Demystifying the Cost of College

About the Author

Jean Ricker has worked in financial aid administration for over 25 years and has extensive knowledge in regulation interpretation, policy and procedure development, data analysis, and audit resolution. She has a special interest in promoting access and equity within the enrollment process, especially for first-generation and underrepresented populations, particularly through student-centered financial counseling and advising. Ricker holds a bachelor’s degree from Providence College and a master’s degree in counseling and student development from Northeastern University. Ricker is currently the Assistant Vice President of Student Financial Planning for Dean College.

Executive Summary

Receiving a bachelor’s degree from a college or university serves as a pathway to economic mobility and personal growth. Studies have shown that the rate of return throughout an individual’s career outperforms the stock market. In fact, degree holders earn a median of $2.8 million, 75 percent more than those with only a high school diploma.¹

However, the financial barriers associated with earning a college degree continue to hinder access for millions of students. Rising costs, coupled with financial aid complexities, create challenges that disproportionately impact students from low-income backgrounds and marginalized communities. Despite these barriers, a college education does not need to remain out of reach for so many Americans and can be attainable with the correct information, resources, and support.

This informative paper will explore:

• The shock of college pricing: Many students and families are deterred by the high sticker prices of college tuition. However, it’s important to realize that most private colleges provide substantial tuition discounts to students.
• Understanding financial aid: Most U.S. students benefit from some type of financial aid. Learning how to navigate this process effectively is the key to unlocking opportunities.
• Free tuition: When considering an offer for free tuition, it’s important to read the fine print. Eligibility requirements, renewal conditions, residency stipulations, and additional costs can significantly impact the true value of this offer.
• The return on investment of a college education: Research confirms that earning a college degree produces higher career earnings and societal benefits. Therefore, investing in higher education really does result in a positive return.
• The value of a private college education: Private colleges often provide more competitive financial aid packages, better support, and a more personalized education experience.

Introduction

As colleges and universities report the first increase in undergraduate enrollment since the onset of the COVID-19 pandemic², the Lumina Foundation-Gallup 2024 State of Higher Education Study shows that Americans still overwhelmingly agree that education beyond high school—particularly a four-year college degree—is valuable and important to having a good career.³  However, the study also illustrates that cost is the leading reason American students have decided not to pursue higher education.

The cost of earning a degree remains a significant challenge for many families and may deter students from even applying. Learning how to navigate the confusing world of college financing and understanding the total value of an education will empower you to make the college dream a reality.

With that in mind, prospective families and students should not hesitate to ask colleges and universities the following 10 questions:

1. What is the average financial aid package you offer, and how does it lower my potential out-of-pocket expenses?
2. What percentage of your students receive institutional grants or scholarships?
3. Can you provide a detailed breakdown of the net price after my scholarships and grants?
4. Are there specific merit-based or need-based scholarships I might qualify for as part of your admissions process?
5. Besides tuition, housing, and food, what are the additional fees your college requires?
6. What resources or programs do you provide to help students navigate the financial aid process?
7. What support services do you provide your students to help them maintain any required financial aid eligibility requirements?
8. What type of career preparation, including internships, do you provide for your students?
9. What percentage of your graduates complete their degree within four years?
10. What percentage of your graduates are employed and/or pursuing an advanced degree (master's or doctoral) within one year of graduating?

Knowledge is power, and equipping yourself with the information needed to make this huge decision will ultimately result in a positive return on your investment.

The Shock of College Pricing

If you are currently starting a college search, you have likely been stunned by the prices. Tuition at private colleges in the Northeast can be as much as $70,000 per year.  This cost doesn’t include housing, food, or any other related expenses that a family must pay each year.

According to a 2024 Sallie Mae/Ipsos survey, 81 percent of families said they eliminated a college from consideration at some point in the research and application process due to the published price.⁴ That is before they even applied and/or were accepted to the institution.

The sticker price should not deter you, however. It is rare that an accepted student will ever pay close to the full published tuition, especially at a private institution. On average, private nonprofit colleges cut tuition by more than half for first-time undergraduates, according to a recent report from the National Association of College and University Business Officers.⁵

Colleges and universities give scholarships for many different reasons, including academic achievement, first-generation, geography, intended major, and so much more. There is money available, and it is often dependent on the institution's enrollment goals. Bottom line: if it is a place where you can see yourself thriving, you should not let the published price stop you from applying.

In addition, always consider your unique net price, which is the amount a student will pay to attend an institution for an academic year after subtracting anticipated scholarships and grants. It is almost always lower than the published price.

Additionally, contact the financial aid office at the college or university you are considering. We are here to work with prospective students and families to overcome any financial barriers to attendance.

Financial Aid 101

According to the 2024 Financial Aid Statistics report by EducationData.org, 87.3 percent of college students in the U.S. benefit from some form of financial aid. The federal government annually distributes $6.4 billion in grant money to college students nationwide. And those private 4-year institutions award an average of $25,400 per year to 84 percent of their students.⁶

College should be a wise investment, not a financial burden. Yet, navigating the financial aid process to ensure you receive the maximum amount of assistance available can be overwhelming. If you know where to look and what to do, though, it can be as simple as 1, 2, 3.

1. Complete the Free Application for Federal Student Aid (FAFSA). This is an application to be completed by current and prospective college students in the U.S. to determine their eligibility for grants, scholarships, work-study funds, and loans. Even if you don’t think you will qualify for aid, complete this form. It’s free and can get you, at the very least, a low-interest federal loan. It is important to note that some schools may also require additional financial aid applications, so be sure to check the requirements for each institution.
2. Attend webinars about the financial aid process. Most higher-education institutions provide live or recorded informational sessions. Look for presentations at high schools, as well. Also, don’t hesitate to reach out to the financial aid offices of colleges and universities to which you are applying to ask questions.
3. Explore outside scholarships. Many websites designed to help navigate this process exist, including fastweb.com, collegeboard.com, scholarships.com, and finaid.org. It is also highly recommended that students check with their high school counseling office.

Types of Need-Based Aid:

• Grants — Grants are called “gift aid” since they do not need to be repaid. They are based solely on financial need. They can come from federal or state governments and colleges or universities themselves. Completion of the FAFSA is required.
• Work Study — Part-time work-study jobs are available on campus or near campus to those who qualify. The money earned through work-study can help pay education expenses. Completion of the FAFSA is required.
• Student Loans — Low-interest loans are available to students who qualify to help pay for the college investment. Most loans do not need to be repaid until after graduation. Completion of the FAFSA is required.

Other Sources of Financial Aid:

• Merit Scholarships — Many colleges devote institutional funds to merit aid. At the time of admission to a college or university, a student is considered for that institution’s merit scholarships, if available. These are based on academic achievement and not on financial need.
• Payment Plans — Many higher-education institutions offer interest-free payment plans allowing students to spread out the costs not covered by other financial assistance.
• Parent Loans — Loans are also available to the families of college students who would like to assist with the cost of their education.
• The Internal Revenue Service (IRS) — The IRS offers educational tax benefits through deductions and exemptions for certain college savings programs.
• The Department of Veterans Affairs (VA) — The VA provides student financial aid, including scholarships and the Yellow Ribbon Program, which are designed to cover education costs not included in the benefits ensured under the GI Bill.

As you navigate the financial aspects of a college education, it is important to arm yourself with all the above information in order to weigh your options properly. While your dream school may initially seem out of reach, with a robust financial aid package, it may be a better deal than expected.

Students and families should always consider 1) the “net price” of all prospective institutions, 2) whether it would be a good academic and personal fit, and 3) what relevant services are available to the student. And don’t forget that the traditional “pros vs. cons” list is very helpful in this process!

Free Tuition

To attract applicants and reduce the complexities of the financial aid process, some 4-year institutions are now advertising “free tuition” if you are a student who meets specific financial need criteria. However, it is important to understand the nuances of this messaging and why it may not be as “free” as it appears. Pay close attention to the eligibility requirements needed to qualify for free tuition for all four years—like financial, renewal terms, residency, and duration. For example:

• Financial criteria are usually reviewed annually. Therefore, you may be disqualified if the maximum family income threshold is exceeded (even by a slim margin).
• Minimum high school GPA requirements may be required to be considered. If offered free tuition, an admitted student must also know the required academic standards to keep the award.  
• Free tuition may require that students meet certain residency requirements during their four years. Keep in mind that free tuition is just tuition. It does not include the costs of housing, food, or any other fees/expenses. Families should have a plan in place for those expenses.
• Sometimes, it’s not possible for a student to complete all their required credits within four years. Like other institutional aid, free tuition will likely cover eight semesters. Families should understand the appeal process if additional time is required.

While the concept of "free tuition" may sound enticing, it is essential for students and families to understand the fine print and potential limitations. By carefully evaluating these factors and planning ahead for uncovered expenses, students can make informed decisions and avoid unexpected financial challenges that may arise by accepting a “free tuition deal.”

Return on Investment

The ultimate question remains. Is paying for a college education worth it? The short answer is yes!
A 2024 study published in the American Educational Research Journal found that earning a college degree is still a sound investment. The analysis of 5.8 million Americans compared individuals who completed a bachelor’s degree to those who had finished only high school; the researchers determined that earning a degree provided a rate of return on investment of 9.88 percent for women and 9.06 percent for men, based on median earnings. In other words, a college education is expected to yield an annual rate of return of 9 to 10 percent throughout an individual’s career.⁷  

“Our cost-benefit analysis finds that, on average, a college degree offers better returns than the stock market,” said study co-author Liang Zhang, a professor of higher education at the NYU Steinhardt School of Culture, Education, and Human Development. “However, there are significant differences across college majors and the return is higher for women than men.”  

Further research from The Georgetown University Center on Education and the Workforce shows that bachelor’s degree holders earn a median of $2.8 million during their career, 75 percent more than if they had only obtained a high school diploma.¹

In addition to the financial advantages, research shows the societal benefits of earning a college degree include lower levels of unemployment and poverty; lower smoking rates and more positive perceptions of personal health; lower incarceration rates; and higher levels of civic participation, including volunteer work, voting, and even blood donation.⁸

Investing in a college education is investing in a better future—not just for yourself but also for our society. College is the pathway to personal success and building a better world!

The Value of a Private College Education

Now that you know why the published cost alone should not be a deal-breaker when making your college decision, we can look more deeply at cost as it relates to value. As discussed previously, students rarely pay the published price of a private education, and the net price may be the same or even less than that of a public institution. For the student who has always dreamed of a small private school with personalized attention, this message is for you. We want you to understand that it is possible at an affordable price. When considering different colleges and universities, students and families should evaluate the following:

Total financial aid offered — Public universities often cannot compete with the financial aid provided by private institutions. These can include need-based aid and merit scholarships. After aid, the net price of a private education can be comparable to what a public institution can offer.

Housing and food costs — While housing and food costs can be substantial at both types of institutions, the greater availability of financial aid at private colleges to help reduce these costs can make a big difference in the final amount to be paid.

Time to graduation — According to statistics⁹, the percentage of students graduating within four years is higher at a private vs. public institution. A private college is invested in each of its students. It will work with them individually to ensure the requirements are met to achieve an on-time—or even early—graduation.

Class sizes — It is important to pay close attention to the faculty-to-student ratio and typical class size at an institution, as these can correlate closely to overall classroom satisfaction and outcomes. Private colleges can often offer smaller class sizes taught by full-time faculty (not teaching assistants), ensuring a quality education all four years.

Support programs and services — A private college often provides dedicated and personalized advising, career services, counseling, and tutoring. Some private institutions also offer specialized programs for students who are neurodivergent and/or may have learning challenges or differences. Asking about these services during your search process is an important component to consider.

Internship opportunities — Real-world experiences gained through internships are imperative to gaining a competitive edge after graduation. Prospective students should inquire about these opportunities and consider whether an internship will be guaranteed by a college or university. Some private institutions will also help with placement and require this experience as a prerequisite for graduation.

There are clear advantages to obtaining a degree from a public institution that should not be overlooked and will appeal to certain students. However, for some individuals, a smaller private school can be of significant value and the published price should not deter them from applying. In fact, a survey conducted by The National Association of College and University Business Officers shows that the share of first-time, full-time students who received an institutional grant or scholarship from private nonprofit colleges was estimated to be nearly 90 percent.¹⁰  

The Dean Difference

Dean College, founded in 1865, is in the center of Franklin, Massachusetts, an idyllic college town ranked one of the safest in the U.S. Centrally located between Boston and Providence, Rhode Island, Dean offers the quintessential New England college experience at a great value. Approximately 98 percent of Dean students receive some form of financial assistance, with an average out-of-pocket cost of only $25,190 annually.

From day one, Dean is interested in getting to know each student and discovering how they will best achieve success. Dean’s close-knit community means students have support, not only from their professors but also from success and career advisors.

The average class size at Dean is 17 and all classes are taught by faculty, not teaching assistants. We also require that each student completes at least one internship before graduating, and Dean staff and faculty assist with placements. We’re proud to boast that 96 percent of our graduates are employed or enrolled in grad school within one year of graduating, ensuring the return on their investment begins immediately.

Dean delivers excellence, from our unmatched learning support services to our study-away opportunities to our 16 Division III athletic teams. At Dean, our students have a place to belong, including four years of guaranteed housing; a variety of student organizations to join; and more than 500 educational, social, athletic, and recreational events hosted annually.

There’s no better way to get to know us than by visiting our campus. Walk through the buildings. Meet our students, faculty and staff. Get your first taste of the Dean Difference. You will be considered for a merit-based scholarship as part of the admissions process. There is no additional application.

For more information, please visit www.dean.edu. We look forward to meeting you!

SOURCES

1 Anthony P. Carnevale, Ban Cheah, and Emma Wenzinger. The College Payoff: More Education Doesn’t Always Mean More Earnings. Washington, DC: Georgetown University Center on Education and the Workforce, 2021. cew.georgetown.edu/collegepayoff2021 

2 Current term enrollment estimates: Fall 2023. (2024, January 24). National Student Clearinghouse Research Center. https://nscresearchcenter.org/current-term-enrollment-estimates/

3  Lumina Foundation-Gallup 2024 State of Higher Education Study https://www.gallup.com/analytics/644939/state-of-higher-education.aspx

4  Sallie Mae/Ipsos Study: How America Pays for College 2024 https://www.salliemae.com/about/leading-research/how-america-pays-for-college

5 National Association of College and University Business Officers 2022 Tuition Discounting Study https://www.nacubo.org/Press-Releases/2023/Tuition-Discount-Rates-at-Private-Colleges-and-Universities-Top-50-Percent

6 Hanson, Melanie. “Financial Aid Statistics” EducationData.org, May 25, 2024,
https://educationdata.org/financial-aid-statistics

7  Zhang, L., Liu, X., & Hu, Y. (2024). Degrees of return: Estimating internal rates of return for college majors using quantile regression. American Educational Research Journal. Prepublished March 12, 2024. https://doi.org/10.3102/00028312241231512

8 Sandy Baum and Kathleen Payea. Education Pays: The Benefits of Higher Education for Individuals and Society. The College Board, Revised 2005. https://research.collegeboard.org/media/pdf/education-pays-2004-full-report.pdf

9 National Student Clearinghouse Research Center (NSRC), 2020. https://www.clrn.org/what-percentage-of-students-graduate-in-four-years/

10 National Association of College and University Business Officers 2021 Tuition Discounting Study https://www.nacubo.org/Press-Releases/2022/Tuition-Discount-Rates-at-Private-Colleges-and-Universities-Hit-All-Time-Highs