# College Math

Kyle McIntosh

WHAT’S THE REAL PRICE? In September, I wrote about the potential tab for sending our first child to college in 2025. The four-year cost was estimated at anywhere from \$65,000 to \$430,000, depending on the college chosen.

This wild disparity led me to conclude that college financial planning was like saving to buy a car—when you don’t know if you’ll drive off the lot in a Honda or a Lamborghini.

Since then, I’ve tried to put a sharper pencil to college costs. I had the help of an expert on student financial aid, who advised me to complete the Federal Student Aid Estimator. This government calculator yields your expected family contribution, or EFC. This is the annual amount families are expected to pay for tuition, room and board, books and other college costs.

To get apples-to-apples comparisons, I used the following factors in all my calculations:

• Family size: four, with one child entering college.
• Annual income: two adults making \$120,000 combined.
• Non-retirement investment accounts: \$250,000.
• Home value: \$500,000 with a \$350,000 mortgage.
• Student performance: top 15% in grades, as well as SAT and ACT test scores.

When I plugged these factors into the Federal Student Aid Estimator, it said the expected family contribution would be \$36,000 per year. If you assume a student will borrow \$5,500 to \$7,500 per year—the federal direct loan limits—then the family would have to pay roughly \$30,000 a year for college.

That’s a steep price. It represents 25% of the hypothetical family’s annual pre-tax income. Or, if paid from savings, four years of college costs would eat up nearly half their \$250,000 in non-retirement investments.

To get a more precise estimate, I was advised by my college-finance expert to try the net price calculators available on the websites of all U.S. colleges. These calculators offer a wealth of data.

To start, they provide a college’s undiscounted all-in cost. Next, they estimate the scholarships and loans a student might receive. What’s finally left is the estimated price a family might pay out of pocket for a year of schooling.

In running my experiment, I selected 20 schools: 10 private schools, five public in-state California schools and five out-of-state public colleges. Across the 20 colleges, the average annual all-in cost was \$54,000 a year, with a range from \$24,000 to \$82,000.

With scholarships and loans factored in, the average price dropped to \$35,000 annually for our hypothetical family. The cost ranged from \$17,000 to \$54,000 a year, depending on the school.

While this range is wide, 13 of the 20 schools had an annual family cost of between \$30,000 and \$40,000. That suggests that the Federal Student Aid Estimator gives a good idea of what college will typically cost a family.