The Price Everybody Talks About and Nobody Really Knows: How Much Does College Cost?

If you're a parent, and you don't suffer palpitations whenever the topic of paying for college comes up, congratulations: You're either unusually mellow, or unusually wealthy. Higher education is expensive, and getting more so by the year.

But how expensive? Ah, that's a trickier question. What we talk about when we talk about the price of a degree can be a bit murky, thanks to the vast variations in tuition, financial aid, and lifestyle choices that determine how much a student spends during their time on campus. For parents paying the tab, and for wonks who'd like to make higher education more affordable, it's useful to have a realistic baseline for how much a bachelor's actually runs these days.

So without further ado, let's look at the numbers.


In the 2009-2010 school year, the sticker price of tuition, room, and board for a full-time student pursuing a four-year degree was $21,189, or 34 percent of the median family's income. That's already 10 percentage points higher than the beginning of the decade. Here's a graph of college's sticker price as a share of a typical family's budget going back to 2000.


Thankfully, these numbers are only the beginning of the story. For one, they ignore the gap between state schools, where tuition, room, and board totaled about $15,000 in 2009-2010, and private schools, where they were just about $33,000 on average. Meanwhile, thanks to financial aid, mercifully few students actually pay the full sticker price.


To get a more precise sense of what college costs, we need to do two things. First, we should look at "net-price of attendance," which subtracts scholarships and financial aid from the whole cost of a year at school. This is essentially the budget that attempts to take into account the real cost of a dorm room, late night trips to White Castle, Andy Warhol posters for decorating, and beer money, along with tuition. Once we have that figure, we should break it down by family income level.

Handily enough, the graph below from the Department of Education does both using data gleaned from federal financial aid applications for the 2007-2008 school year. This is intended to tell us how much families were actually paying for school, rather than what they potentially could have paid. 

College students skew wealthy, so a kid from the median American family would fall into the chart's low middle-income category.** If that kid dreams of attending a fancy private college, they're staring at $22,700* per year tab. If they're happy going to a state school they'll pay around two-thirds that price.


There is some reason to be skeptical about the government's estimates. For most students, the most expensive part of attending college isn't tuition -- it's living expenses. To ballpark what students spend on themselves, the Department of Education uses the estimated budgets produced by school financial aid offices. As the graph below shows, those budgets are often quite measly. (For a frame of reference, the poverty line for a single adult is about $11,000.)



Thankfully, we can try and check the government's work. For the last several years, student lending giant Sallie Mae has run an annual survey on how students finance their educations. According to their findings, middle income families (who made between $35,000 and $100,000 a year) paid $20,065 for a year of school in 2011-2012, up about $3,000 from 2007-2008. Those numbers, however, don't account for aid.


Once you subtract scholarships and grants, the net cost comes down to $14,171, right about in line with the government's estimates.


So it appears your average student has indeed taken a vow of poverty to keep the cost of school down.


That brings us back to the burden these costs place on the typical family. By dividing the net cost of a year at school by the median family income, we get a number I like to call "the college misery factor." Since the turn of the century, the burden of college has clearly increased at both public and private institutions, although its been more severe at the latter.


Unfortunately, the 2007-2008 figures are the most recent data the Department of Education has readily broken down in a useful way for measure. (It's most recent numbers, which cover 2008-2009, divide up institutions into even smaller classifications). But chances are that the misery factor is worse today than it was about five years ago. State schools have raised prices as legislatures have cut budgets. Families are poorer than they were at the end of housing bubble. We can safely say that, for a middle-class household, a bachelor's will cost around a quarter of their income.


*Correction: In a previous version of this story, I incorrectly (and very carelessly) cited the for-profit cost, instead of the non-profit price, which is a roughly $5,000 difference. The final chart has been corrected to reflect that change. My thanks to reader Ticonb for pointing the error out.

**Families making less than $36,100 a year fall under low income; up to $66,600 qualifies as low-middle; high-middle means up to $104,000; high-income means anything higher.