The Missing Link to College Costs: "The reality for most families is the cost of education has less to do with the price and more to do with the ability to pay.".

• Author: Duncombe, Justin
• Position: EDUCATION

MANY FAMILIES do not understand how colleges charge for their education and how the schools assess families and students to determine that cost. There are drastic differences between conventional wisdom and the reality regarding education selection and affordability, and the mistakes that people might make could cost tens of thousands of dollars.

Too many parents and students prevent themselves from considering schools due to a misunderstanding of costs. Parents may restrict the type of school due to the belief that it is unaffordable. Students may not think beyond a community college or not try as hard in high school because they feel college is out of reach. They may be inclined only to do well enough to go to a college that appears less expensive. The reality for most families is the cost of education has less to do with the price and more to do with the ability to pay.

What might families pay per year at different income levels--a family of four with $10,000 in the bank, for instance? The only thing we will change is income. In each example, we will consider three types: highly selective private colleges ($65,000-$75,000), selective colleges ($45,000-$60,000), and instate colleges ($18,000-$35,000).

Median income: $61,000. Highly selective private colleges have estimated out-of-pocket costs between $4,600 and $10,000--the same or less than the annual cost of a student when living at home and comparable to the cost of many community colleges. Selective school costs are between $10,000 and $25,000. Even in California, where in-state prices are among the highest at up to $35,000, the out-of-pocket estimate is $11,000. Incomes lower than this will qualify for even more assistance from each type of school and from Federal and state programs. The assistance can cover most or all the tuition and often all the housing. A student could graduate with no debt with a part-time job to cover clothes, food, and books.

Middle income: $90,000. Highly selective private colleges have estimated out-of-pocket costs between $8200 and $16,000. Selective school costs are between $16,000 and $35,000. Sticking with the California UC example, the out-of-pocket estimate is $20,500.

Upper middle-class income: $140,000. At this point, we are well into the range of incomes where families start to assume they make too much to get financial aid. Let's test that. Highly selective private colleges have estimated out-of-pocket costs between $17200 and $25,000. Selective...