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Net College Costs vs. List Price
Old 01-15-2010, 03:59 PM   #1
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Net College Costs vs. List Price

A few weeks ago I started a post on college costs--since then, there has been at least one more started. Hot topic!

My son applied early action to several schools, so recently he has started hearing back on the schools' decisions. Four of the schools he has been offerd admission to are smaller liberal arts colleges in the midwest---schools with good reputations, but they may not be known as well outside the midwest. (So these are not natioanlly recognized high-powered schools like Duke, Penn, etc.) In addition he has heard back from State U, as well as one "major" well known private liberal arts college with a strong academic reputation (along the lines of Amherst). As I mentioned in the my earlier post, he is a pretty decent student, so I suspected that he would get some merit based aid offers--he got offers everywhere except from the "major" college. (Again, no surprise---I think some of the smaller less known schools have to offer $ to attract better students, whereas the better known schools know they have a virtually infinite demand for admission, so unless you are truly exceptional, they aren't going to offer any merit based aid.) The chart below shows a comparison between the list prices and the net prices for the schools to which he has been accepted after factoring in the scholarship $ he was offered.

List Price(Tuition/Rm/Bd) Scholarship$ Net Price % Discount
Pvt College 1 $40,419 $17,000 $23,419 42%
Pvt College 2 $41,990 $17,000 $24,990 40%
Pvt College 3 $38,516 $16,000 $22,516 42%
Pvt College 4 $37,850 $13,500 $24,350 36%
State U $12,832 $ 7,250 $ 5,582 56%
Major College $46,902 - $46,902 0%

Assuming he keeps his scholarships for all 4 years, I thought that the net costs for the smaller schools were reasonable in relation to the cost of State U. I think the price of the more elite liberal arts college is ridiculous--higher base price, no discount, 9x the price of State U. If he goes to the school with the high price tag, he is going to have some funding issues, as we won't be paying for the whole thing. I assume he will be leaving school with some significnat debt.) If he goes to State U, he will basically leave college with cash in his hand, and if he goes to the smaller liberal arts colleges, he leaves without cash, but no debt. I think he is leaning to the smaller liberal arts schools.
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Old 01-15-2010, 04:50 PM   #2
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My impression is that less than half of undergraduates pay full list price for their college degrees.
Here is a poll that hints at this:
Bogleheads :: View topic - Did college cost you full list price?
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Old 01-15-2010, 10:40 PM   #3
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My antidotal evidence supports LOL!'s contention.

Many of the better students at my kids' HS were offered tuition breaks by the 2nd tier private schools. (A couple of students were accepted at Stanford and and some of the Ivy league schools but I don't know the situation there.)

This frequently reduced the costs to near that of the competing state (UC) schools.

Also, you can negotiate with them!

One student I know was accepted at a private school but told them that the costs were too high so the school reduced them. The student then told them that the costs were still too high and the school reduced them a second time.

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Old 01-16-2010, 09:05 AM   #4
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This is consistent with our experience with three kids. If you don't qualify for "needs based" aid, then higher you go on the "prestige" ladder, the higher your net cost.

I have two who could have gone to the local state U for nothing, but neither would get any merit aid from an ivy. The intermediate schools lined up pretty predictably.

I'll bet that all the schools on your list advertised "Don't be scared by the tuition, most of our students get financial aid". But, none of them would give you any meaningful aid statistics before you applied.
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Old 01-16-2010, 01:33 PM   #5
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Quote:
Originally Posted by stephenandrew View Post
Assuming he keeps his scholarships for all 4 years, I thought that the net costs for the smaller schools were reasonable in relation to the cost of State U. I think the price of the more elite liberal arts college is ridiculous--higher base price, no discount, 9x the price of State U.
What I don't understand is what is the advantage of a non-elite private college over the typical State University? Poorly funded as many state schools are, small private schools are usually even worse. The breadth of offerings is much less in smaller private schools, and the small schools are often in pretty dull out of the way spots.

It is easier to get out in 4 years in most private schools, as the popular majors in big state universities often present scheduling problems. Big deal, work opportunites are more abundant in the cities where these big schools are often located so the student can get some maturity and some work experience while s/he works toward the degree.

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Old 01-16-2010, 08:49 PM   #6
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Originally Posted by haha View Post
What I don't understand is what is the advantage of a non-elite private college over the typical State University? Poorly funded as many state schools are, small private schools are usually even worse. The breadth of offerings is much less in smaller private schools, and the small schools are often in pretty dull out of the way spots.

It is easier to get out in 4 years in most private schools, as the popular majors in big state universities often present scheduling problems. Big deal, work opportunites are more abundant in the cities where these big schools are often located so the student can get some maturity and some work experience while s/he works toward the degree.

Ha
A few thoughts---one, for what it is worth, one of the smaller schools to which my son was acepted actually has one of the largest endowments per student in the country, so to the extent that is a measure of a school's finanical reosurces, that particualr school does well. The advantages of the smaller schools--a few things come to mind---smaller classes, classes taught by professors dedicated to teaching as opposed to professors who are primarily at a University to do research and have to teach, or classes taught by graduate students, more of a sesne of community, etc., etc. I think State U has some advantages too---many of the things you mentioned.
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Old 01-16-2010, 09:38 PM   #7
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Originally Posted by haha View Post
What I don't understand is what is the advantage of a non-elite private college over the typical State University? Poorly funded as many state schools are, small private schools are usually even worse. The breadth of offerings is much less in smaller private schools, and the small schools are often in pretty dull out of the way spots.

It is easier to get out in 4 years in most private schools, as the popular majors in big state universities often present scheduling problems. Big deal, work opportunites are more abundant in the cities where these big schools are often located so the student can get some maturity and some work experience while s/he works toward the degree.
I feel pretty much the same way. Looking at the cost differential from stephenandrews experience, small liberal arts school vs state school appears to be a $75,000 decision over the course of 4 years. Closer to $100,000 if it takes 5 to graduate. Does that factor in cost of living while attending university? Private schools often charge more for room/board and your peers are wealthier, hence a need for more beer/champagne money.

And I went to two of the larger state schools (each with many tens of thousands of students). In undergrad, most classes were small enough where you knew everyone's name. In my specific discipline within on of my degree programs, there were only maybe 20 folks for each year (20 juniors, 20 seniors, etc). Three professors taught all the core classes in this degree program, and they knew all the active students on a first name basis. The other degree program was even smaller and more close knit.

Our dorm room suite had 4 rooms x2 people per room = 8 very close friends/acquaintances. So big school breaks down into small units in practice.
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Old 01-17-2010, 08:47 AM   #8
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You said "he is a pretty decent student", and that tells me that he should stay away from the high price tags. If he is in a very competitive high school, and in the top quintile, then he may have been prepared for what is in store.

One of my kids, a boy, was able to move 6 hours away, and find his way through the tough times. He worked full-time, and negotiated lower tuition each year. Girl struggled, and frankly, the money was dragging us down. Fortunately she made own decision to come back. She will now go to the local state school, and commute.

My suggestion is to look at the non-financial side of this. The emotions, the drag on your family when you visit, etc.
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Old 01-18-2010, 02:08 AM   #9
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he is a pretty decent student, so I suspected that he would get some merit based aid offers
I wonder what I am doing wrong. Son is more than just a decent student, with a pile of state academic awards and even a couple national ones in different (unrelated) subjects. State U offered no scholarship of any kind and all of the private schools we talked to (not a lot, but some pretty good ones) said their scholarships are 100% need based. Do I need to dig deeper?
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Old 01-18-2010, 12:30 PM   #10
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I wonder what I am doing wrong. Son is more than just a decent student, with a pile of state academic awards and even a couple national ones in different (unrelated) subjects. State U offered no scholarship of any kind and all of the private schools we talked to (not a lot, but some pretty good ones) said their scholarships are 100% need based. Do I need to dig deeper?
I had pretty good academics going into State U and didn't get anything 1st year. But all the scholarships I applied for during my first year paid off big in the second and third years of college. Got about 11 during those 2 years ranging from $1000-$10,000 and was paid well to stay in school. So there may be hope for your son later on in his college career.
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Old 01-18-2010, 01:25 PM   #11
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Originally Posted by growing_older View Post
I wonder what I am doing wrong. Son is more than just a decent student, with a pile of state academic awards and even a couple national ones in different (unrelated) subjects. State U offered no scholarship of any kind and all of the private schools we talked to (not a lot, but some pretty good ones) said their scholarships are 100% need based. Do I need to dig deeper?
I'm not sure how you define "pretty good". Here's an older (2003) article about Washington University in St. Louis.

Quote:
With one of the most liberal uses of financial incentives for academic achievers among the top 20 universities, Wash U. is open about its reliance on what is typically called merit aid to compete with the elite schools in the recruitment wars.
"It's something that helps people pay attention to us,...

But could the university fare as well without merit aid, a strategy that neither the Ivy League, Stanford, the Massachusetts Institute of Technology nor several other elite universities employ?
...
Washington University is hardly the only highly ranked university to give merit aid to top students who may not need help to pay for school -- Vanderbilt, Rice and Emory all devote a greater share of their financial aid budgets to the same end -- but the issue has become a volatile one among elite institutions.
The New York Times spotlights WUSTL's rapid ascent to national elite

Are you looking at Top 20 national universities? or moderately selective schools?

As I mentioned in an earlier post, I have a pet peeve about the lack of good statistics on financial aid. I think you ought to be able to get numbers like percent qualifying and average award on every college website.
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Old 01-20-2010, 03:12 AM   #12
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State U here is a pretty good school and probably top 20 in his likely areas of interest. Other schools he would consider would have to be in that class and have some other advantage to be worth going there. A significant merit award might do that, but no one we talked to had such a program.

I don't see any advantage to getting a merit scholarship to bring the price of an expensive school down to State U level, only to enroll there in a program that wouldn't provide as good an education as the State U would have. Outside his main field of interest, it's possible that the named school has greater name recognition, but in his field that State U would be hard to beat. Not that it matters, since the schools on his list all claimed to be need based only.
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