The price of colleges can seem a bit daunting, and some families spend years preparing to pay for college. Of course, cost is something to consider when choosing a school. But if you see an expensive price tag for a university and think you can’t afford it, don’t be intimidated just yet. In your journey to obtain a college degree, the first thing you’ll probably see is the schools’ published Cost of Attendance (COA), or as some may call it – the ‘Sticker Price’. But what really matters is the ‘Net Price’ or Net Cost – so let’s find out what the difference between these are.
What is Sticker Price?
The COA or Sticker Price of a college is the estimated total cost of attending, which includes:
- Student Fees
- Transportation/Travel expenses
- Dependent Care Expenses (if you have children)
- Expenses Related to Disability
- More Personal/Miscellaneous Expenses
- Living Costs (Colleges are not required to include Living Costs when advertising their Sticker Price)
You’ve heard of the saying “never judge a book by its cover”, well in this case - never judge a college by its Sticker Price.
What is Net Cost?
‘Net Cost’ is the amount you and your family are expected to pay out-of-pocket, also commonly known as the ‘Net Price’. It’s based on starting with the full Sticker Price of the college, then subtracting the financial awards, scholarships, and grants.
So, if you are interested in a school, go ahead and apply for it regardless of what the Sticker Price is. That way you can see how much the college will offer you in financial aid (grants), scholarships (merit and athletic), and other awards from federal, state, and local sources.
It’s worth the time to contact the school and see what else they can offer – perhaps additional aid assistance is available that you were not aware of. The sooner the better, because gift aid and scholarships sometimes come at a first come first serve basis!
Did I mention negotiating is sometimes a possibility? Yes it is! You may be able to replace loans with grants, scholarships, or tuition breaks – but you may have to ask your financial aid officer directly.
In the end, you may find out that what seemed like an unaffordable school is actually offering a better ‘Net Cost’ (what you and your family are expected to pay) compared to other colleges.
I must emphasize the importance of filing your Free Application for Federal Student Aid (FAFSA) as a critical first step when trying to figure out your Net Cost. FAFSA has a “FAFSA4caster” webpage where you calculate the estimate of your Expected Family Contribution (EFC), work-study, your eligibility for student aid, and subsidized/unsubsidized loans to help you and your family plan ahead.
The calculation for Net Cost/Price is:
To calculate the Net Cost/Price, take the Sticker Price minus any grants, gift aids, scholarships, tax benefits, tuition breaks, and/or other awards you may receive (any money that you don’t have to pay back) which would then equal the Net Cost.
Remember that your Net Cost is only an estimate of what you’ll be actually paying. If you’d like to research more or compare colleges, try the “College Navigator”, this is where you can search other schools and research their projected average Net Cost/Price.
In order to calculate your estimated Net Cost, some colleges’ website list interactive tools, usually called the ‘Net Price Calculator.’ Some colleges call it a ‘Financial Aid Estimator’, or a ‘College Cost Calculator’. It’s a helpful planning tool, mandated by the federal government, to predict how much financial aid will be given to the student based on their need. Most universities and colleges have a Net Price Calculator on their website.
You can anonymously put financial information into a school’s online price calculator to get an early estimate of what you will be paying out-of-pocket to attend. The more accurate the information you and your family can enter, the more accurate the estimation of financial aid will be. One tip I’d like to share is to have all financial documents ready before you start visiting schools’ calculators so it will take you less time to get an estimate.
What you really pay: the True or Real Cost
What you actually pay for college is called the ‘True Net Cost/Price’, sometimes called ‘Real Price’ or ‘Real Cost of College’. This is what the student and their family immediately pays out-of-pocket in order for that student to attend their school – it really is the true cost of what you are paying for a college/university.
Work-study programs and student loans are also included in your True Net Cost because work-study takes time away from class study (although you do get to work based around your school schedule and gain experience), and student loans have to be paid back along with interest.
From year-to-year, keep track of what your True Net Costs have been. You might see the amount increase, stay about the same, or become lower in the following years.
My advice: focus on your academics, maximize your aid, stay on-time (15 credits per semester) as best you can, and only use student loans once you’re sure you’ve exhausted all non-loan aid.
If you have questions or would like assistance in calculating Net Cost of school, please visit the Success Center at one of our two locations in Anchorage – or call us! We are happy to help you navigate your path towards college and career training success.
The financial aid process can sometimes feel overwhelming, but don’t fret! Check out this article on how to find scholarships and grants. Or, if you need any [free] assistance with completing the FAFSA or need guidance with formulating a plan for your postsecondary journey, please come see us at the ACPE Success Center!