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Cost of College: Sizing It Up Beyond the Sticker Price

If college prices are sending chills down your spine, join the club. With the priciest schools charging over $40,000 in just tuition -- that doesn't even touch room, board or book costs -- financial planning for higher education can feel like a 24/7 anxiety nightmare. The good and bad news is that assessing whether a school is affordable goes far beyond looking at sticker price. Shake off your fears, take a deep breath, and read up on how to find out a school's real price.

Sticker Versus Net Price
When colleges advertise their tuition and fees, they are most likely lying to you... and that's a good thing. According to the College Board, the average advertised tuition and fees at four-year in-state public institutions was $8,893 per year; however, the average net price students actually paid was only $3,120. Since many private institutions have endowments that put public schools to shame, discounts there are even more dramatic. The typical four-year private nonprofit school boasts a price that tops $30,000 annually, but the average student pays less than half.

To give families a more realistic financial picture, the Department of Education requires that all schools participating in federal student aid programs include a net price calculator on their websites. The problem, says Kalman Chany, author of "Paying for College Without Going Broke," is that these net price calculators aren't standardized and can be off by up to $10,000 per year.

"Some take into account merit-based money, others don't," he says. "[Net price calculators] are not a reliable tool."

The National Center for Education Statistics takes a uniform approach to breaking down net prices of thousands of institutions according to income bracket. In addition to plugging your information into the school's net price calculator, prospective students and their families can head to to compare college prices.

Graduation Rate
Even if a school comes with a low net price, those savings fly out the window if it takes longer to graduate. Among the 650 schools chosen for Forbes' America's Top Colleges list last year, the average four-year graduation rate at private schools was just 59 percent. At public institutions, only 32 percent of students graduate in four years. Sticking around campus not only adds extra tuition and living expenses, it can also cost you grant money says Christine Wilcox, financial aid director at Florida Technical College in Kissimmee, Fla.

"If you're jumping schools and you're doing this for years and years and you've not decided what you want to do, your Pell Grants are going to run out," she says.

Students attending four-year colleges are eligible for the Pell Grant for up to six years, but many private and institutional scholarships are only renewable for up to four years.

Some students take longer to graduate because they add internships, practicums or study abroad trips to their academic calendars, but transferring and changing majors can also add semesters. Those factors can be sidestepped with a bit of planning, says Denata Williams, a financial aid advisor at Albany State University in Georgia.

"One thing I do suggest is try to do a campus visitation. See what you're getting yourself into before you actually start the [application] process," she says. "Also try to talk with some of the alumni that have graduated from the institution to see how the institution has benefited them."

Williams also recommends that students have some idea of what they'd like to study prior to enrolling, and if they change their mind, to switch majors no later than sophomore year. College Navigator publishes information on six-year graduation rates and transfer rates at schools across the country.

Cohort Default Rate
A college really isn't affordable if graduates can't pay their loans back after leaving campus. Some institutions publish job placement rates, but these figures often don't distinguish where students are working or if they're earning a living wage. A better metric for assessing if the debt will be worth it is to look at a school's cohort default rate, which measures how many students default on their loans within a certain time period, explains Betsy Mayotte, director of regulatory compliance for the student debt education group American Student Assistance.

"[A high default rate] can be the canary in the coal mine to indicate that graduates are having trouble finding jobs in their field, or that the jobs they're getting are underpaid in comparison to the debt that they have to take out in order to complete their education at that school," she says.

Nearly 15 percent of federal loan borrowers default on their loans within three years of leaving school, reports the Department of Education.

Gary Carpenter, a CPA and executive director of the National College Advocacy Group, says that students can set themselves up for success by keeping their debt low.

"I often say 'let's not borrow more than one year's worth of college costs,' " he says. "That's hard for a lot of families."

The original article: Cost of College: Sizing It Up Beyond the Sticker Price appeared on

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