PUBLIC VS. PRIVATE

One of the biggest mistakes many parents make is to discourage their student from looking at a private school because of the Cost of Attendance (COA), or sticker price.  For many parents, it costs too much for their student to consider attending a private school.  However, the notion that a state public college is more affordable may not always be accurate. 

Investigating the financial aspect of public vs. private college selection is crucial in comparison shopping ... the college way.  If you compare just public vs. public school options and do not consider private schools, you could be eliminating some of the best financial choices.

When looking at colleges to determine costs, you must first look at the published Cost of Attendance (COA) of that particular school and subtract what the U.S. government determines from the FAFSA to be your Expected Family Contribution (EFC).  The amount remaining is called the “Gap.”  How schools address the “Gap” or your “Need” truly matters.

By doing your due diligence and homework, most families can find the average “Need Met” for the schools their student is considering.  Without researching this important aspect of the process, a family is sure to overpay for the cost of college.  While this information can usually be found on the internet with some effort and searching, your CPR - College Planning Relief® - Specialist can easily provide this information.  Some schools will meet 80-100% of overall need, while others are as low as 40%.  On average, private colleges meet between 70-100% of need, while public schools meet between 40-70%.

This is important because, contrary to popular belief, statistics show that over 40% of a typical student’s financial aid package is in the form of loans, also called self-help.  One thing we know about loans is that they have to be repaid.  As a result, we want to help families determine their eventual “out of pocket” expense...and loans will be part of that number. With a higher percentage of overall need met and more money in gift aid vs. self-help, you can begin to see how a private school could, in fact, be a more cost effective alternative for a family.

Gift aid or “free money” does not have to be repaid.  Private schools, many of whom have wealthy endowments, have a tendency to provide more “gift aid” than their public counterparts.

A higher percentage of “Need Met” is important; however, it is not enough.  More research must be done to determine how much of the “Need Met” is in “Gift Aid” vs. “Self-Help.”  For instance, it is not enough to say one school meets 70% of my college need.  If all of that 70% is in the form of loans, then your out-of-pocket expense is actually 100%!

One must also be cognizant of the time it takes to graduate with a four year degree from the college or university they are considering.  Statistics show it is more likely for a student to graduate with a 4-year degree in less time from a private school than a public school. As a result, even if the private school costs a few thousand more per year, graduating in one less year can still make the private school less expensive to attend than the public school. 

As with any type of major purchase, the time spent researching can mean significant savings when it comes to the final decision.  Taking the time to be an informed consumer when selecting a college will be more than worth the time invested – cognitively, emotionally, and financially.

Again … your Head, Heart, and Hand at work.