Cost of education is an extremely confusing and complicated concept since the cost is never constant and varies from a college to the next in the same state. To make cost transparent, each college publishes a set of calculators including a net cost calculator on its website to help parents and students calculate out of pocket expenses prior to accepting admissions. It is critical for high school graduates to learn how to use such calculators or create a spreadsheet as a method and a tool for arriving accurately to the out of pocket cost to families.

How to

Here is a summary of basic key terms and terminology to help students understand the components of the cost of education:

Sticker Price

- Sticker price includes but is not limited to:
  - Tuition
  - Fees
  - Housing
  - Meals
  - Books
  - Transportation
  - Health insurance
  - Parking permits
  - Library ID
  - Other miscellaneous items
- Think of the sticker price as the gross amount before deducting any credits such as financial aid, scholarships, grants, or personal payments

Net Price

- Referred to as net cost or out of pocket cost to the student and parents
- What is left on the account after deducting all applicable credits from student aid package
- What a student will actually have to pay in the form of cash or private loans to attend college, and is a recurring payment required to continue being enrolled till graduation

Financial Aid

- Financial aid includes but is not limited to:
  - Grants
  - Scholarships
  - Student loans

Grants

- Grants include but are not limited to:
  - Federal Grant such as:
    - PELL
    - State Grants
- It is money students do not have to pay back based on their continued eligibility

Scholarships

- Scholarships include all types of scholarships such as:
  - Athletic
  - Academic
  - Internal and external scholarships
- It is money students do not have to pay back based on their continued eligibility

Student loans

- Student loans include but are not limited to:
  - Federal loans
  - Institutional loans
  - Private loans
- It is money students have to pay back coupled with interest over time.

Personal payments or out of pocket payments

- Personal payments/out of pocket payments include:
  - Cash
  - Credit
  - Private loan
- It is the responsibility of the students and parents to satisfy these payments to the institution as a condition to maintain enrollment in college

Students need to make sure they learn how to use these various calculators correctly. In addition, students can create a spreadsheet to contrast and compare colleges before deciding on which one to attend. A simple spreadsheet for record keeping can be easily created to include critical data for decision making. Here is a quick list to include in each spreadsheet (sticker price minus student financial aid equals net price).

Compare Colleges Before Making Decision

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Creating a simple but effective spreadsheet helps students financially compare colleges across the board to make sure they can afford such payments and reach graduation. Keep in mind, some of the amounts can be a close estimate but not an exact actual; it is advisable to create a cushion in the calculation to allow for changes in status and other unexpected emergencies.

Practice

Now that you know how to calculate the cost of education, and out of pocket cost, think of paying it forward and share your tools with a friend or a family member.

Congratulations! You can move on to Chapter 3. Where to look for funding?

To review the full module on financial literacy for high school students, click here.