Attending college is a major decision for young adults and their respective families, requiring parents, grandparents, and even the prospective students themselves to start saving for higher education early in the student’s life. The daunting price tag is often at the forefront of their focus: 73% of parents’ number one concern about their child’s college education is how to pay for it, and 59% of students report that their number one concern is graduating with student loans and figuring out how to repay them.

What Do You Need to Know?

There are many different factors that play a large role in determining the cost of attending college, many of which are overlooked when deciding between colleges. These include, but aren’t limited to, the parents’ and student’s expected financial contributions, their respective assets, the student’s academic standing and previous achievements, and the merit and need-based scholarships available to the student. However, the first thing that most parents and students look at before even researching the college itself is the sticker price.

A college’s sticker price is the maximum amount a student will have to pay to attend the college. “Maximum” is the key word here. This sticker price is higher than what most people pay. A college’s sticker price includes the following: tuition, room and board, fees, and other expected expenses such as transportation costs and books.

In determining the financial feasibility of attending a college, the student should make a decision not based on the sticker price, but on the net cost of attendance, which is the final cost after the sticker price is reduced by need-based financial aid, merit scholarships, and other grants .

What Reduces the Sticker Price?

Need-Based Aid. Need-based aid is awarded to those who demonstrate financial need. There are two types of need-based aid: g.

Gift aid reduces the cost of college. This includes scholarships, grants,  and extra financial aid. This differs from merit scholarships, because merit scholarships require the student to reach some predetermined threshold of achievement in order to qualify. This is usually measured in terms of academic performance, such as GPA or SAT scores. Gift aid does not require the student to meet any performance measure; it is purely gifted to students in need.

Self-help aid does not reduce the cost of college. Self-help aid is offered as an additional source of funds, such as student loans or work-study income. Examples of self-help aid include expanding the amount of loans offered to the student or providing an opportunity for the student to work for additional income while studying.

The Free Application for Federal Student Aid (FAFSA) is a financial aid form that determines one’s eligibility for federal financial aid for higher education. It allows families to access a pool of over $112 billion in grants, scholarships, and financial aid provided by the federal government. It is important for everyone applying for college to file the FAFSA form, regardless of their income, for two reasons. First, numerous colleges require the student to complete the FAFSA form in order to receive merit scholarships. Second, regardless of your financial standing, you may be eligible for aid you didn’t think you would qualify for. It is a common misconception that higher-income families are not eligible for any financial aid, and therefore such families sometimes refuse to fill out the FAFSA form. (New Hampshire recently made completing the FAFSA a graduation requirement.)

Merit Scholarships. Merit scholarships are awarded to recognize outstanding academic performance, talents, or leadership.

Other Grants. Students have many opportunities to earn additional scholarships and grants to help mitigate a college’s cost of attendance.

Why Is This Important?

About 60%-70% of students rule out college based on the sticker price alone, before analyzing the net price they would pay after scholarships and deductions they would receive if they applied for admission. Being able to differentiate between net cost and the college’s sticker price, as well as understanding the sources of aid that make up this difference, is critically important. The methodology that colleges use to calculate the amount of aid that will be provided to a prospective student varies significantly from one institution to the next, but there are tools available to help you figure out how a specific school approaches merit scholarships and need-based aid.

Most colleges offer a tool called a net price/tuition calculator on their website. This allows students or parents to answer a questionnaire and input both qualitative and quantitative information about the student and their family to calculate an estimate of the true cost of attending the college. You can access this calculator by finding the college’s website and typing “net price calculator” into the site’s search bar.

Upon calculating the net tuition, rather than solely considering sticker prices, you will begin to see that some colleges that may not have seemed feasible based on their sticker price can be affordable if the student’s profile makes them eligible for merit scholarships or need-based aid. Different schools have different methods of distributing financial aid, so it is crucial to calculate the net cost of attendance.


Let’s take a look at Bentley University’s Net Price Calculator to see how this concept plays out for a prospective student.


  • Birthdate: July 15, 2005.
  • Student information: US citizen, single, no dependents, resides in Massachusetts, prefers on-campus housing.
  • Student academics:8 unweighted GPA, 1400 SAT, four AP/dual enrollment classes taken.
  • Household information: Married parents; older parent is 48 years of age. Five total people in the household—student has two younger siblings not in college, ages 14 and 12.
  • Parental income: $402,000 combined, with each parent making about $200,000 per year. $2,000 interest income. $120,000 paid in federal taxes.
  • Assets: Amount in parents’ cash savings: $300,000. Combined assets of siblings not in college: $6,000. Primary residence purchased for $700,000, with $220,000 left in debt. Current value of the home is $1.1 million. No other properties or investments.
  • Student income: Only source of income was work, at $5,000 per year. $7,000 in total

With all of this information, Bentley’s estimated net price is $58,470. This is $20,000 less than Bentley’s sticker price of $78,470. This shows that even with a high-income family, a student can still reduce the price of college.

One of the important things to note is that GPA, SAT scores, and the number of AP/dual enrollment classes each have a different effect on potential merit aid. Using Bentley University’s Net Price Calculator, all three components were adjusted to reflect several different scenarios, but AP/dual enrollment classes taken by the prospective student had the largest effect on merit aid. Just taking an extra Advanced Placement class or two can make a difference of $10,000 in merit aid, given Bentley University’s qualifications.


The entire process of enrolling in college is daunting, from finding the right major to picking the right school to creating a financial plan of attack on one of the biggest expenses of many people’s lives. Yet when it comes to developing this plan, it is important to be aware that the sticker price is just the starting point, not the final figure.

Every college offers different types of aid and has a unique way of distributing the aid. It is critical to calculate the net cost of attendance because expensive colleges can . Even families with high income who may not qualify for much, if any, need-based aid are still provided with opportunities to reduce the college’s sticker price significantly with merit aid scholarships, external scholarships provided by foundations, and so on.

Disclaimer: This is not to be considered investment, tax, or financial advice. Please review your personal situation with your tax and/or financial advisor. Milestone Financial Planning, LLC (Milestone) is a fee-only financial planning firm and registered investment advisor in Bedford, NH. Milestone works with clients on a long-term, ongoing basis. Our fees are based on the assets that we manage and may include an annual financial planning subscription fee. Clients receive financial planning, tax planning, retirement planning, and investment management services and have unlimited access to our advisors. We receive no commissions or referral fees. We put our client’s interests first.  If you need assistance with your investments or financial planning, please reach out to one of our fee-only advisors.  Advisory services are only offered to clients or prospective clients where Milestone and its representatives are properly licensed or exempt from licensure.

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