Higher Education: What Is the True Cost of College?

College loan debt is often cited as a major obstacle to growing net worth and getting ahead on the goals of buying a home or saving for retirement. So, is there any truth to the complaint that college costs too much? Here’s a rundown of what the average institution will charge, along with predictions of the future cost of college.

Community College

Usually a 2-year option for those hoping to pursue a certificate in a skilled trade or an Associate’s degree, the community college is often the most affordable college choice. Community colleges nationwide see class sizes growing each year, as more programs are offered. The average yearly tuition amount for a typical community college is $3,440. This does not include additional fees, books, housing, transportation, or meals.


These types of learning facilities also offer an attractive transfer option for those who want a 4-year-degree from a regular state or liberal arts college, but would like to save money. By transferring up to 60 credits from the lower-priced community college, finishing at a 4-year institution can cost significantly less. One other way to save costs is to take college courses in high school. Many community colleges offer a discount (up to 50% off tuition rates) for those still in high school. Since they transfer as regular credits, they are perhaps one of the cheapest ways to tackle the cost of college.

State College

Depending on whether you are in-state or out-of-state at the time you enroll, a state college option may still be rather affordable. A public, 4-year institution may charge around $9,400 a year for tuition. This is for students who have lived within the state for the year prior to their enrollment and are getting the “in-state” discount. If you are coming from out-of-state, expect to pay considerably more. The cost of college rises to almost $24,000!

One way to save big on that out-of-state tuition rate is to look for colleges that participate in regional agreements with other schools, such as the Midwest Student Exchange Program. This and other similar programs offer to charge no more than 150% of the in-state tuition rate for students coming from select states. Some state colleges get funds from state and federal programs that can drop the tuition rate to zero for qualified applicants. These programs are usually set up through state college systems and are designed to help low-income students.

Private College

These four-year-options are generally the most expensive. A liberal arts college degree can run $32,000 or more, and some degrees can take longer than four years to achieve. Even with the cost of tuition being pricey, most private schools have alumni funds and endowments designed to give generous grants to students who need it. A Presidential scholarship at a private school can cover $12-20,000 of tuition cost, for example. Because these schools are more willing to kick in private funds, the net cost may be similar to that of many state colleges.

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What Drives the Cost of College?

The cost of college has no doubt been going up each year. And while there are more programs, grants, and loans than ever to help defray expenses, the true cost of college is unmanageable for many. According to a 2015 Business Insider report, the average annual increase in college tuition from 1980-2014 grew by nearly 260% compared to the nearly 120% increase in all consumer items. What does that mean in terms of dollars and cents? That same $24,000 annual state college tuition bill we mentioned above would have cost a mere $9,438 in 1980.

Why is this? While there are too many factors to summarize here, enrollment has increased dramatically during this same time period. The percentage of the total population of students who graduated in the last five years rose from just 53% in 1980 to an amazing 94% in 2012! This means that most all high school graduates are pursuing some form of post-secondary education, including community colleges, nursing programs, tech schools, or apprenticeships. As students absorb more of the cost of college, rather than government, the cost continues to rise.

What is the cost of college?

The Future of College Costs

So how high can it go? Can students stick out the inflated costs? We would like to think that the runaway price of tuition will stall out sometime soon. The experts, however, think we are seeing just the beginning of the incline. In fact, a CNBC projection put the total cost of tuition, room, and board for those entering college in 2030 at $41,000 – $57,000 for in-state public schools. This isn’t quite as bad as the $92,000 – $130,000 projected for private schools. One wonders how all of that will be paid for.

The important number to consider is the net cost of whatever college you are hoping to attend. When it comes down to paying for school, it’s the cost after grants, scholarships, and discounts that really counts. Most all schools have a calculator on their website to give you an idea of the cost. Applying for the FAFSA is important, as well. This year it opens on October 1st. Get a jump on it early, to find out how much help you qualify for!