Guide to Paying for College: The Real Cost of a Higher Education

Guide to Paying for College: The Real Cost of a Higher Education

The cost of college can be high, but the sticker price may not tell the whole story. Paying for college requires more than just tuition. You may also be responsible for additional fees, room & board, meal plan, travel and parking, text books, computer equipment, and dorm room swag. So how much does college cost? We highlight the likely costs, offer some tips on how you can cut down on these costs, and give you some advice on how you can prepare for the high cost of college.

What is the real cost of college?

The easy answer is that tuition and fees for the average four-year college is just over $26,000 a year in 2020. But the real answer is far more complex. There are a lot of factors you must consider, from housing and text books to everyday living expenses and opportunities for financial aid. All of these factors will figure into how much you’ll likely spend on your college degree, and how likely you are to get a good return on investment (ROI). Fun fact: tuition for a year at Harvard University will cost you $47,730, but the addition of fees, room and board, text books and living expenses adds up to something more like $78,000 a year.

So how can you avoid sticker shock, and get the best return on your investment? The following guide walks you through the likely costs of paying for college beyond tuition, identifies opportunities for offsetting that cost, and advises on ways to get the best return on your investment.

Find out what it costs to attend one of the Most Influential Universities in the World.

Or read on to find how you can accurately calculate the cost of college.

Tuition for a College Degree-The Tip of the Iceberg

Let’s begin with a quick overview of tuition in the year 2020. According to U.S. News & World Report, the average yearly cost of tuition and fees for in-state public colleges is $10,116; the average cost is $36,801 for a year in private school. And among ranked private colleges, 120 charge annual tuition and fees of at least $50,000.

College isn’t just expensive. It’s also risen dramatically in cost over the last several decades. According to Forbes, in 1989, the average cost of a four-year degree from any institution, public or private, was $26,902 ($52,892 adjusted for inflation). In 2018, the same four-year degree costs an average of $104,480 across four years.

It also bears noting that “four-year degree” may be something of a misnomer in this day and age. The U.S. Department of Education reports that only 33.3% of public university students will graduate in four years; 52.8% of private university students.

These figures tell only one part of the story, however. The rising cost of tuition and the rising length of commitment have been matched by rising fees, costlier educational resources, and increased living expenses.

The figures above reflect the “sticker price” for a year in college, but not the actual “net price.” The “net price” is meant to account for an array of necessary incidentals from housing and text books to meal plans to general living expenses. The net price should tell you what a year in your chosen college will actually cost. And just as the cost for tuition has skyrocketed over the last several decades, so too have costs for non-tuition expenses.

The news isn’t all bad though. Financial aid, scholarships, and geographical considerations all offer ways to offset the initial sticker price. In some cases, the costliest schools are likely to be the most generous when it comes to the disbursement of merit and need-based grants.

While this is certainly a good thing, it only further complicates matters when it comes to calculating the cost of college. This is why we’ve compiled the following guide. What follows is a closer look at the various fees and living expenses that you’ll need to prepare for as you calculate the average cost of college per year.

How Much Does College Really Cost?

The net price of college is what you’ll actually pay for a year of school, with all fees, aid, and grants accounted for. This number may be quite different from the price listed in the brochure. According to the Century Foundation, “many of the costs of attending college do not come from tuition and fees. At the nation’s community colleges, 80 percent of the average $16,833 sticker price comes from non-tuition expenses. At public four-year colleges and universities, those expenses make up 61 percent of the total costs. Key among these additional expenses are costs of living (room and board), which increased by just under 80 percent, inflation-adjusted” between 1975 and 2015.

The Century Foundation goes on to report that many colleges and universities underestimate these expenses during the recruitment process. This means that students often enter into college unprepared for the real incidental costs of four to six years away from home.

Below, we outline some of the added costs on top of your basic tuition expenses.

Breakdown of Fees

So what does the word “fees” actually refer to? What are you getting for your money? And how much of your money is going toward these mysterious fees. U.S. News and World Reportoffers a basic overview of the things you’re likely paying for.

Type of FeeCostWhat is it Paying For?
Orientation Fees$50-$300Your fees may include some designated amount for an orientation weekend or other activities which could include meals, overnight housing, informational materials, university branded paraphernalia, and more. Orientation customs will vary by school, and therefore, so may associated fees.
Campus Fees$1000+Usually the most expensive line item included in the list of fees, campus fees can pay for all manner of resources including student activity centers, fitness facilities, infrastructural maintenance, security, and more.
Lab Fees~$150Most students will pay a modest fee to account for use of laboratory facilities and other hands-on science resources.
Spirit/Athletic FeesVariesThese fees can vary widely and may depend on the emphasis which each school places on its athletics programs. Students interested in attending schools with competitive national athletics programs should expect their fees to include some funding for athletics activities including stadium maintenance, rally events, coaching salaries, and more.
Assorted FeesVariesA wide range of other fees may or may not apply. Fees will vary from one school to another, but additional fees may include:
Technology fees
Environmental fees
Transportation fees
Health and wellness fees

Housing Expenses

Room and board is likely the most significant cost that most students will pay beyond tuition and fees. For students who will live on-campus or who will rent off campus, housing is a major expense. This expense is often proportional to the relative cost of your college. Colleges with high tuition will likely also offer costly on-campus housing options. Geography can also directly impact the cost of housing. Students seeking off-campus housing in small towns will likely pay far less for rent than those leasing off-campus space in major metropolitan cities.

Beyond these variables, the National Center for Education Statistics (NCES) provides figures for the yearly cost of college by degree level, factoring for room and board:

Type of College By Degree LevelTutition, Room & Board Plus Fees
Public Two Year$10,091
Public Four Year$19,488
Private Nonprofit/For-Profit Two Year$24,882
Private Nonprofit/For-Profit Four Year$41,468
*Totals rates range from years 2015-2017


Another major expense that is often underestimated in the stated sticker price for college is the cost of textbooks. Over the course of each year, students are required to purchase textbooks which are mandated by professors and course syllabi.

Often these texts will not only be required for course participation, but will include access codes for essential supplementary online materials. This means there are typically very few ways to skirt the actual-and often very high-cost of required textbooks.

According to CBS News, “Over the course of a year, the average college student spends more than $1,200 on books and materials, according to the College Board.” This is a considerable out-of-pocket expense that students must manage at the start of each new semester.

Education Materials

Beyond mandatory text books, most students will need to purchase any number of peripheral educational resources over the course of a year including laptops, tablets, ink cartridges, cloud storage, educational apps, and any incidental expenses that may arise in completion of a project.

College Board reports that “in 2018-19, students spent an average of $415 on course materials, $419 on technology, and $108 on supplies.”

Cost of Living

In addition to the various items that you must pay for as a student, you still have to account for basic living expenses like travel, phone bills, toiletries, healthcare, medication, clothing, recreation, and more. If you live off of campus and don’t partake of your school’s meal plan, you can also add in the cost of food.

In other words, don’t forget the cost of basic survival when you consider the price tag of college. To this end, College Board makes an important point. College students are no different from the general population when it comes to the costs of housing, food, and living expenses. However, as students, their commitment of time to education requires them to forego an income from full-time work. This is the “opportunity cost” that must also be factored into the cost of education. The limited budget of time for paying work further magnifies the impact of basic living expenses.

The cost of living for each college student will vary considerably. Living expenses can be impacted by factors like location, housing, online course access, and personal circumstances. Consider your own needs-geographical, medical, dietary, recreational, etc.-in forecasting the budget you will likely require to satisfy your basic cost of living expenses.

Factors That Can Reduce the Cost of College

Now that you know which factors are likely to inflate the sticker price, we have good news. There are also a number of factors that can reduce the cost of college:

Financial Aid

Every student applying to an accredited college or university should complete a FAFSA. The Free Application for Federal Student Aid is the critical first step in determining your eligibility for federal student loans or for need-based student grants. Need-based grants can reduce your cost of college and unlike student loans, these do not need to be repaid. Eligibility is determined based on economic need. Fill out your FAFSA to determine whether or not you qualify.


Just as every student should complete a FAFSA, every student should apply for any scholarships for which they might qualify. Scholarships are awarded by schools, government agencies, non-profit foundations, religious organizations, private benefactors, corporations, and a wide range of other parties interested in helping prospective college students meet their educational and professional goals.

Scholarships are given for academic excellence, athletic ability, personal achievements, organizational affiliations, military commitment and a host of other qualifiers. Start with scholarship portals like or FastWeb to see which opportunities might help bring down the sticker price of your college education.

In-State Attendance

Tuition costs are often dramatically lower for students attending public school in-state. If lowering the cost of college is a major priority, consider attending a school in close proximity to home. It’s also worth noting that some neighboring states share agreements through which their respective residents can enjoy in-state rates even when crossing a shared border to attend college. Find out if you can take advantage of State & Regional College Tuition Discounts.

For a closer look on in-state tuition, read our Focus on In-State Tuition Rates.

Online College

One of the most immediate ways to reduce costs affiliated with college attendance is to bypass the costs of on-campus housing, travel, campus fees and more by attending online college. Students attending online college will often pay similar tuition rates as their on-campus peers. However, living at home and attending classes online can mitigate a number of the peripheral costs outlined in our discussion above.

Let’s Do the Math

Harvard University makes the top of our list in nearly every major category of influence. So let’s start there. As we noted at the start of this discussion, Harvard’s tuition for the 2019-2020 school year was $47,730*. This is on the costly side, but not bad for one of the top institutions in the world. But what about the sticker price?

Let’s take a closer look:

Room & Board$17,682
Text Books$4,193

*Figures from CNBC

Costs can add up quickly at top schools like Harvard. But CNBC points out that Harvard is also among the most generous schools in dispersing scholarships. An estimated 55% of all Harvard students receive need-based scholarships with the average grant total amounting to $53,000. 70% of all students receive some form of aid. According to Harvard’s own reporting, “90% of American families would pay the same or less to send their children to Harvard as they would a state school.”

In this case, the sticker price is far higher than the stated tuition, but Harvard’s endowments allow it to offset this cost dramatically for most students. This demonstrates how varied the prospective answers are to the question driving our discussion-how much does college cost?

There is no single answer. Every student’s situation will differ, as will the costs and opportunities associated with any given school. This is important to keep in mind as you ask and answer the following question-

Is College Worth the Money?

Once again, short answer, yes. Long answer, it’s complicated.

In general terms, college is a worthwhile investment. However, like any investment, one must choose wisely. The cost must be offset by the benefits and opportunities that you’ll create in college. If a more costly college experience is the best path to the opportunities you hope to create, it may actually be worth the investment.

According to Forbes, the Federal Reserve reports an average earning for college graduates of $78,000 per year, relative to $45,000 per year for those whose highest degree is a high school diploma. At an average difference of $33,000 per year, this suggests that students paying the average rate of $26,120 a year (plus the various costs outlined above) for four-year private and public universities are getting a return on their investment.

Of course, you could spend a lot more, or a lot less, on a four-year degree from an accredited college or university. The sticker price for a year at Columbia University is just under $60,000, whereas a year for an in-state student at the University of California-Davis campus will cost just over $10,000. So what should you consider as you decide where you want to go, how much you’re willing to spend, and whether this expense is ultimately worth it?

Exceptions to the Rule

The return on investment for college is based on the job prospects and earning potential that you nurture by earning your degree. And as the Federal Reserve notes, the average college graduate is in a good position to see this return. However, the following exceptions apply.

  • You Must Graduate-It should come as no surprise that in order to earn what the average college graduate earns, you must, first and foremost, graduate from college. College completion is critical to recouping your investment no matter what type of college experience you seek. This may sound obvious, but according to NPR, only 58% of students who began college in 2012 had earned an undergraduate degree 6 years later. This underscores the importance of choosing a college where you believe you can succeed, and one that you can afford. Investing in the wrong school could place you on the path toward substantial student debt, with little else to show for your effort.
  • You Must Perform Well-This is not just true for those who can’t complete college, but also for those who underperform. According to Forbes, those who fall in the bottom 25% of their graduating class will likely struggle to compete with better performing peers, both in the job market and in the competition to enter reputable graduate school programs.
  • Minimize Your Time Commitment-Consider that each additional year that it takes to complete your undergraduate degree is another year of tuition, fees, housing, and all of the additional living expenses outlined in the first section of our discussion. Naturally, this changes the equation as you calculate the value of your degree relative to your job prospects and earning potential. In simple terms, the longer you take to complete college, the longer it will likely take you to earn a return on your investment.

Getting the Best Return On Investment in Your College Education

How much should you spend on college? That really depends on what you want out of college, and what you need to achieve in your education and your career. Consider these factors as you size up your investment:

Choose the right type of college experience for you

The best way to get a return on your investment is to choose the educational experience that is right for you. A costly private college may be the best path to the degree and career you seek. Conversely, you might be able to achieve all of your professional goals by earning an associate’s degree at a community college before transferring to a reputable in-state public school. You may thrive at a large research university with an enormous variety of resources, or you may do best in a more intimate environment with a real focus on teaching.Every student has different goals and priorities. In order to get the best return on your investment, start by ensuring that the college you select matches up with your goals.

Find out more about the differences between a Research University and a Teaching College.

Find an accredited college

Accreditation is the stamp of approval, indicating that a college or university is meeting and maintaining certain standards of quality and credibility. These standards are set by accrediting organizations which have been recognized by the U.S. Department of Education. These organizations typically consist of university faculty, administrators, executives, and experts. There are two primary types of accreditation-regional accreditation and national accreditation. Regional accreditation is widely regarded as a more rigorous standard-and a marker of higher quality and credibility-than national accreditation. To this end, accreditation is also an extremely important indicator of your probable return on investment. Attending a college with only national accreditation, or no accreditation at all, will limit your access to graduate school opportunities and will also likely make you a less competitive candidate for certain career opportunities.

Accreditation status must therefore be considered as you calculate the value of a college degree. In most cases, your return on investment will be much higher for a degree from a regionally accredited school, even at the same sticker price as a nationally accredited school.

To learn more about accreditation, take a look at our Guide to Accreditation in Higher Education.

Have a Student Loan Repayment Plan

Just as the cost of college has grown dramatically in the last 30 years, so has the rate of student loan debt. The average student from the Class of 2018 graduated with $29,200 in debt, a 2% increase over 2017, says the Institute for College Access and Success. As of 2020, 45 million borrowers collectively owe more than $1.6 trillion, a number that exceeds our shared credit card and auto loan debts. Before you take on a massive amount of your own student loan debt, be aware of your borrowing term, including your repayment schedule and interest rate. Your interest rate is a number which is also not reflected in the basic sticker price of college but it will be very real when you begin making monthly payments. In order to get the best return on your investment, borrow only with a clear sense of when and how you will ultimately be making your payments upon graduation.

To learn more about financial aid for college take a look at our Guide to Financial Aid in Higher Education.

Match Your Cost of College with Your Earning Potential

In addition to the type of school you choose, your degree path will have a direct connection to your likely ROI. Some career paths offer a higher earning potential than others. Students majoring in fields like business, accounting, and engineering will likely see higher entry level pay and more robust salary growth than social work, theology, or theatre majors.

You shouldn’t choose your career path based simply on earning potential. Find something that you care about and that you can truly see yourself doing everyday. However, be aware of the earning potential associated with your career, and invest in college accordingly.

As you consider your degree path, visit the Bureau of Labor Statistics and find out what people in your intended field are earning today. Make sure you are aware of these figures before you decide how much you should spend on your undergraduate degree.

Once you’ve figured that out, you can start your search by ranking the Most Influential Schools in your chosen discipline.

Choose a Reputable School

Some of the most influential schools are also among the most expensive colleges and universities in the world. Refer once again to the discussion above regarding the cost of a year at Harvard University. While both the tuition and sticker price for Harvard University are among the highest in the U.S., Harvard’s reputation for excellence, the value of its degree, and the access it provides students to influential faculty, state of the art resources, and excellent job prospects all make it likely that the average Harvard graduate will eventually earn a return on this considerable investment.

It’s also worth repeating that Harvard-and many other top colleges and universities-can deploy their considerable endowments to fund financial aid for deserving students. So just as you should be aware of the many costs that accompany tuition, don’t let a large sticker price frighten you away from your top choice. If you believe you have ability and qualifications to attend an elite college or university, explore every opportunity for scholarship and assistance first.

Get started with a look at the Most Influential Universities in the World, those that are famous for providing incredible return on the investment.

Photo by Sharon McCutcheon on Unsplash