3 Reasons Colleges are Expensive
There are a few aspects involved in college cost, and Crown’s Vice President of Enrollment and Marketing, Mike Price, breaks it down into three aspects:
1. General expenses. From professor’s paychecks to admissions teams to facility maintenance, creating an intentional environment conducive to learning is costly.
2. College runs on thin margins. It may seem like colleges are raking in money left and right, but Price argues otherwise: “I would bet most colleges, such as Crown probably run on 1-3%, revenue at the end of the year. And some schools . . . run in the red, meaning they had more expenses than they had revenue.” Though colleges may look like they bring in plenty of cash, the reality is that expenses also run high.
3. Lower salary. The balancing act of colleges keeping prices down so students can afford them, while not going bankrupt has some big consequences on business aspects like salary. Many faculty and staff — particularly at small private institutions – may make less money than you would think. Why do they stay? Many professors and staff love the mission of the institution and are willing to take lower pay to help fulfill that mission in the world.
List Price vs. Net Price
If you’re concerned about the price of college, be aware that students rarely pay the price actually listed on college websites. Don’t be surprised if after you complete financial aid forms, the net price (what you will actually pay) is far less than the sticker price.
A college degree appears more expensive than it was ten years ago— at least the list price does. Financial aid has also increased with the cost, so the net price has only changed marginally. “Even though our tuition has gone up by six, seven, or eight thousand dollars,” says Brad Nelson, Associate Director of Admissions at Crown, “the out-of-pocket is actually very, very similar to what it was back then.” Almost every college website has a net price calculator. This is a really handy resource for calculating the actual price of your college of choice. Mike Price recommends each student calculate their approximate college tuition before committing to paying it.
The only way to truly know how affordable a particular college might be is to stay in contact with the financial aid team while applying and filling out the FAFSA.
Financial Aid Expert Tips
At Crown, our Financial Aid Office is a great place to get personalized, friendly help with all things finance. They’re ready to sit down with students and help navigate difficult questions. They have plenty of ideas on how to pay for college and love to share them! The best advice: be aware and educated about the cost before you commit to paying for school. (Reading this article might be your first step!)
Financial Aid Counselor Becky Witmer says, “Those that are proactive and take ownership aren’t as surprised when they graduate.” If you know what you’re getting into, you’ll be well-equipped to handle the responsibility.
Being proactive about your loans means you should start paying them off while you’re enrolled if you can. Setting up a monthly payment plan (even if it’s just ten dollars a month!) can save you years of debt by cutting down your interest. Sit down with your parent or a friend and look at how much in loans you’ll have to take out, and how long it will take you to pay them back. This little step can save you a lot of worry!
Let’s talk about Crown College’s budget.
Where Does the Money Go?
After applying scholarships and student aid, you might be paying around $25,000 for college. Where does that money go? And why?
The mission of small private higher education is to holistically develop students. Colleges need to provide an impactful experience for students to grow, which includes supplying staff, faculty, facilities, student development teams, admissions crews, marketing, residence halls, food services, and more.
To give us a real-life example, let’s look at Crown’s spending habits.
Crown’s expenses. The total expense for full-time, part-time, and student salaries come out to approximately $7,514,000. Add on employee benefits and that’s an additional $1,865,000. After advertising, conferences and seminars, library expenses, food services, software purchases, insurance, maintenance, office expenses, professional fees, travel, utilities, and a few other things, the total cost comes out to about $8,859,000. The total expenses for Crown’s 2018/2019 academic year were about $18,238,000. When deducted from Crown’s total revenue for the year, $19,301,000, there is about 6% reserve leftover; more than usual.
Price mentioned colleges operating on thin margins. This is a good example of how that plays out in real life. There are lots of expenses with almost the same amount in return. Price notes students’ difficulty with the cost of college, but he also realizes that most colleges are in tight spots with expenses. “We’ve gotta be good stewards,” says Price. “I believe Crown stewards its finances very well.”
Financial aid expert tips. “FAFSA’s huge,” says Becky Witmer, a Financial Aid Counselor. “February is FAFSA Awareness Month.”
And she’s not joking. Annually, every student at Crown gets a little card in their mailbox with a note about the FAFSA; a very handy reminder. Some people see the word FAFSA and fall victim to swelling anxiety, but Witmer wants you to know that it’s a lot easier than you’d think. She advised sitting down with a friend for emotional support to get going. The sooner you get it done, the better.
Another huge help for financial stability in college comes in the form of scholarships. Scholarships take a little more legwork than the FAFSA; you have to keep your eyes peeled. If you’re in high school, keep those grades up! Lots of scholarships go to students with good grades. Study hard for your ACT or SAT, and consider looking for scholarships that are outside of your institution. You can find scholarship sites like scholarships.com.
Another great resource is Fastweb. You can create a profile and receive personalized options for scholarships to apply for. Take a few hours out of your weekend and sign up for as many of them as you can! “You’re selling yourself when you sign up for a scholarship,” says Molly Simpkins, a student worker in Financial Aid. Just remember to present yourself honestly and in an appealing light. The internet is full of resources to help you out.
Now that we know why college is so costly and what goes into the college experience, is it even worth it to go?
Short Answer: yes.
Long answer: there are two reasons why it’s worth it:
1. College makes you a better person. “College isn’t just the degree,” says Brad Nelson, Associate Director of Admissions, “it’s not just the education you receive, but it’s also the experience that you get and the life skills that you gain.” There are few better ways to ease into adulthood than going through college. Not only is there the challenge of independence, but students receive education on a variety of topics and are better equipped to address matters of culture post-graduation. In addition to further general education, students receive dynamic training in their desired field and a group of peers learning with them to provide nuanced conversations and ideas.
2. College is investing in yourself. It’s easy to point out the rich and famous entrepreneurs who never went to college as examples of why higher ed isn’t worth it. But we have to remember that they are exceptions to the rule. “The average earnings over a lifetime for somebody that has a bachelor’s degree,” says Mike Price, “verses somebody that has a high school degree, is $900,000.” Even though some students pay tens of thousands of dollars, in the grand scheme they’ll be making hundreds of thousands of dollars more than their non-college peers. You’ll be making even more if you pursue graduate school.
“I don’t know where you can in your lifetime take an investment that you’re putting in yourself and make that kind of earnings,” Price explains.
However, for college to be worth it, you have to actually graduate. Make sure it’s feasible to complete all four years of college before plunging in.
Financial Aid Expert Tips
Paying for college isn’t just about loans and FAFSA and scholarships. It’s about saving money and being practical with your budget. “It’s nothing profound,” says Simpkins. Saving for college can be as simple as collecting coupons. Something Simpkins is doing to pay for college is work-study; working part-time between her classes. Not only is she making money to pay for her daily commute, but she’s also getting valuable work experience.
Gillette is a big advocate for getting a job at college and has a ton of advice for saving money. Here are a few:
- Download a money-saving app to help set aside money for the future.
- Know your student discounts. Lots of places offer discounts for students, and if you’re not sure if they do, It’s worth it to ask!
- Take a budgeting class. Look online for classes or keep an eye out for seminars hosted by your college.
- Compare things from different stores. A very useful skill in adulthood is to know where milk and eggs are cheap.
- Rent textbooks rather than buying them. Better yet, ask around if any of your college friends have them.
- Consider Postsecondary Enrollment Options (PSEO), if that’s an option in your state. By completing college courses in high school, you can graduate early and save thousands of dollars.