Student Achievement and College Cost

Does your student's level of academic success factor into the amount of money you pay for her college education? You bet. If there's an "immutable law" buried in the maze of counter-intuitive and contradictory financial aid guidelines, it is this: The better the student, the cheaper the degree."

We have visited with hundreds of parents over the last eight years and the nearly universal chorus is, "Can we afford private college?" Given that the average private college is now $44,000 and the average in-state public college is $20,000 (out-of-state publics average $37,000) the answer would seem obvious. But like many aspects of college planning, what appears to be so, isn't.


The reason is that the private colleges are more generally more generous with their financial aid awards than are the publics and their generosity is not limited to the amount of aid but extends to the type of aid. Our firm is based in New Jersey, where Rutgers' "list price" is about $24,000. Harvard's list price, on the other hand, is $54,000. Rutgers awards aid on average up to 51% of a family's eligibility ("need"), leaving the family short 49%; Harvard awards aid to 100% of need. As importantly, in our view, Harvard's aid package is generally 93% FREE money ("gift-aid" that need not be repaid) while Rutgers' package will generally be only 45% free money, with the rest being loans and/or federal work study. For PA readers, Penn State's in-state numbers are $28,000/61% of need/39% free money.

Let's examine how this plays out for a family that earns $125,000 with $40,000 in savings and investments, $250,000 in IRAs and 401(k)s and a $300,000 mortgage on a $500,000 home:

This family qualifes for no financial aid at Rutgers so their cost will be $24,000 per year. They qualify for $33,000 in financial aid at Harvard, of which $31,000 is free money. So Harvard costs the family $21,000 ($54,000 list minus $33,000 in aid) per year while Rutgers costs the family $24,000 per year. Can the family afford private college? We think so!

But getting back to our first paragraph, the family does not get Harvard's aid award offer if the student does not get into Harvard. A smiliar situation plays out for the "near-Ivies" and other private colleges. The better the student, the cheaper the degree.

One other note: Only 48% of kids graduate Rutgers in four years while 88% graduate Harvard in four. So the Rutgers degree is even more expensive. We do these types of analyses every day for free. Talk to us; we can help.