Why public school may not be the cheapest college option

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At first blush, in-state public universities may seem like the most cost-conscious four-year college choice for frugal families.

After all, the average in-state tuition and fees in the 2015-2016 academic year is $8,957, according to data reported by 314 ranked public colleges in an annual survey by U.S. News.

That's a fraction of the cost of private colleges, which charge an average of $32,599 in tuition and fees in 2015-2016, according to 711 ranked private colleges reporting that figure.

But judging the affordability of a school – or ignoring an entire category of schools – based on sticker price is a mistake, say experts.

"Ignore sticker price," says Frank Palmasani, college counselor at Providence Catholic High School in New Lenox, Illinois, and creator of the Financial Fit program, an online resource for helping families assess the affordability of colleges. "Over and over and over, there are examples of students paying less at higher-sticker-price schools."

That means that students with designs on heading to private or out-of-state colleges but concerned with costs need not despair. Instead, they can do some legwork to determine whether a high-priced college is as – or more affordable – than Home State University.

[See the schools U.S. News calls the 2016 Best Value Colleges.]

1. Diversify the search: Instead of homing in on the university down the road, weigh – and apply to – a range of options.

"If you can break down colleges into categories, you can probably find categories that seem to be more affordable than others," says Palmasani.

He breaks schools into several groups, separating out flagship public universities from non-flagships, highly selective institutions from other types of private colleges. Students may find, for example, that an elite private college meets 100 percent of financial need or that a public university will offer a merit-based grant to an out-of-stater because it's not the super-popular flagship school.

2. Have a conversation: College hopefuls should "have a real conversation with their families about what they're expecting to pay for college," says W. Kent Barnds, executive vice president and vice president of enrollment, communication and planning at Augustana College in Illinois. "That's really important."

Keep in mind that there's more to the affordability talk than tallying how much the family's put aside in savings, says Palmasani. Families should look at their tolerance for borrowing, how they can reduce monthly expenses when their child is at college and any tax credit eligibility.

And don't just talk to each other, says Ben Kohl, former president of the Kansas Association of Student Financial Aid Administrators and president of Kohlidescope, a company that prepares students academically and financially for higher education.

Parents can talk to the financial aid office to get a sense of typical costs for a family of their size and economic status. "Find the right people at the institutions that they're interested in discovering more about and talk to people one on one," says Kohl.

[Know the 10 questions college financial aid advisers wish parents would ask.]

3. Consider schools that discount: Don't assume that the local state school is the best option, just because it has a cheaper price tag. "Looking at sticker price is really sort of a meaningless exercise," says Barnds. "Oftentimes what students don't understand is that the cost ultimately to attend is going to be different based on a whole range of criteria."

For example, private colleges, despite sky-high prices, often cut costs for eligible students. The tuition discount rate, a measure of how much tuition and fee revenue a college foregoes, for first-time, full-time freshmen was 48 percent in the 2014-2015 school year, according to the most recent discounting survey from the National Association of College and University Business Officers.

That means that many private universities use their own institutional grants to cut their price tag and entice qualified students.

Some universities are more generous at cutting costs for students than others, so one quick way to get an estimate of how a college will tamp down costs for an individual family is to use a net price calculator, which every university receiving federal funding should have on its website.

[Discover when to include a net price calculator in your college search.]

While this tool can give families a starting point for understanding the cost of an institution, it has limits.

"Understand what the net price calculator tells you," says Palmasani. "It doesn't tell you everything. It's not the comprehensive award letter, and more dollars could be added."

4. Apply: Students can still apply to a school that's out of their league financially, just as they can apply to a school that's a long shot academically.

But students should balance their financial reach schools with financial safety schools, such as that state university down the road. And they should set the expectation that, if the aid award from a reach school doesn't meet their needs, they'll be content enrolling somewhere else.

"Understand what that threshold is," says Barnds. "What is the breaking point for your family? When does a college become undoable?"

Trying to fund your education? Get tips and more in the U.S. News Paying for College center.

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