Savings & Cost Calculators: Help

As you work through the college financing calculators, you'll see a question mark ( ) next to each question. Click the question marks to get help answering the questions. In addition to those specific tips, here are answers to some general questions.

For more advice about paying for college, browse the full selection of articles.

Where do I get information about average college costs?

If you're unsure about current costs, you can use the pull-down menu (indented below the first question) to select average costs for private and public institutions. When you select an item from this menu, we'll put the associated amount in the calculator's cost box. You can change this amount at any time.

Keep in mind that these average costs include all major expenses, such as tuition, fees, and room and board. To research the latest trends in college pricing, check out this College Board report.

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How do I use College Search and/or my College List to get real costs?

To find costs for a particular college or university, you have two options:

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I entered the savings you recommended — why don't the totals match perfectly?

If results indicate that you're not saving enough, we'll let you know how much you need to save monthly in order to reach your savings goal. So, if you go back to the calculator and enter that monthly savings recommendation, you'd expect to be on track to save exactly the right amount, yes? Well, it will be very close, but not exact, because we round up the total amounts to the nearest dollar. You're entering a rounded amount into the calculator, not an exact amount. Your savings will then be a little higher than your savings goal.

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Should I even consider my first-choice college if it costs too much?

Don't bump a school from your college list just because the tuition seems high. There are strategies you can employ to reduce costs (such as shortening the time it takes to graduate) and there are resources available to help you bridge any gaps (such as scholarships and financial aid).

That said, it is true that the total expenses of some colleges are lower than those for others. This is largely due to the difference in the cost of tuition. Tuition at public colleges is usually lower than at private colleges, because it's partially subsidized by the state. Two-year college tuition is usually lower than four-year college. There's usually not a lot of difference in the other costs. You should also keep in mind that private colleges often have more financial aid, and more flexibility in awarding it, to help make up the difference between their costs and what your family can afford. The greater your overall college expenses, the greater the possibility of demonstrating eligibility for financial aid.

Learn more about why price shouldn't be your only consideration.

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How should I interpret news stories about rising costs?

While college costs have risen higher than the inflation rate, college remains accessible and affordable for a majority of Americans. The media has focused attention on the highest-priced colleges (those with tuition amounts of more than $25,000 and total costs of more than $30,000). However, the fact is that:

Learn more about college costs.

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What are the typical components of college cost?

College cost, which is sometimes referred to as the cost of attendance, includes both indirect and billable costs.

Indirect costs are the costs that don't show up on the college bill. They include books and supplies, travel, and personal expenses such as laundry, telephone, and pizza. If you live and eat off campus, room and board costs will also be indirect costs. You can control indirect costs to some degree, by making smart spending choices.

Billable costs are fixed costs that the family is billed for by the college, such as tuition and fees and room and board.

The full cost of attendance should contain these components:

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What's the difference between "in-state" and "out-of-state"?

Simply put, an "in-state" student lives in the same state or district as the college. An "out-of-state" student does not. Most four-year and two-year public colleges charge higher tuition for nonresidents than for legal residents of the state or district in which the college is located. This "out-of-state" tuition (or "out-of-district" tuition, in the case of two-year community colleges) often can make the cost of attending a public institution as high as the cost of attending many private institutions.

Want some background information? The creation and maintenance of public institutions of higher education and university systems in the fifty states are financed first and foremost by each state's citizens through the payment of taxes. States seek to provide educational opportunity to their residents at an appropriate cost, recognizing that a well-educated electorate helps the state economy to grow and supports improved social and cultural amenities. Relatively few state colleges and universities get any significant amount of operating expenses from fundraising or outside development or endowments, as do the private institutions. Obviously, state legislatures and boards do not want their residents to assume the financial burden of educating persons whose presence in the state is not intended to be permanent, except in very specific situations (merit scholarships, for example). Thus, the nonresident tuition rate is born.

There are two key rules to remember about residency status for tuition purposes: 1) actions speak louder than words, and 2) the devil is in the detail. The information presented in an admission application is analyzed by the state institution to determine residency. The burden is often on the student to document eligibility for in-state preferential status: most state statutes require proof of legal residence over a period of time (usually one year before admission) and intent of on-going domicile.

Be sure to look into each state's residency policies. And be sure to check with specific institutions to get the most accurate information about qualifying for in-state tuition rates.

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What's the difference between a "public" and "private" college or university?

Public institutions are supported by (and get most of their money from) the state or local government. Private institutions are privately owned and operated and rely on tuition, fees, endowments, and other private sources.

There's a lot of discussion about the benefits of one type of college or another. On the one hand, public colleges are usually less expensive, particularly for in-state residents. On the other hand, private colleges often have more financial aid and flexibility awarding aid and they may offer more personalized attention (and some believe more prestige). What's right for you depends on your own situation and goals.

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How can I cut costs?

One approach to making a college education affordable is to reduce the overall costs. Cost-reducing strategies include:

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Is it true that there isn't as much aid available as there used to be?

Actually, the reverse is true. There's more financial aid available than ever before — over $90 billion.

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Will saving hurt my financial aid chances?

Despite what you may have heard to the contrary, saving pays, even when it comes to receiving financial aid. The amount you'll be asked to pay for college is based on your family's income and assets. Savings are considered an asset. However, current financial aid formulas only "tax" about five percent of your assets each year. That is, the formulas assume that five percent of your family's savings are available each year to help pay for college.

For example: If a family has saved $20,000, they'll be asked to contribute about $1,000 of this savings per year to college expenses. Say their expected family contribution is $10,000. That means that while only $1,000 of their assets is being "taxed," the family can, at their option, use a greater part of their savings to meet educational expenses and reduce their need to borrow.

A family with the same income and significantly less in assets might only be expected to contribute a total of $9,000, but they'd have to rely on loans to make up the difference. The family with the greater savings is in a much better financial situation and may find they have more options in making educational choices.

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What if I don't know how much I can save?

For calculator purposes, just estimate — you can always adjust your estimate to see if you need to save more or less. Whatever you do, don't do nothing because you feel like it's a lost cause. Saving any amount can make a big difference, and you may surprise yourself at how much you can save once you start budgeting and reducing expenses. For example:

A family that saves $50 per month from the time their daughter is born will amass more than $16,000 in savings by her high school graduation. Almost $6,000 of this is interest earnings.

If the same family starts saving when their daughter is seven years old, they would need to save about $100 per month to save the same amount.

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What's a 529 savings plan?

529 plans have become one of the more popular options for families saving for a child's college education, and for good reason. A 529 plan is an investment plan that gives families a federal tax-free way to save money for college. Authorized by Congress in 1996, they are officially known as qualified tuition programs (QTPs), but commonly referred to as "529 plans," "state 529 plans," or "section 529 plans" after the section of the IRS code that provides the plans' special tax breaks.

529 plans come in two varieties — college savings plans and prepaid tuition plans. Every state has at least one of these two options and many states offer both. College savings plans let parents use their plan funds for college expenses at any college. Prepaid tuition plans let parents lock-in future tuition at in-state public colleges at present prices. Get the facts about each plan, and decide which type might be right for you:

Learn more about 529 plans.

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What if my family's income is too high to qualify for financial aid?

While income is certainly a key factor in determining whether a family qualifies for financial aid, it's not the only one. Your assets (or lack of assets), unusually high medical or other necessary expenses, the number of family members in college at the same time, private elementary or secondary school tuition payments, and other factors are often taken into account by college financial aid administrators. Many college students receiving aid come from families whose incomes are much higher than you might expect.

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For more advice about paying for college, browse the full selection of articles.