Julie Jason: The true cost of college.

September is College Savings Month, time to think about how to pay for college.

This is no small issue. Funding a college education can be a significant concern, according to a recent Fidelity study (tinyurl.com/2cc8v5np), which surveyed high school students and their parents, along with recent college graduates and their parents.

Cost can be the most important factor in choosing schools for some (4 out of 10) high school students surveyed. So can student loans. One out of 4 high school students and 1 out of 5 recent graduates said their most important financial priority was “living debt free.”

Given that backdrop, parents and students need to understand this very important point. There are two ways to look at the cost of college: the “sticker price” and the “net price,” which is the actual cost to students after the impact of aid (including merit and need-based scholarships).

Let’s start with sticker price. The College Board’s “Trends in College Pricing and Student Aid” (tinyurl.com/3wcwmnhr) reported average published charges for tuition and fees (2020-2021) for public fouryear in-state schools to be $10,560 for full-time students.

If you add room and board, you’re talking big bucks. Room and board was estimated at $11,620 for public schools in and out of state.

But, there is a lot more to this equation than meets the eye. Parents need to know that these are sticker prices, referred to by colleges as “cost of attendance (COA).” COAs usually include tuition and fees (for things like the use of the library and athletic facilities); room and board; books and supplies; and transportation and personal expenses.

Now let’s talk about net price. What’s not reflected in COAs? “Need-based aid, merit aid, and scholarships,” according to CollegeData.com, an online college adviser service.

In reality, the majority of students enrolled in colleges don’t pay sticker price, according to the College Board. During the 20192020 school year, undergraduate and graduate students received a total of $242 billion in student aid in the form of grants from all sources, Federal WorkStudy (FWS), federal loans, and federal tax credits and deductions.

Looking at tuition and fees alone, a first-time student at a four-year, public, in-state school (sticker price: $10,560) can pay a net price of $3,230, according to the College Board. A private, nonprofit, four-year school with a sticker price of $37,650 could cost $15,990 (net price).

What accounts for the differences between prices? Undergraduate students in 2019-2020 “received an average of $14,940 per FTE [full-time equivalent] student in financial aid: $9,850 in grants, $4,090 in federal loans, $920 in education tax credits and deductions; and $80 in Federal Work-Study.”

It’s wise for high school students to keep costs at the forefront. Let me offer another piece of advice: Before making a cost decision, make a career decision and work backward. Find the best college choices based on what happens when you graduate. That is, will the experience lead to a career? Prepare a short list of colleges. Figure out the net price. Then, do a cost-benefit analysis, choosing the best education for the best price.

Check out the U.S. Department of Education website (ed.gov) for student loans and grants and get familiar with Fidelity’s tools such as the College Savings Calculator (tinyurl.com/2ea5zf2h).

College Savings Month is not the only savingsoriented occasion in September. Sept. 10 (“401(k) Day”) marked the opening of the annual competition for the title of “401(k) Champion,” earned through an essay contest for 401(k) participants. This is a financial literacy event that I created along with my firm, Jackson, Grant Investments Advisers, Inc., to shine a light on 401(k) participants who make good 401(k) decisions. Apply at 401kchampion.com soon, well before the deadline of Oct. 1.

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant of Stamford) and author, welcomes your questions/comments (readers@juliejason.com). Her awards include the 2020 Clarion Award, symbolizing excellence in clear, concise communications. Her latest book, a curated collection of Julie’s columns, is “Retire Securely: Insights on Money Management From an Award-Winning Financial Columnist.” To hear Julie speak, visit juliejason.com/events.