What Determines the Real Cost of College?
The real cost of college is different than the the institution’s stated tuition and fees or what we might call the sticker price. You also have your expenses for the year (things like room and board, books, transportation costs and, with some schools, the price of a computer is considered part of the cost of attendance). In addition, you also need to understand what other things go into calculating your real cost. Here at eduLaunchpad.com, we look at 4 primary factors in order to calculate the real cost of college:
4 Primary Factors Influencing the Real Cost of College
- The Stated Tuition and Fees plus Expenses (Room and Board, Transportation, etc.)
- Free Application for Federal Student Aid & other financial forms
- College Financial Track Records
- Student Appeal
College Tuition and Fees
Effectively, the stated tuition and fees is the dollar value that a university ascribes to a student's one year experience at that institution. This is the sticker price, although just like the sticker price on a car, rarely does anyone pay sticker price. Believe it or not, I have actually seen examples where the college actually paid the student to go there. It's rare, but it can happen.
The Free Application for Federal Student Aid (FAFSA) and Other Financial Forms
The Free Application for Federal Student Aid – FAFSA in case we haven’t reminded you enough – is a government form used to collect demographic and financial information about you and your family and help determine for which different types of financial aid you qualify.
Often the completion of this application will get you started on your quest for financial aid although some institutions require you to complete additional forms. Typically, these forms must be filed annually starting the year before the student enters college. It is critical that these forms are filed accurately and in a timely fashion. Schools will have their own deadlines for filing these forms, and if you miss a deadline, it can cost you thousands of dollars. Let’s repeat that.If you miss a financial aid form filing deadline, it can literally cost you thousands of dollars.
College Financial Track Records
A university’s financial track record is the most important factor influencing the real cost of college and is probably the least well known by people searching for colleges. A college’s financial track record is essentially a snapshot of how that school has historically awarded financial aid and the composition or form of that assistance. An institution’s financial track record is comprised of three values:
1. Percentage of Student Need Met
2. Percentage of Free Money
3. Percentage of Self-Help
The Percentage of Student Need Met indicates how closely the school award matches the award you’re eligible to receive based on information within the FAFSA form and other financial forms. The closer this value is to 100% the better.
The Percentage of Free Money is how much of the money received by you is in the form of gift aid, grants and scholarships, i.e. money which you don’t have to repay. Again, the closer to 100% the better.
The Percentage of Self-Help is the flip side of free money. It represents how much of the money awarded to you is in the form of work-study or loans. You either work it off now (work-study), or you work it off later (loans). The closer this number is to 0% the better.
Though somewhat vague, this is actually a measurement of how you compare academically to the rest of your selected university’s incoming freshman class. One of the easiest ways for colleges to compare students is to use your ACT or SAT score. Because higher education is a business, the colleges and universities want to attract those students who they believe have the best chance of succeeding (and ultimately endowing them with lots of money when the student retires). For this reason, colleges will frequently provide more generous awards to students who place in the top 25% of the incoming freshman class while students in the bottom 25% typically do not receive as generous a financial package. In other words,
Above average students get above average awards, average students get average awards, and below average students get below average awards.
You get the picture. Have we made the case for doing well on your ACT or SAT yet?