The published college tuition is not often the amount the average family will pay, thanks to increasing discounts in the form of merit scholarships. Therefore, parents and students should not dismiss a college solely on sticker price.
In the recent school year, 2023-24, the average US private university discount on tuition for first year students was 56.1%, another increase from 54.8% in 2022-23. Thus, students and their families are essentially paying only 44 cents on every dollar of published tuition.
Additionally, the 2023-24 discount rate for continuing undergraduates (those in their second, third, and fourth years) increased to 51.9%, from 50.8% in the 2022-23 school year. As a result, many college degrees are essentially half-priced, reducing questions of affordability.
Further, the majority of all college students do NOT pay full sticker price for their education. According to a recent study by The Brookings Institution, in 2019-20, only 26% of in-state public college students paid the full cost of attendance, a decrease from 53% in 1995-96. At private nonprofit universities, the proportion of students paying full price dropped from 29% to 16% over the same time period.
With price less of a concern, families can instead focus on selecting the most valuable college education. When families take the time to define value, students can consider a range of college options, using the application process to find the best match. Ultimately, students can choose the college where they’ll continue discovering their aptitude, not only to build economic prosperity but also unleash their talents for the benefit of others.
Prudent families follow the sage advice of Warren Buffett, “Price is what you pay; value is what you get.” His advice is particularly relevant for families investing in their children’s college educations. And, with an estimated $93.4 Billion in net worth, Uncle Warren knows value.
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