The Good News About College Costs
By Elizabeth Fishel and Jeffrey Arnett (Next Avenue Contributors)
“College costs rise again” is a headline we’ve all seen on a regular basis over the past couple of decades. “A residential four-year degree can set you back as much as $60,000 a year,” warns The Economist in a recent issue.
These types of declarations are sure to send a chill through the hearts of parents, whether their kids are just about to enter college or just out of the womb.
“How will we ever afford it?” parents mutter to themselves and whisper to each other late at night. “We’ll never have that kind of money.”
Well, it’s true: Few of us will ever have the kind of financial resources that would allow us to spend a quarter of a million dollars on each of our kid’s college education. It’s also true that college costs have gone up rapidly in recent decades — four times faster than the rate of inflation.
However, there’s more good news than you might think. And the best news of all may be that in this brief essay, we’re going to help you separate the reality of college pricing from the horror stories, with information that may profoundly change your financial expectations for your kids’ college years.
Don’t Forget: There’s Help
Let’s start with a key piece of good news: Almost no family pays anything like $60,000 a year to send their kid to college. That’s the sticker price for the most expensive private colleges, with absolutely no financial aid.
The only families who end up paying that much are the miniscule percentage who actually do have that kind of money.
For everyone else, the cost is much, much lower.
In 2012 13, full-time undergraduates at public four year colleges paid an average net price of $2,900 for tuition and fees. Full time undergraduates at private nonprofit four year schools paid tuition and fees of $13,380, on average. Students living on campus paid an additional $10,000 a year for room and board — a bit less than that at public four-year schools, a bit more at private four-year schools.
Nowhere near $60,000 a year, in other words. So, take a deep breath.
These statistics are from an invaluable report published annually by the College Board, called Trends in College Pricing. Their reports are essential reading for all parents with kids approaching the college years.
Here are a few more useful nuggets from their 2013 report:
• College costs at private schools are not going up once financial aid is taken into account. On average, net tuition and fees for private nonprofit four-year schools are lower in inflation-adjusted dollars in 2013-14 than they were a decade earlier.
• Students from the poorest families can get a free education. At four-year public colleges, students from families with incomes less than $30,000 a year pay an average of $0 in tuition and fees.
• More and more young people are attending college. In the decade from 2000 to 2010, the number of full time undergraduate students increased by 44%, from 7.9 million to 11.4 million. The number of part time undergraduate students increased by 27%, from 5.2 million to 6.6 million.
• Federal funding for higher education is rising, but state funding is continuing its freefall. In 2012-13, public institutions received 27% less per student in state funding they received five years earlier.
Eye on the Prize
Although the cost of sending your kids to college may not be as much as you expected, it still represents a great financial sacrifice in most families.
Furthermore, costs are likely to rise rather than fall in the years to come, with the number of students increasing and states reducing their financial support.
Nevertheless, college is worth it in long run. On average, people with a four-year college degree make a million dollars more over a lifetime than people with only a high school education or less.
College graduates also have lower divorce rates, better mental and physical health and longer life expectancies.
In the long run, it’s the best investment you can make in your child’s future.
Elizabeth Fishel and Jeffrey Arnett are co-authors of When Will My Grown-Up Kid Grow Up? Loving and Understanding Your Emerging Adult. Fishel is the author of four other books on families, including Sisters and Reunion. Arnett is a professor in the Department of Psychology at Clark University.