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How to Calculate the True Cost of College

by Caldwell Trust

If you’ve started preparing for your kids to attend college, you’ll quickly find the costs are no laughing matter as you plan them into your overall financial plans. The costs of college fluctuates year by year, with expenses consistently rising.

According to The College Board, the average price of tuition and fees have gone up more than $7,000 over the past 10 years at four-year private colleges and universities. That figure has outpaced inflation by more than 3 percentage points. In fact, the cost in 2018-2019 is about $9,716 for an in-state public college, and about $35,676 for private colleges.


The good news is, while costs are steadily increasing, parents usually pay the net price, which is much lower than the published price due to scholarships, grants and other programs the school may offer. A survey released by the National Association of College and University Business Officers indicate only 12% of freshmen paid full sticker price at private colleges during the 2016-2017 school year, which is an all-time low. On average, private-college freshmen got grants to cover a record 56% of their tuition.

How to Calculate the True Cost of College

What Exactly is Net Price?

Net price is one of the most important figures of the equation. It’s the amount actually paid to attend the institution after all the grants and scholarships are subtracted for a single year. It is important to note that scholarships and grants are financial aid that do not have to be repaid.

To put this into perspective, consider the following example: the total cost of tuition at a private college is listed at $35,000 for the entire academic year, not including the price of books. The student received a scholarship in the amount of $20,000. They also qualified for a financial aid grant in the amount of $2,500. The scholarship and grant have now brought the cost of tuition down to $12,500. This is the net price, or the amount the parent can expect to pay for the academic year, minus the cost of books and other incidentals.


Calculating the Net Price

Once you have decided which school your child will be attending, a net price calculator will come in handy to estimate your costs. Many schools have net price calculators located on their website to help parents, but they can be difficult to find. This list from U.S. News may assist in locating the one for your student’s desired school.


Net price calculators evaluate a number of considerations. These include:

  • High school GPA and ACT or SAT score
  • Expected Family Contribution (EFC) from the FAFSA, or last year’s tax return
  • Scholarship awards

This helps parents estimate the cost of tuition, housing and fees. While it may not provide the actual cost, it calculates a ballpark estimation based on given figures. The price varies based on certain things, such as having a suite-style dorm or single room, the type of dorm they may choose, meal plans, and the number of credits the student takes. Still, net price calculators are an effective tool for financial planning.


It’s always better to start preparing early, rather than being caught off-guard by college costs. Also, parents should always consider the net price of college, rather than the sticker price when planning for the school year. This is a realistic picture of what they can expect to pay. And utilizing the net price calculator - as well as consulting trusted advisors like the team at Caldwell Trust - can assist in understanding the true costs of their education, while helping them shape their budget for any additional expenses.


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