Getting over College Sticker Price Shock

Hey Paul: Our high school son is looking at colleges in central Kentucky. He is a junior at WJHS. The Transylvania University website lists a “total cost” of $45,690 – about what we paid for our home a few decades ago! Your school, Asbury, posts total costs of around $35,000. How can college be worth these sky-high prices? What kind of “deal” can we expect?

When I attended UK about 25 years ago I believe the tuition was around $3000 a year and total cost around $6000. A student could combine relatively modest scholarships, financial aid, a summer job and a bit of help from parents and have no student loans. For this coming school year UK lists the total costs at $24,278! The magic of compounding growth is working against us. The typical annual increase of around 6% has doubled the costs every dozen years.

I have compiled some core information from four local colleges that may help clarify what you really are facing in terms of college “investment” (note the subtle change in wording from “cost”) as well as what a student can take from the college experience. This information is from the U.S. Dept. of Education’s College Scoreboard. See https://collegescorecard.ed.gov for complete information on these schools and any other colleges of interest.

Centre Transy Asbury UK
Family Income AVERAGE COST
$0-$30,000 $17,161 $15,256 $18,677 $9,743
$30,001-$48,000 $17,024 $16,435 $19,565 $11,831
$48,001-$75,000 $20,676 $19,470 $24,526 $15,416
$75,001-$110,000 $23,685 $23,085 $26,365 $17,779
$110,001+ $28,445 $25,716 $29,741 $18,220
Debt $26,063 $27,000 $26,000 $20,500
Starting Salary $45,000 $41,100 $34,100 $41,500
Graduation Rate 85% 73% 70% 60%
ACT Range 26-31 24-30 21-27 22-28

The first thing to note is that virtually no one pays “sticker price” – Even wealthy students that attend Transy get around $20,000 knocked off the sticker price. Your family’s income will be a major determinant of your financial aid package. For each of these four schools the lowest income students received about $10,000 more in financial aid.   Of course even the lower income student is looking at around 17 grand a year to attend a private college and around 10 grand to attend UK.

Keep in mind that these costs are averages – some students will receive more generous financial packages due to academic scholarships. Others will be eligible for further financial aid due to their specific financial situations. The College Scoreboard provides a link to each college’s Net Price Calculator that gives more precise estimates of potential financial aid packages.

Typically the “deal” includes the Kentucky Educational Excellence Scholarship (KEES), Kentucky State Grant and the college’s financial grants. Note that a grant is essentially a gift with no payback! The offer may also include Federal loans that like all other loans need to be paid back but often have no interest until six months after completing college.

The median student loan at the three private schools was around $26,000 – think about it like a car payment for the five years after college with a diploma in hand rather than a vehicle. Again that’s an average figure. I’ve known a few students with $100,000 in undergraduate debt and many with mid-five figure debts. That’s a heavy burden even before you start throwing in graduate school costs, a wedding, first home, and the first baby.

So, is it worth it? Yes, I think the college experience can be “the best four years of your life” and a springboard to a career that is not possible without a college degree. Over the years I know many college graduates that question the utility of their college degree but very few who would forgo college if they had to do it over again. On the other hand I know many people who regret they didn’t take advantage of continuing their education through college when they had the chance.

The one catch is that if you are going to invest tens of thousands of dollars a year than you better complete college – unless you are an NBA first-rounder. Half a degree is worth zilch. As I mentioned in last week’s column, college success is more about grit and wisdom than smarts.

Finances are important but don’t let money be the sole factor. The smaller classes and collegiality of a private college may be the difference between college success and dropping out.   Admission teams will work with you to “make it happen” and then the rest is up to you boy!