In our article What Is the REAL Total Cost of Graduation for College Undergrads, we revealed how the total cost of graduation could be quite misleading if you look only at the tuition and fees associated with attending college.
For example, with a projected 4-year average cost of $134,600 for private colleges versus $36,400 for public in-state universities, it would appear that it is a better financial decision to attend a public school over a private one.
However, assessing the total cost of graduation is more complex than just crunching tuition numbers. Other factors include the school’s graduation rate, tuition for extra years that are required to complete your degree, and lost wages from not entering the workforce sooner.
When these and other public-private differences are factored in, it becomes clear that you should not assume that public institutions are cheaper in the long-run.
To demonstrate this, we have provided some hypothetical situations to show you how it works.
However, before we get to that, let’s provide some basic explanations of the statistics that will be presented:
- Tuition and Fees: The cost of attending the school for one year (education fees only).
- Total Price for an In-State Student: Cost for one year that includes tuition and fees as well as the cost of on-campus housing, books, supplies, and other campus expenses.
- Percentage of Undergrads Receiving Financial Aid: Includes any financial aid including grants and loans.
- Average Net Price After Gift Aid: The average cost per year after financial aid gifts (which do not have to be paid back) are deducted.
- 4-Year Graduation Rate: Percentage of full-time students who complete their degree in four years.
In addition to these statistics, we factor in the average annual increase in college costs. Statistics show that public schools increase prices at a rate of 3.6 percent per year, while private schools increase by 2.4 percent per year.
We also use the statistic that a student’s average starting salary is $49,900. These wages will be earned in Year 5 if a student graduates in four years, but will be forfeited if they need extra years to finish their degree.
Larry and Lauren – Studying Literature in Picturesque Northern New York
Larry and Lauren are high school students with similar academic backgrounds living in New York State. Each has a deep love of English literature and are looking to channel their inner Henry David Thoreau in a quiet rural area, surrounded by nature and fresh air.
Larry has decided to go to SUNY Potsdam, a state university located in Potsdam, New York with about 3,800 full-time undergraduate students, 10.7 percent of whom have also selected English language and literature as their major. Here are the numbers:
- Tuition and Fees (1 year): $6,800
- Total Price for an In-State Student (1 year): $20,200
- Percentage of Undergrads Receiving Financial Aid: 73%
- Average Net Price After Gift Aid (1 year): $13,400
That’s an overview of Year 1, but let’s figure out how those numbers add up after four years, with the 3.6 percent average annual increase factored in.
- Year 1 Net Price: $13,400
- Year 2 Net Price: $13,900
- Year 3 Net Price: $14,400
- Year 4 Net Price: $14,900
- 4-Year Estimated Price (Total): $56,600
Meanwhile, Lauren set her sights on St. Lawrence University, a private school in nearby Canon, New York. The school has about 2,400 full-time undergraduates, 8.4 percent of whom are also majoring in English language and literature. The numbers:
- Tuition and Fees (1 year): $44,400
- Total Price for an In-State Student (1 year): $57,500
- Percentage of Undergrads Receiving Financial Aid: 86%
- Average Net Price After Gift Aid (1 year): $28,600
With this overview of Year 1 in mind, let’s figure out the cost for all four years with the average annual increase for private schools – 2.4 percent.
- Year 1 Net Price: $28,600
- Year 2 Net Price: $29,300
- Year 3 Net Price: $30,000
- Year 4 Net Price: $30,700
- 4-Year Estimated Price (Total): $118,600
Looking at the numbers, it would appear that Lauren, at her private university, will pay over double the amount that Larry will pay at a public school. However, there are still other factors that go into the total cost of graduation.
4-Year Graduation Rate
- Lauren’s private school: 76%
- Larry’s public school: 32%
Of course, we are all rooting for Larry to ‘beat the odds,’ but there is a good chance that Larry will need one or possibly even two additional years of study to graduate. Therefore, we must add another year of study, and with the 3.6 percent annual increase, Year 5 will cost an additional $15,400. This makes his total cost of graduation $72,000.
Meanwhile, Lauren is far more likely to graduate within four years. In Year 5, while Larry is racking up extra costs, Lauren can find a job and earn a salary. With the average starting salary of $49,900 subtracted from her 4 year costs of $118,600, her total cost becomes $68,700.
Lauren’s total cost of graduation from a private school is, therefore, actually less than Larry’s cost of graduation from a public school.
But unfortunately, it could get worse for Larry. If he, in fact, needs a sixth year to complete his degree, he will owe another $15,949, meaning that his total cost of graduation will balloon to $87,759 – even more than Lauren.
Meanwhile, Lauren will enjoy a second year of wages, she will no longer be accruing financial aid debt or accumulated interest on those loans, and so when all is said and done, she will put even more pennies in her pocket.
Total Cost of Graduation for You
The hypothetical story listed above demonstrates that you should not jump to the conclusion that a public university education will necessarily be cheaper than one from a private or liberal arts school.
The key is to look at more than just tuition and fees when you are determining what the total cost of graduation will be: not only on-campus living expenses but also the cost of extra tuition beyond four years, the chances that you will graduate on time, the money you will make if you graduate on time (or lose if you don’t), added fees and interest, and more.
Stay tuned for another article that shares the path of Selena and Sam, two students heading off to Chicago to study the social sciences and what they discover about the real total cost of graduation.