The cost of going to college can vary dramatically depending on where you go. The average cost of tuition and fees for the 2023-2024 school year is $42,162 at private colleges, $23,630 for out-of-state students at public universities, and $10,662 for in-state residents at public schools, according to U.S. News. Based on those numbers, the average tuition and fees to attend an in-state public college are nearly 75% less than the average sticker price charged at a private institution.
But should you choose a college based on price? Maybe. While there are a number of things you’ll want to consider when choosing a college, including its location, reputation, and even the vibe on campus, price is often near the top of the list for many families. Here’s a look at how to compare schools by cost, plus tips for making a school that seems economically out of reach more affordable.
Understanding Net Price vs Sticker Price
Choosing a college based on price begins with knowing what the actual price is. But this isn’t as simple as it sounds. That’s because there is a difference between the sticker price published by the college and the actual price you will pay if you are admitted to that school. Indeed, colleges with the highest sticker prices sometimes end up costing far less than a college with an affordable sticker price.
The sticker price is a school’s published cost of attendance (COA), including tuition, fees, room and board. It can vary anywhere from $3,000 to $75,000-plus. But don’t let those upper ranges frighten you off — few students end up paying the full sticker price.
Net price, on the other hand, is what you will actually pay. It is sticker price (COA) minus any financial aid provided by the college and the federal government.
Financial aid is based on financial need, a student’s merit (achievements), or a combination. Aid is offered in the form of grants, scholarships, work-study, and sometimes federal student loans.
Before you apply to a school, it’s a good idea to use the net price calculator available on the school’s website. This can give you a better indication of the actual cost of attending that college.
💡 Quick Tip: You can fund your education with a low-rate, no-fee private student loan that covers all school-certified costs.
3 Reasons to Choose a College Based on Price
While price likely isn’t the only factor you’ll want to weigh when choosing a school, here are some reasons why you may want to make it a key consideration.
You Can Avoid High Debt
The average student borrows over $30,000 to pursue a bachelor’s degree, according to the Education Data Initiative. Students who used their federal loans to attend public institutions owe an average of $27,884, while the average student who attended a private, nonprofit institution owes $40,607. Attending a lower-cost school can mean borrowing less, and graduating with a smaller student loan balance.
You’ll Help Your Parents Out
If your parents plan to help you with college costs, choosing a less expensive school can help them avoid having to tap their savings, home equity, or retirement to cover your education expenses. While there are many different types of student loans you can tap, there is no such thing as a retirement loan.
Along with using income and savings for college costs, parents might also need to take on private loans or federal PLUS loans to pay for your college education, which come with higher interest rates than federal student loans. Generally, it’s cheaper for you to borrow money for college than your parents. Plus, you’ll have more time to repay the debt.
You’ll Improve the Return on Your Investment
Return on investment (ROI) is a term borrowed from investing that tells you the average earnings you can expect when you compare the return to how much you invested. To consider ROI for a college degree, you need to look at how much you can expect to earn with your degree versus how much the degree costs. You likely won’t earn enough to offset the degree within one year, so you generally want to consider the potential return over 10 years.
The lower your college costs, the better the chance you’ll get a strong return on your investment. That means earning enough after graduating to justify the expense of attending school.
To figure out which schools have the best chance of setting you up for success, you might look at the U.S. Department of Education’s College Scorecard . It has key details including average net price, graduation rates, and typical salaries students earn after attending a college or university.
How to Lower the Cost of College
What you will have to pay to attend a particular college may differ from that school’s published cost of attendance. Here are some ways to significantly shrink the sticker price.
Fill out the FAFSA
Submitting the Free Application for Federal Student Aid (FAFSA) is a critical step when it comes to reducing the price of college. This form is a gateway to several forms of financial aid, including grants, scholarships, work-study, and federal student loans. Many colleges also use the FAFSA when awarding institutional (merit-based) aid, and some states use the form for certain state-based aid. So it’s worth filling out even if you don’t think you will qualify for aid.
Seek Out Local Scholarships
Submitting the FAFSA puts you in the running for many grants and scholarships. But there are other, smaller, sources of “free money” out there that can further chip away at the cost of college. You may be able to take advantage of local scholarships, which are typically offered by local organizations, nonprofits, or places of worship. You can do a national search for private scholarships using an online search engine. To find local scholarships, however, you may want to ask your high school guidance counselor what is available in your area. Some companies also give out scholarships to dependents of their employees.
Earn College Credits in High School
Taking Advanced Placement (AP) courses in high school and doing well on AP exams can help you save on college tuition. Some schools will award course credits based on AP scores, while others allow students with qualifying scores to place into higher-level courses, which could allow you to graduate a semester early.
Pay Less for a Four-Year Degree
You may be able to save on the cost of a four-year degree by starting at a community college for two years, then transferring to a pricier, four-year school for your remaining two years. However, you’ll need to make sure that the college you want to transfer to — and graduate from — will accept the credits from the community college. Some community colleges actually have reciprocity agreements with nearby four-year schools.
Pursue Federal Loans First
If you need to borrow money to pay for college, you generally want to tap all sources of financial aid, including federal student loans, before looking at private student loans. Then, if you still have gaps in funding, you might consider using private student loans ot fill them.
Available through banks, credit unions, and online lenders, private student loans typically come with higher interest rates than federal student loans and don’t offer the same borrower protections (like income-driven repayment plans and forgiveness programs). However, they come with higher borrowing limits. Typically, you can borrow up to the total cost of attendance, minus any financial aid received, every year, giving you more borrowing flexibility than you can get with federal government.
💡 Quick Tip: Federal student loans carry an origination or processing fee (1.057% for Direct Subsidized and Unsubsidized loans first disbursed from Oct. 1, 2020, through Oct. 1, 2024). The fee is subtracted from your loan amount, which is why the amount disbursed is less than the amount you borrowed. That said, some private student loan lenders don’t charge an origination fee.
The Takeaway
There may be many colleges where you’d be happy and thrive academically, so it’s important to narrow the possibilities into a manageable list. To do this, you’ll want to consider size, location, available majors, makeup of the student body, and, of course, price. Going to a more affordable college can mean taking on less debt, giving your parents a break, and improving your return on investment.
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
About the author
Julia Califano
Julia Califano is an award-winning journalist who covers banking, small business, personal loans, student loans, and other money issues for SoFi. She has over 20 years of experience writing about personal finance and lifestyle topics. Read full bio.
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