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A college education at the most selective schools in the country can cost upwards of $70,000 per year or more. Private colleges and universities in the Midwest often charge $60K per year for the total cost of attendance, while the University of MN comes in at just under $30,000 for the total cost. Our state schools are more moderately priced with total costs of about $20,000 per year.
With prices like these, many families struggle to pay for college without sentencing their kids to a lifetime of student loan payments or sacrificing their retirement dreams in the process.
Just one thing. In the 1991 movie, City Slickers, Billy Crystal goes into the wilderness looking for the secret to the meaning of life. Along the way, he meets an old cowboy who tells him the secret to the meaning of life comes down to “just one thing”.
If only paying for a college education were that simple.
Well, maybe it is.
Helping families pay less for their kids’ college education is part of what I do as a financial planner. In my experience, the single biggest thing that determines how much you will pay for your kids’ college education always comes down to just one thing as well.
If you think “the one thing” is financial aid, scholarships or even saving and investing, you would be wrong.
Working with parents of college-bound, high school students, I have found that the one thing that determines how much you will pay for college, literally every single time is…
The college your student chooses to attend.
That may sound like an obvious statement. Harvard University probably costs more than Mankato State. But it becomes less obvious when you peel back the layers and start to understand how schools dole out financial aid to their students, and how much that school thinks the student and their family can afford to pay.
Other factors like resident vs. non-resident tuition rates, academic and sports scholarships, even your student’s major will affect how much you pay for college as well. These considerations are a part of the college selection process, but ultimately how much money you pay for college comes down to the school your student attends.
Despite the high sticker price, it might actually be less expensive for some students to go to a top tier, private college than a local state college or university. In other cases, that same private school may cost 2-3 times as much some of the other schools on your list. Most of the time, especially if you have a talented student, a private college or university might cost you approximately the same amount as your local university.
If a prestigious top-tier school is on your list, don’t cross it off just because of the sticker price. You might find its total net price to be competitive with other schools you are considering. Likewise, if such schools are on your list know what your net cost will be before making commitments to your student that you may regret later.
Net Price Calculator. How do you know which school will be the most or least expensive? Is there a way to tell in advance what your approximate net price will be prior to applying at that school?
Yes! And it’s called a Net Price Calculator. The Net Price Calculator is a tool found on each school’s website that allows students and their parents to enter their financial information as well as some key information about the student. The calculator then estimates the net price you will pay for that student at that school.
The numbers are non-binding and some calculators are better than others, but they will give you an idea of what you will pay if your student chooses to attend that school. This way you can easily eliminate colleges from your list that are unaffordable saving you and your student thousands of dollars in college expenses.
One more factor to consider. The intended career of your student. Here is what I mean…
My daughter was interested in an architecture major. To become an architect you need a specific undergraduate degree or even a masters degree just to sit for the licensing exam that will allow you to work as an architect.
One school we looked at had a 5-year undergrad program that qualified a student to sit for the licensing exam. The other school required a 4-year undergrad program combined with a 2-year master’s program before you could sit for the exam. At the second school, tuition for the graduate program is more than double the annual price of undergraduate program.
Both schools had a similar net price for their undergraduate program over four years, and were highly regarded for their architecture programs, but after accounting for the 5th year at one school and two years of graduate school at the other, we determined that the school that required the master’s degree would cost about $100,000 more than the other school, essentially doubling the cost of becoming a young architect.
If architecture seems unusual, it is not. Many careers require more than a 4-year undergraduate degree. Knowing that your student will likely need graduate school or professional school after they complete their undergraduate degree can be a big factor in determining how much you and/or your student will ultimately pay for their education.
To learn more, contact me directly to attend one of my Pay Less For College webinars or ask your local high school to sponsor this free event at your school.
To discuss any of the topics in this blog or to learn more about how we can help you Cross The Bridge To A Confident Retirement, please contact me through my web site mikebranch.net, call me directly at 651-379-3935 or email me at mpbranch@focusfinancial.com.