How Much You Pay For College May Depend On Just One Thing

According to Bloomberg News, the price of a college education has risen 1,178% since 1978 — more than 4 times the rate of inflation during the same time.  iStock_000020002942_ExtraSmall

After working with families on their college and retirement planning for the past 20 years or more I believe the single biggest factor determining how much you pay for college may depend on just one thing (drum roll please):  the school your student chooses to attend.

How much you pay depends on where they stay

Of all the factors you consider when calculating the cost of your student’s college education, the decision of where they go to school is probably the biggest single factor determining how much you will pay for college.

I know this sounds obvious. An Ivy League education probably has a higher price tag than your local state college. But it becomes less obvious when you consider how schools assess your student and your family for purposes of determining financial aid.

Need-based financial aid

Some schools focus their financial aid dollars on students who have the greatest financial need. In fact, many of them claim to meet 100% of a student’s financial need. This means that regardless of the advertised “sticker price” of the school, they will put together a financial aid package that will try to meet 100% of your family’s financial need, usually through a combination of grants, scholarships, student loans and work-study opportunities.

For some families this may mean that a high-end, exclusive private school education might not cost any more than a state college or university. In fact, depending on your financial situation an expensive private school education might actually cost less than your local pubic college.

For other families that same school could cost over $55,000 per year – every year. With inflation, that could total up to $250,000 or more for an undergraduate degree.

Merit-based financial aid

Other schools focus their financial aid dollars on students who have the best academic merit. They seek students who have the best grades, ACT scores and other criteria and may offer significant merit-based financial aid as a way to entice them to attend their school. For families with high income or assets these schools may offer substantial savings over schools that focus on need-based aid.

Merit-based financial aid awards vary from school to school and student to student, but they can range from a few hundred dollars at state colleges and universities to $20,000 or more at some of the more expensive private schools.

According to the MN Office of Higher Education, the average cost of a private school education in for the 2012-2013 school year was $33,373 . Plan on up to $10,000 more each year for room and board, books, and personal expenses. However, when you factor in merit-based scholarships, some private colleges and universities could cost half as much as those that focus on need-based financial aid.

At The College of St. Benedict, for example, a student with strong academic credentials may qualify for renewable, merit-based financial aid of between $5,000 for the Dean’s Scholarship to upwards of $20,000 for the Trustees’ scholarship. In addition, there are other scholarships based on music, leadership and other criteria that your student could apply for. (Source:

Government-based financial aid

Unlike many of the private colleges and universities, public colleges and universities get much of their financial aid money from the federal or state government; what I call the “government-sponsored, need-based financial aid” that many families may not qualify for. The Pell Grant and the MN State Grant are good examples of this type of financial aid.

The good news is that the sticker price at public schools is often much lower than private schools which offer merit or need-based financial aid. In Minnesota, our state colleges and universities range from about $15,000 at a school like Winona State to as much as $25,000 at The University of MN. In addition, many of these schools offer both need-based and merit-based financial aid opportunities.

For more information

To determine which schools will offer the best financial fit for your student visit the website of the schools your student wants to attend.  Other resources include the College Board,, and the MN Office of Higher Education, If you need more information than that, email me directly at

How do you plan to pay for college?

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