlines do. Schools are well aware that most families can’t pay their sticker price, as they call it. Gift aid is a way to bring down the price of the school so you might be willing to attend.
Think of it this way: Getting a big scholarship is way more exciting than getting a sale price. Colleges know that.
A couple terms to know are merit aid and institutional aid. The definitions can get fuzzy, depending on the institution.
Merit aid is usually tied to something special about you, such as high grades, strong athletic abilities, musical talent, or a passion for community service.
Institutional aid can be used for anything, but it’s frequently used to discount your tuition based on what the college believes you or your family may be willing to pay. Students often see this framed as something like a presidential scholarship — so this gift aid feels special too. ;-)
Average College ‘Discount Rate’
Need more evidence that gift aid is simply a form of discount pricing? The college industry calls this figure a “discount rate.” And these discounts are worthy of Walmart.
The average tuition discount rate at private colleges was 56% for first-time, full-time freshmen attending in the 2023-24 academic year, according to an annual survey by the National Association of College and University Business Officers. The survey included 324 private, nonprofit institutions.
“Tuition discounting and undergraduate enrollment are on the rise,” the study’s authors noted. “By providing grants, fellowships, and scholarships, these institutions forgo more than half the revenue they would collect if they charged all students the tuition and fee sticker price.”
It’s important to note that state schools typically offer much lower, if any, discount rates, since their tuition is already state-subsidized and tends to be lower than the private schools.
This is all the more reason to apply to a variety of schools — private, out-of-state, and in-state schools. Discounted private school tuition can be competitive with, and sometimes less than, tuition at a state school.
Use a Net Price Calculator
The takeaway? Spend a few minutes looking past the college sticker price when you’re creating your college list.
Sure, you’ll want to glance at that heart-stopping cost of attendance figure. But then look for the college’s net price calculator.
Every college is required to have one on its website. You’ll answer some questions about your family’s income, your grades, and your test scores. With this information, the calculator will be able to provide a ballpark estimate of what you may ultimately pay to go to that school.
If the estimated cost seems doable and the college feels like a good fit for you, put it on your list! It’s possible you may get additional merit aid for things about you that the calculator doesn’t consider. It’s important to shop around.
Kim Nauer is founder of this website and a higher education expert at the Center for New York City Affairs at The New School. She is a graduate of UConn and the Columbia Journalism School, which were cheap in the old days. Her advice: Don’t overpay for college. There are always options.