This is a guest post by Lynn O’Shaughnessy. See bottom of post for more information.
Colleges costs are skyrocketing. At least that’s what everybody assumes, but it’s not true.
College sticker prices are soaring, but what matters are the actual costs that parents must pay. And this is the good news: net prices — after tuition discounts — have been falling significantly.
Here are the most recent average sticker prices along with the net tuition prices from annual College Board price survey.
Why is the actual price so much lower? Federal tax benefits, such as the American Opportunity Credit, help a little, but the big price breaks come from tuition discounts — otherwise known as scholarships or grants — that the schools award. The average tuition discount at private colleges and universities is at an historic high of 53.5%.
Finding the Money
The trick is finding schools that will discount the price for your child. And that’s where you have to play detective. To win these big grants you need to be able to identify the financial fingerprint of any college or university.
As a higher-ed journalist and college consultant, I’m always checking out the financial generosity of individual schools. I’m going to show you two of the ways that you can follow the money trail for any college.
I’m using New York University as an example because this is an institution that’s wildly popular despite its mediocre financial aid policies.
Here are a couple of questions that you need to ask when identifying a school’s financial fingerprint:
What is the percentage of financial need met?
How much will a school kick in to help with a student’s demonstrated financial aid need? One place where you can find the answer is at the
On the home page, type in the name of a school in the College Search box and when its profile appears, click on Cost & Financial Aid. Under the heading Financial Aid Statistics, you’ll see that NYU typically meets 71% of a family’s financial aid need. That’s a miserable figure for a highly selective and wealthy university. In comparison, Columbia University meets 100% of its students’ qualified financial need.
What is a school’s breakdown of loans vs. grants?
A school can boast that it meets a high percentage of a family’s financial need, but you have to see how it assembles its financial aid package. Does the package include a bunch of loans, which parents aren’t going to be thrilled with, or grants, which is free money.
Once again, I used the College Board’s stats on New York University. I discovered that a whopping 44% of the typical NYU aid package is loans and work study. Once again this is awful. In contrast, 91% of Columbia University’s financial aid package is grants and the remainder is work study with no loans.
College price tags are meaningless, but you will save even more money if you evaluate the financial fingerprint of a university before your child falls madly in love with a school like New York University.
Lynn O’Shaughnessy, the author of The College Solution: A Guide for Everyone Looking for the Right School at the Right Price*, is an independent college counselor and college blogger who writes for TheCollegeSolutionBlog, CBSMoneyWatch and US News & World Report.