Colleges break down college costs one year at a time. Good right? Well maybe. Why is it that so many colleges sell college one year at a time when it typically takes 4 years to get a bachelor's degree? We want to discuss some of the reasons why colleges are scared to sell 4-years of college costs to students and their families and discuss how you can inform yourself of the entire costs for a degree to make better informed decisions.
Adding in College Financial Fit
Most colleges focus applicants on academic fit and social fit. Both are essentials to a college decision, and the colleges themselves feel comfortable communicating their academic and social features when selling students their college experience. When it comes down to talking about financial fit, many colleges are not as comfortable. Yes, they have a webpage that lists their college costs. Yes, they have a
net price calculator on their website to meet the federal requirement. Yes, they outline how and when to apply for financial aid. But do all of these tools jump out to families as letting them feel comfortable with the financial fit? Often not.
What we know is that families are worried about college costs. In fact for many families now, college financial fit has equal, if not greater importance. Studies like the
College Savings Foundation’s annual “How Youth Plan to Fund College” show that 83% of students say college affordability is a factor in deciding which college to attend. Parents are worried too. Roughly two-thirds of parents of college-bound students are more worried about paying for their child’s college education
in the wake of the pandemic, according to a
report by Discover Student Loans.
Some colleges say they are doing just that by promoting their net price calculators, having aid offer comparison tools, and sending student loan repayment calculations to help families to see one year of the college’s financial fit. These tools can be great ways to assess one year. But how many extrapolating on the one year’s costs to show the entire costs until degree? Very few. Plus, few of these show what college costs break down to on a monthly basis so that a family can determine how it fits into their monthly budget.
Graduation Rates Are a Factor
Don’t colleges expect students to attend until they complete their degree? Colleges may only be selling one year at a time because they don’t want to face up to the percentage of their students who will get a degree. Based on the graduation rates of many colleges, some are not banking on their students leaving with a degree. The federal government tracks the 6-year graduation rate for first-time, full-time undergraduate students who began seeking a bachelor’s degree at 4-year degree-granting institutions. Although in 2020, they were psyched to report that average 38.8% graduation rates at public universities and 55.3% graduation rate at private colleges were the highest ever, most families may not take the same view. From a family standpoint, this means that their kid has only about a 2 out 5 chance that they will get a bachelors’ degree in 6 years (not 4) at public universities. Their kid’s odds are a bit better than 50/50 for a private college.
4 Years of College Costs Look Like a Really Nice Car or Starter Condo
Are colleges too scared to show their
net price for the entire degree? Yes, most are. For many families, even the average net price for one year of $15,380 for a 4-year public university and $$27,370 at a private college is daunting. Plug in the historic college costs increase and families are looking at $62,824 for a 4-year public university and $111,801 at a private college for all four years. This of course also assumes that you plan well to graduate on-time without any additions or summer school or additional years to get your degree.
People think and feel differently about a $15,000 vs. a $60,000 purchase. And when you are making a six-figure purchase, you really think more about the long term value. It’s no wonder why colleges don’t want families to look at these bigger numbers.
Price of Ignoring College Financial Fit
But by ignoring the long term college financial fit, colleges are jeopardizing their retention rates. In a recent
survey by Gallup and the Lumina Foundation, the biggest barrier to college completion is college costs. Students reported that their number one reason for dropping out was the college cost. This means they started paying for one year of college (or maybe two or three years), but they didn’t persist because of the costs being too great to bear.
Game Changer to Looking at 4 Years
Can you imagine a world where people proactively check out all four years of college costs - including financing - before they decide on a specific college? What if they could compare that one college to another college they were contemplating? Well, that is what Quatromoney’s College Finance Planner does. We are committed to helping students and their families to make the purchase of higher education easier and more informed. In just a few minutes, their potential college costs, understand how far their savings and income will stretch, and assess market rates for all eligible financing options. By seeing their eligible federal and private finance options (including home equity soon) and understanding their aggregated monthly payments, a student and their family can ensure a college purchase fits in the family’s monthly budget both now and after graduation.
Learn more about how students and families are personalizing their college finance plans in less than 5 minutes with Quatromoney.
Colleen Krumwiede
Co-Founder & Chief Marketing Officer
Colleen MacDonald Krumwiede is a financial aid and paying for college expert with over a decade of financial aid experience at Stanford GSB, Caltech, and Pomona College and another decade at educational finance and technology companies servicing higher education. She guides go-to-market strategy and product development at Quatromoney to transform the way families afford college.
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