The Most Important Conversation to Have about College

For some families, the cost of college is immaterial. They have the ability to pay whatever it costs and have reasons they’re willing to do so. They won’t have to rely on loans to cover the costs, and the student will have the advantage of graduating from college debt free.

If you’re in the majority of families for whom the cost of college is a factor, it is probably the most important conversation you can have. Nailing down the exact “cost of college” can be difficult. Most sources will focus on the cost of tuition because that’s the easiest number to get from the schools. Things like housing and travel costs are less predictable, even if the student lives on campus. The best estimate right now is that a public four-year university will average about $25,000 a year for in-state applicants and $40,000 year year for out-of-state applicants. Private universities average $50,000.

Table comparing college costs from

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The sticker shock is real

We’re seeing it right now with comments from parents in Facebook groups. Parents are experiencing the sticker shock as they’re getting financial award letters in. The post is usually something along the lines of “worked hard, got in, no aid”. Now they’re looking at a tough decision. They can probably finance the difference through student loans, but is the education worth it?

Deciding on the value is tough. If your student is looking at an engineering or business degree, debt might not be as big a factor. If they’re looking at something in a healthcare field, they’ll likely have a salary that can bear more debt. However, if they’re looking at a career in a field with a set salary schedule like teaching or social work, the amount of debt they can take on is much less.

How much debt?

The most common guideline you’ll hear is that a student shouldn’t take on more college debt than their likely first year salary. That’s a tough number to gauge. Very few high school students look at college and think, “Yeah, I want to be a teacher”. On lists of most popular majors, business, engineering, and healthcare dominate. Many high school students don’t realize the variety of possible majors and careers until they’re in the process of getting a degree. The average starting salary for a person with a college degree is around $60,000 a year, but that average has a wide range of possibilities.

Because it’s difficult to predict whether a student will stick with a particular major, it’s important to be thinking about the cost of college as a part of your college search.

Doing a cost-benefit analysis

Imagine your student decides to be a teacher. In most states, you complete an undergraduate degree in a field related to what you want to teach then spend another year in some sort of “educator preparation program”. Regardless of where you get your undergraduate degree, you will have to complete that post-graduate program.

So let’s compare the costs of 3 undergraduate programs in Texas: Texas Tech, Baylor, and St. Edward’s in Austin. We know what a 1st year teacher is likely to make and less tangible things like alumni networks or internship opportunities are not big factors for getting hired to teach. Texas requires a minimum annual salary of $33,660 for a first year teacher. My own experience says that a 1st year teacher in a metropolitan area is going to make around $40,000 a year.

According to College Navigator, Texas Tech has an average net price of $16,464. Baylor is $38,372 and St. Edward’s is $35,203. The average net price for those private schools is $19-22 thousand more than the public university. $76-88k over 4 years, assuming it only takes 4 years.

What does the student gain for that $80k? They’re still going to have to complete a post-grad certification course. They won’t qualify for a higher paying job, and they aren’t learning something about how to educate people at one school that isn’t taught at the other schools.

The same is true of many programs that will require a post-grad certification like nursing or physical therapy. The certification itself is much more significant than the school the student attended for the undergraduate degree. The student gains ZERO additional professional opportunity for an $80,000 investment.

Start the research early

But it’s tough. Students get their minds set on what will be the perfect school and come up with lots of ways to rationalize the decision. The campus culture. The alumni network. Earning potential. You can come up with a lot of reasons that the cost “makes sense” right now. However, those decisions are setting students and families up for huge burdens down the road. That’s why having the conversation early about what the college will cost and how to pay for that cost is so important.

So what can you do? The first step is to make research a priority. For anyone for whom cost is a factor, a column on your college application spreadsheet of cost of attendance and average net price is essential. (Click here for our application spreadsheet.) Cost of attendance is the college’s estimate of what it will cost for the average student to attend for one year. And it’s typically below the real thing. At least 10% under the real cost in the best of cases. Average net price is the cost of attendance minus scholarships and grants students receive. The focus should be on the word “average” because we have no idea of the range.

You can use a source like College Navigator to find a school’s average net price. It’s one of the websites where the Department of Education warehouses the information it has on colleges. You can search a school and find the drop down for “Net Price”.

Net price is then broken down by income levels along with the average net price for all students.

Breakdown of ANP for Texas Tech from College Navigator

Colleges have their own net price calculators available on their websites, but it can be tough to find them all. When you get closer to putting a school on your list, you’ll want to do that. At the early stages, College Navigator is a one-stop research source.

Final thoughts

If cost is going to be a factor in your college decision, do the research early. Other elements can play into the decision, but this is one of the few areas that is relatively black and white. Some federal loans like the Direct Student loans are reliable. Almost all students will qualify for the standard amounts allowed. PLUS loans might be an option, but if you’re going to have to rely on private loans to finance an education, the cost is rarely worth the benefit. Those loans will be affected by credit a student or parent’s credit score and are going to burden the student with a loan they may never be able to discharge.