How to choose the right college: considering cost and return on investment


College is one of the most life-altering and expensive decisions of your life, so it’s important to know all the facts in order to choose the right college for you. There are many important considerations to keep in mind for your college search beyond traditional college rankings.

The cost of college: net price vs. net cost

For many students, the financial aid award plays the biggest role in ultimately choosing the best college. A school’s cost of attendance (or COA) isn’t necessarily how much you will pay after your financial aid eligibility is determined. During your college search, keep in mind the difference between net price and net cost.

Net price is the annual cost of college minus gift aid (grants and scholarships). This price often discourages students from applying to their dream college or enrolling in a private institution — but it doesn’t necessarily reflect how much you’ll actually have to pay for college.

What college really costs, or the net cost, is determined by subtracting the amount of federal aid found in your financial aid award letter from the net price. The net cost may be much lower than the net price, but even then, other expenses must be taken into account, such as:

  • Technology: Laptops and smartphones have become vital tools in college. You’ll likely be spending extra money on one or both of these things, so make sure you add them to the equation.
  • Textbooks: Although there are many smart ways to save money on textbooks, they are still expensive and can add up to several hundred dollars per class. Be sure to include this expense in your budget.
  • Specialty tools: Fine art and technical classes may require additional materials like canvas and paint, software, or lab fees. These expenses are typically not included in the tuition, but should be considered when calculating costs.

In-state tuition vs. out-of-state tuition

Deciding whether to go to school in-state or attending college far away can be difficult, but the question becomes even more complicated when considering net cost.

Students who attend an out-of-state public university may spend thousands more on tuition than those who choose to stay in-state, and living and moving expenses can add up quickly. Also, on-campus housing is not always guaranteed after your freshman year, so research the real estate market in the college’s surrounding area as part of your college search.

An in-state university or community college can save you a lot of money on tuition and room and board, especially if you choose to live at home. On the other hand, going away to school can offer a priceless opportunity to explore new geography and culture.

Return on investment

Return on investment (ROI), as it relates to college, asks whether you’re getting as much value out of your college education as the amount you’ve invested into it. In other words, are you getting what you pay for?

Here are a few factors to consider when calculating a college’s ROI.

  • Net cost vs. potential salary: Can you afford the cost of your dream college? What about the student loan debt you may graduate with? When evaluating student loan debt, it’s important to consider your potential future salary. How long will it take to pay back your loans? Does your expected salary justify your college debt?

  • Prospective career: What are you planning to study? Do you have a career in mind? Is that field in high demand? Is the school you’re considering better than a less expensive school for your major or career path?

    It’s important to follow your passion, but if the expected salary in your desired career is too low to pay off your student loans in a reasonable amount of time (most loan terms range from five to 15 years), a less expensive school may be a better fit.

  • Alumni network: The old saying is true: It’s not what you know, but who you know. Having a healthy network of working professionals who can let you know about job openings and recommend you for work can help you jump-start a successful career.

    Investigate the strength of each school’s alumni network. Typically, the larger and more committed the alumni network, the greater your chances of getting a good return on your investment.

The right college for you might be one that delivers a high return on investment, provides you with the unique opportunities that are important to you, helps you secure a fulfilling career path, and doesn’t drown you in debt after you graduate. Carefully researching each college and talking to current students and recent alumni can help you make educated, better-informed decisions about where to pursue your college education and get the most out of your experience.

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