As college costs rise, sticker shock eased by student aid
Wednesday, February 10, 2010
If the $50,000-a-year price of a prestigious private college looks unreal to most families, well, it's not real. At least, not for most students.
The sticker price of private college has soared in the past five years, feeding a common perception that the most expensive schools are beyond the reach of most families. But net price -- the amount the average student actually pays -- has declined.
The higher education marketplace increasingly resembles a mall on the day after Thanksgiving. The published price of a college education has spiraled far above what the average student pays after subtracting grants, tuition discounts and tax benefits.
Published tuition, fees and living expenses at private nonprofit colleges average $35,640 in the 2009-10 academic year, according to the definitive annual report Trends in College Pricing by the nonprofit College Board. But net price averages $21,200. Adjusted for inflation, one has gone up. The other has gone down.
"The price, on the surface, is more than a middle-income family can pay," said Alison Rabil, assistant vice provost and director of financial aid at Duke University. "But we're not asking families to pay that amount."
College finance has grown increasingly complex. The phenomenon of rising sticker price is partly a marketing trick, partly a tool to redistribute the costs of college across income levels.
Tuition and fees have risen by nearly one-third at private nonprofit colleges since fall 2004, or 15 percent in inflation-adjusted dollars. But aid has risen faster.
The difference between sticker price and net price "may be the single most misunderstood fact" in higher education, said David Warren, president of the National Association of Independent Colleges and Universities. "Net tuition is only 45 percent of the advertised tuition. That's a pretty significant difference."
The most selective, well-endowed colleges dispense ever-greater sums of grant aid according to need -- and rising tuition has broadened the definition of need. At the most expensive colleges, the term now applies to families making $200,000 a year.
With a household income of about $100,000 and his family's home in foreclosure, Nicholas Parks didn't know whether he fit George Washington University's definition of need. As Parks approached college admissions season last winter, GWU was a $53,000-a-year dream school.
"I didn't really have my heart set on it," he said, "because I didn't think I'd be able to afford it."
The school rewarded his dream with $35,000 in grants, covering most of his tuition and fees, leaving the Parks family to handle room and board, books and car fare from Fairfield, Conn. Parks, 18, is midway through his freshman year.