The Hidden Costs of College

So you’re ready to start looking at colleges.  Congratulations!  You may have dreams of becoming a writer, a welder, a politician, or a musical instrument repair technician.  Maybe you are considering some field in science – or maybe you haven’t a clue yet what you’re looking for in a career.  Your choice of the right college – and how to finance your education – will have ramifications for your career and the rest of your financial life.

College costs have escalated over the past two decades, and more and more students are relying on student loans to cover the costs.  So it is more important than ever to carefully consider the costs of college, your anticipated career income, and how to best finance those college expenses. It is important to consider the costs beyond tuition, room and board, and books, in order to get a more realistic estimate of total college expenses. In this lesson, you will research the cost of attending two colleges of your choice and learn about hidden costs that are often overlooked when preparing a budget for college.

1.  This is the first of two related lessons. You will need to research the costs for different colleges before deciding where to enroll.  Of course you should consider the academic program, the quality of professors, the preferred size of the school, distance from home, career placement rate, likelihood of graduating on time, and other important criteria.  But the cost can often be the deciding factor in selecting a college.

It is important to remember that tuition is not the only cost of college.  Often, the costs of room and board in a dormitory can outweigh tuition.  Then there are the other costs that colleges add to the bill to cover technology, health care, construction projects, parking, and other expenses.  And then, of course, there are the costs of maintaining a social life. If hidden costs such as transportation are overlooked, it is more difficult to plan for college expenses. Learning to estimate the hidden costs will allow for more accurate comparisons between schools.

2.  Brainstorm some of the costs that you may encounter, which aren’t included in the “sticker” price of your school (published tuition and fees).  If you have trouble getting started, consider whether you plan to go to school in another state and go home to visit family on holidays, or what sort of social life you expect to have.  Then look at the Hidden Costs of College worksheet to see costs you might not have considered, such as laundry, transportation, inflation, or changing majors.  The worksheet can be found at:  https://www.edvisors.com/plan-for-college/money-saving-tips/beware-of-hidden-college-costs/ .

3.  Consider this actual bill for Emily, who attends a major state university as an in-state student.

By focusing only on tuition, Emily would have missed more than half of the cost of one year of college.  Then there are the costs specific to the academic program you choose.  Count on $1,000 or more per year for textbooks.  You may also face lab fees, instrument rental, supply charges, parking fees, and other costs for classes.  If you attend school out of state, expect the tuition to double or triple.  Beware penalties that can add up; Emily faced a $70 fee for registering for classes after the deadline and an additional $17 for dropping a class.  Some colleges even charge a fee for paying by credit card rather than check.

Calculate the percentage of the total cost that Emily will spend on the dormitory.

Now estimate some of the hidden costs Emily might need to add to her cost of attending college for one year.  Are these hidden costs more than $1,000 per year?

4.  Now let’s look at Josh’s college costs.  Josh is attending a community technical college and will be living in an apartment.  Consider his actual bill.

While Josh’s tuition at the technical school is significantly lower than Emily’s at the major state university, Josh faces the cost of tools.  Apartment rental and food costs can vary widely among regions.  One other obvious consideration is how many years you expect to remain in school to achieve your desired certification or degree.  While some technical programs require only months or a year, advanced degree programs may require many years of school.  And many students take five or more years to complete a four-year degree program.  Other students will begin their studies at a community college and later transfer to a four-year college. It is very important to consider all of the costs in making a choice of colleges and universities.

Calculate Josh’s tuition for the second year if the school increases tuition by 5%.

5.  You will now have an opportunity to look at the costs to attend two colleges or universities you would consider attending.  Visit the college’s website or go to https://nces.ed.gov/collegenavigator/ to look up tuition and fees.  Use the information to complete the center column of the table below.  Then use the same procedure to find a second school and put the information in the right column of the table.

The “sticker” price of the college is not what most students actually pay.  The average net price that students pay is usually substantially lower because many students receive financial aid.  For the purposes of this lesson, however, we will use the sticker price because the net price depends on a number of variables such as family income and number of siblings in college. 

Many students are surprised by how much a year of college will cost, and most students will realize that their families will not have enough cash on hand to pay these bills.  Now that you have information about the costs of college, you’ll need to consider how to finance your education, which is the focus of the next two lessons.

It’s very important for you and your parents to sit down and research ALL the costs of attending college, not only tuition and room and board.  Having a realistic idea about the actual costs is the first step toward creating a workable plan for financing your college education.

Refer to the table you completed in Procedure 5. Identify the tradeoffs involved in choosing each of the schools and conduct a cost-benefit analysis for each school.  Then write a paragraph explaining which college seems to be a better value.  Write a second paragraph explaining why a student might choose a school whose "sticker price" does not appear to be a better value.  

You can work with your parents to calculate the estimated net price of attending college.  The College Board Net Price Calculator at https://professionals.collegeboard.org/higher-ed/financial-aid/netprice/participating-schools?excmpid=mtg382-st-1-mat bases the estimates on parents’ financial records, test scores, and GPA. Please note that not all schools participate in the Net Price Calculator.