Well, there’s the sticker price…

Any discussion of college affordability needs to begin with the Cost of Attendance (COA), a.k.a. the sticker price. Each institution designs a sticker price based the average package an incoming student purchases. Think of it like car shopping and looking at the mid-range model, before extras are added on or downgrading to a less expensive model. The COA is the average package, and while minor features may vary, you still won’t be too far off the sticker price until you start to talk major discounts (which equate here to financial aid and merit scholarships). But that’s another discussion. Here, we are focusing on the sticker price, or COA.

All US colleges and universities are required to list their COA on their web sites, broken down between direct and indirect costs.

Direct Costs

The mid-range model (i.e. the school’s published COA) comprises three categories: tuition and fees, housing, and food. The school will send you a bill, which you will pay directly to the school; hence the term “Direct Costs.”

While the direct costs might sound fairly straightforward, and remember the published COA will provide a nice round number, they can actually vary quite a bit. For example, a university might offer several different rooming options (say, standard dorms and college-owned apartments) each at their own price points. Likewise, many schools offer a variety of dining plans to accommodate students who prefer to grab or make some of their own meals.

Even fees can be variable, such as those based on your major (lab fees are fairly common for science and engineering majors). Other common fees are activity fees, school health insurance, and technology fees. Some of these other fees, too, may not apply to you. For example, the online student may not need to pay an “activity fee” for resources and services that they will never use, or the student with good health insurance may not need to pay for the school’s health insurance.

So, even though the school web site lists an average price for the direct costs, individual students may choose less expensive features or negotiate out of some of the fees that don’t apply to them.

Indirect Costs

As with the Direct Costs, the published prices for Indirect Costs are based on averages. Nonetheless, each school is required to list the average costs of three categories of indirect costs:

Books, materials, supplies, equipment, etc.
Transportation: to and from the school each semester as well as while living at the school
Personal/Miscellaneous: think toiletries, snacks, laundry, seasonal clothing, nights out, recreation, etc.

Because the student sources these goods and services on their own, these costs are not included in the university’s bill; hence the term “Indirect Costs.’”

Indirect costs vary even more wildly than direct costs. Some majors, for instance, require expensive equipment (think lab sciences or art) that other majors don’t need to consider, and transportation costs will ring up very differently for the in-state student just a couple hours drive away than for the student flying in from across the country.

… and there’s the net price.

Despite the variability of individual features, like housing plans and transportation costs, it is unlikely that the full Cost of Attendance will veer too wildly from the published COA.

And some of those COA numbers are eye-popping, over $90,000 each year! Quite a far cry from the $600 a year the University of Pennsylvania charged in 1950 (the equivalent of about $6,000 today).

The good news is that most people today do not pay the full sticker price: in fact, just 39% of public school students and 23% attending private schools do so. These statistics are not pulled from following individual families to see how much they managed to nickel-and-dime themselves down from the COA. Instead, the majority of students today are offered financial aid packages that reduce the sticker price to the amount you actually pay for college, a.k.a. your Net Price.

As with the COA, every college is required by law to host a Net Price Calculator on their web site that will allow a family to guesstimate their likely Net Price based on how much they make in income and how much they hold in assets. It’s a very good idea to use the Net Price Calculator at each school you are considering and make sure that at least a few affordable schools are on your list.

Do note, though, that the Net Price Calculator will return an educated guesstimate and not your actual financial aid offer from a school. Each year, a school might have certain priorities it needs to fulfill (say, more tuba players or more students from Idaho) that will prompt the school to adjust their offers a bit.