As the published prices for college tuition keep rising to astronomical levels ($100k a year?!), fewer and fewer students are actually paying the “sticker” price. As you can see below, the number is down to ~25% for public and ~15% for private 4-year institutions. This can make it very confusing for a family trying to plan for upcoming college costs.
This chart is taken from the Econofact.org article “How Much Does College Really Cost?” by economics professor Phillip Levine is one of the few articles I’ve seen that analyzes the the data based on household income level.
Colleges use a combination of need-based financial aid and “merit” aid to adjust the pricing of their product to balance their desired class composition and revenue requirements. The chart below shows “Typical College Net Prices At 4-Year Institutions by Family Income, Adjusted for Inflation”. This number does not include student loans and work-study funding.
For households under $100,000 a year, the numbers work out to well over 100% of your annual income for 4 years of tuition at both public and private schools. That seems especially daunting given the rising floor of basic costs like housing, transportation, and food.
Even for a family that earns $100,000 a year, paying for 4 years at a public university will average roughly $100,000 total. If you have multiple kids, that’s getting into the zone of another mortgage. A household earning $200,000 or $500,000 would also pay about the same $100,000 for 4 years of public university.
The private universities are where the higher-income households keep paying more as their income rises. A household earning $200,000 a year can expect to pay $200,000+ for 4-years at a private university.