Before College: Net Price — The Key to Selecting an Affordable College or University

Prices posted for this year at private non-profit colleges and universities average out to $52,900. That’s more than twice the $25,290 average of prices posted for this year at public colleges and universities. Clearly, public institutions are generally more affordable pathways to bachelor’s degrees than private institutions.

But there are exceptions.

For example, we compared average net prices for 2016-17 in-state, full-time, first-year undergraduates at 30 Public Ivy League universities to average net prices for the same type of students at 15 top-ranked private nonprofit universities, including the Ivy League schools. Interestingly, net prices were lower in 17% of these comparisons at the private nonprofit universities.

Private nonprofits work particularly hard to keep their net prices low. Every year, Ken Redd of the National Association of College and University Business Officers (NACUBO) surveys the discounts such colleges and universities provide. In 2017-18, he learned their freshman discounts averaged 49.9% of their freshman tuition charges, while their discounts for all undergraduates averaged 44.8% of their undergraduate tuition charges.

Discounts? Net prices? Anyone who’s purchased an automobile is familiar these, at least in practice. Dealers post sticker prices on their cars, then haggle with customers about how much to shave off, or discount, those sticker prices. Remaining amounts are net prices — i.e. what customers actually pay for the cars.

Colleges and universities don’t “haggle” about “how much to shave off” their sticker prices, but they often award gift aid (grants, scholarships, and tuition waivers) that can discount their sticker prices — making them the net prices students and their families pay.

Important! Postsecondary institutions, public or private, usually don’t discount equally. College recruiting strategies typically call for applying more institutional gift aid to achieve lower net prices for students they want than for students they don’t want.

To find net prices:

1. Past behaviors are the best predictors of future actions, even by postsecondary schools. So use the federal government’s College Navigator to identify net prices in recent years when selecting institutions to which a student may apply for admission. Be sure to adjust for nonresident tuition and fees for schools outside your state;

2. Apply for all the gift aid available from federal and state governments, private parties and institutions to which students apply; and

3. When financial offers arrive, calculate freshman year net prices. If any gift aid listed in these offers is renewable, estimate future year net prices, too.

Always figure out the net price of any college or university your student may attend. Doing so is the key to making even the highest-quality postsecondary education more affordable!

Contact College Affordability Solutions if you need help figuring out how affordable one or more postsecondary schools will be. Our consultations are always free for students and parents.

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