Are College Costs at a Tipping Point or Balancing Point?

The Chronicle of Higher Education reported that a recent presentation at the annual meeting of the National Association for College Admission Counseling discussed whether the cost of sending children to college has reached a tipping point for many families. The discussion was based on the discovery that almost 150 colleges charged $50,000 or more for tuition, fees, room, and board in the academic year of 2012-13. Since that amount is close to the median household income in the United States, it might appear on the surface that colleges are pricing themselves out of reach for most ordinary families.

As is often the case, however, appearances can be deceiving, especially when it comes to the concept of college costs. Even though a certain amount may be listed as the cost to attend a specific college, further examination often reveals that everyone on campus does not pay that higher amount. The first place parents should look for more useful pricing information is at a college's net price calculator, which is required to be on the website. Using this calculator requires you to answer a few questions about your financial situation. It then uses this information to calculate estimated financial aid which can be expected to lower the estimated direct costs that the typical student pays at that institution. The net price is a more realistic figure of what you might expect to pay out of pocket, but this does not take into account any scholarships and student loans that could reduce your immediate out-of-pocket expenditures even further.

Fortunately for parents many other factors come into play which can help keep college costs in balance. Parents need to be mindful of the fact that each college is in a unique financial situation as well. They are competing with each other for a decreasing number of students, and none can realistically afford to price themselves out of the market. Each college needs to have a certain number of students in each class to offset the costs of running the institution, but they must also respond to changes in the economy, the economic condition of the state in which they are located, and sometimes to the needs of their student population.

Is This Good News or Bad News for Parents?

In the long-run this could all end up being good news for parents, although it might mean they will have to do a little extra work to find the best combination of costs and financial aid that will make it possible for their child to attend a college at the top of their list. Parents should try not to dissuade a child from attending a certain college based on advertised price alone. You might be surprised at the amount of merit aid, financial aid, scholarships and work-study programs that are still available to help keep costs in line. If your child is planning on a career in certain fields, there are also some benefits to taking out federal student loans to help cover the costs of attendance.

Because the question of cost as it relates to each family's situation can be different in each individual case, families can start planning as early as the student's junior year of high school, but at the latest by the summer before the senior year. Don't just look at the fact that many colleges say that it costs $50,000 to attend; find out what that cost means to you.