Ashley’s Mom: College costs are ridiculous.  They’re so out of line with reality.  I mean, $40,000 a year?  My parents paid $15,000 to send me to the same school. 

Me: And that was only about 7-8 years ago.

Of course. 

Well, okay, how much do you think they should be charging?

Well, I guess, with inflation over those “7 or 8” years, and with technology costs – I don’t know – maybe $25,000.  But 40?  That’s just insane.

They do.

They do what?

They charge $25,000.

The average college tuition discount for the freshman class of 2008 was 41.8%.  That means that the average tuition bill for a college with a $40,000 price tag was actually…$23,280.

A college education – in general – is not cheap.  And tuition continues to rise far too fast and far too high.  Saying that, colleges have still gone out of their way to make the situation seem even WORSE.  Colleges have managed to take a D and turn it into an F.  On purpose.

Why?

From my years on ‘the dark side’, I can pinpoint three reasons – they involve control, fear and a bottle of Scotch.

CONTROL: By creating artificially inflated prices and high discount rates, they have much greater control of the actual price for each customer.  They can attempt to mold their student enrollment by determining who pays $40,000, who pays $23,280 and who pays even less.

FEAR: If everyone else is doing it…

A BOTTLE OF SCOTCH: Colleges are HUGE fans of the Chivas Regal Effect.  For those of you not familiar, Chivas Regal was a relatively unknown brand of scotch whiskey until…it raised its price and positioned itself as a distinguished, classy adult beverage of choice.  The idea is that a college that is ‘too affordable’ will be perceived as ‘not good’.  Colleges have thirstily gulped down that philosophy.

So, what does this mean for Ashley and me?

  • Well, don’t rule a school out because of sticker price.  At least in the beginning.  Ashley might end up being in the Full Pay column, but she may be in the $23,280 group or an even more favorable group.  Maybe College X is down in New Jersey recruitment this year or they need more ‘good citizens’ from suburban homes in the northeast.
  • But, be prepared to make those decisions down the road, as financial aid packages and scholarship announcements and Leadership/Citizenship Grant letters come in.  Or don’t, as the case may be.  Don’t assume the best case scenario.
  • Review financial aid packages carefully, as well as scholarship and grant offers.  The new ‘Net Price Calculator’ that is now required of every school should/might/could help, but – regardless – be aware of actual costs and the total amount of ‘given money’ vs. work vs. loans.
  • Make sure you understand the bottom line.  What will you actually be paying?  To borrow from Sy and Marcy Syms, an educated consumer IS a college’s best customer.

As always, I welcome your comments and questions.  Please feel free to email me at info@cc4therestofus.com, call or text me at 908-403-3819, join me on Facebook on “College Counseling for the Rest of Usand join me on Twitter at @MichaelCCR.   And now on YouTube at http://www.youtube.com/user/CCRMichael?feature=mhee.

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