How Much Do People Really Pay for College? Hint: It’s a Lot Less Than the Sticker Price

When it comes to planning for college, many parents and students feel overwhelmed by the high costs. Headlines about the soaring cost of tuition can easily induce sticker shock, especially for families with modest incomes. Despite this, the vast majority of parents still consider college a top savings priority. According to Fidelity Investments’ 2024 College Savings Indicator Study, 77% of parents believe a college education is worth the cost.

While the cost of college has risen significantly in recent years, there’s more to the story than just the published tuition price. Many families end up paying far less than the sticker price thanks to financial aid, scholarships, and grants. In this blog post, we’ll pull back the curtain on how much families really pay for college and how you can prepare for these expenses without breaking the bank.

The Sticker Price vs. Reality

It’s easy to get discouraged when looking at the published prices of colleges, but those numbers don’t necessarily reflect what most families pay. Every year, the College Board publishes data on the cost of attending college, and their 2023–2024 report shows eye-popping figures. The average total cost of attendance at a private, nonprofit four-year college—including tuition, fees, room and board, and other expenses—was $60,420 for the year. Public four-year in-state colleges had a lower but still significant average total cost of $28,840.

However, most students don’t pay these prices. The net price—the amount families actually pay after grants, scholarships, and tuition discounts—can be much lower. For example, the average published tuition for private nonprofit colleges was $41,540 in 2023–2024, but the estimated average net price was just $15,910.

This huge gap between the sticker price and the net price is critical for families to understand. Many schools use their high tuition rates as a starting point, but most students receive some form of financial aid that significantly reduces the actual cost.

Financial Aid and Scholarships: Reducing the Cost

Financial aid plays a key role in making college more affordable. For the 2022–2023 school year, the average full-time undergraduate student received $10,680 in grant aid, $3,860 in federal student loans, and $940 in other aid, according to the College Board. Grants and scholarships are especially valuable because they don’t have to be repaid.

Beyond federal aid, many states and colleges offer their own grants and scholarships to further reduce costs. For instance, some state schools offer tuition waivers to veterans, teachers, or the dependents of college employees. Many colleges also provide merit-based scholarships that can significantly lower tuition costs for students with strong academic, athletic, or artistic achievements.

In addition to aid from schools and the government, private organizations and foundations offer a wide variety of scholarships. Searching for these opportunities early and applying to as many as possible can further lower the cost of college.

Public vs. Private: What You Pay Matters More Than the Label

There’s a common perception that private colleges are always more expensive than public ones. While the sticker price for private colleges is often higher, the net price can sometimes be comparable to or even lower than that of a public university. For example, after financial aid, the average net price at a private college might be closer to $15,910, whereas some public in-state universities might have a net price of $20,000 or more, depending on the student’s circumstances.

Public colleges, particularly in-state schools, generally have lower tuition rates, but it’s important to remember that there are other costs associated with attending college, such as room, board, and personal expenses. Living at home while attending a nearby public college can dramatically reduce these costs, especially if a student opts for a community college for their first two years before transferring to a four-year institution.

The Importance of Starting Early

Saving for college is a challenge, but starting early gives you a huge advantage. The longer you have to save, the more time your investments have to grow, potentially reducing the amount you need to borrow later.

Parents who start saving for college when their children are young can take advantage of compound interest and long-term investment growth. Even small contributions can grow into significant amounts over time, especially when invested in tax-advantaged accounts like a 529 plan. These plans offer tax-free growth as long as the funds are used for qualifying education expenses. Many states also provide tax deductions or credits for contributions to a 529 plan, making them an even more attractive option.

Setting Realistic Expectations

While saving early and often can help ease the burden of college costs, it’s also important to set realistic expectations for how much you’ll be able to save. The Fidelity study found that more than half of parents rely on their “own best guess” when estimating college costs. This can lead to either overestimating or underestimating what’s needed. Instead, families should use available tools and resources to get a clearer picture of their savings goals.

Fidelity’s planning tools can help parents set specific savings targets based on factors like the age of the student, the type of school they plan to attend, and potential financial aid. These tools allow families to make informed decisions about how much to save each month and what types of investments might be appropriate for their goals.

Borrowing Strategically

Even with a disciplined savings plan, many families will need to borrow money to cover the full cost of college. When borrowing, it’s important to keep student loans manageable. Federal student loans offer lower interest rates and more flexible repayment options than private loans, making them a preferable choice for many families.

Students should also look for ways to reduce their borrowing needs. For example, working part-time during the school year or taking advantage of summer internships can help cover some of the costs and minimize debt.

The Bottom Line: College Is Still Attainable

The high cost of college is a significant concern for many families, but with proper planning and financial aid, most students will pay much less than the sticker price. By understanding the real cost of college and using tools like 529 plans, financial aid, and scholarships, families can make college more affordable without sacrificing their financial well-being.

Ultimately, a college degree remains a worthwhile investment, and with the right strategies, you can help ensure that your child’s education is within reach. By starting early, setting realistic expectations, and being strategic with savings and borrowing, you can prepare for college bills without breaking the bank.