Which Costs Less? Public or Private?

which costs lessDoes a private school really cost more than a state school?  It sounds like a rhetorical question but it’s not.  I can make a case they cost about the same.  In this article we’ll take a look at the real cost differences between the two and bring the word “value” into the conversation.

*Note: If you haven’t read our article on how to figure college costs, you may want to do that before continuing.*

I always like to start this conversation by discussing the differences between cost and value.  When it comes to certain foods, I’ll always go with the name brand.  Then again, with others I’ll go for the generic brand.  Same is true with lots of things we take for granted every day.  You might know some back roads that take you a couple miles out of the way, but you actually save time taking that route during rush hour traffic.  Yes, it costs you more in terms of gas money, but the value you gain is the time.  Just because something is cheaper or less expensive, doesn’t mean that you don’t get a better value for your money.

The same is true for college.  Before we get into the “price” battle, let’s consider some advantages of private school.

  • Smaller Classes
  • Better Quality Students / Peers
  • Better Quality Professors
  • Better Quality Alumni
  • Control Over Your Beliefs
  • Statistically Better 4 Year Graduation Rates

Now The Battle Over Price

Obviously there are a variety of issues that affect the overall cost of college.  In our article “how Financial Aid Works” we cover some important topics like expected family contribution (EFC) and how to determine if you qualify for financial aid or not. 

Very simply put, to determine your qualified financial aid subtract your EFC from the cost of the school.  To keep things simple, let’s assume you have an EFC of $5,000.  Let’s use two schools from South Carolina for our example.  USC has a sticker price of about $18,000 and Presbyterian College has price tag of $32,000.  Which one is more expensive?  The truth lies in the details.  Let’s take a look

Cost of Attendance
Qualified Aid  
$5,000 $18,000 = $13,000 USC
$5,000 $32,000 = $32,000 Presbyterian

As you can see, we qualify for a reasonable amount of aid at each school.  Obviously Presbyterian is still significantly more.  But watch what happens when we take two very important figures into consideration; Percent of Need Met and Percent of Loans to Scholarships.

Percent of Need Met

The vast majority of colleges in America are not going to meet 100% of your need.  They will meet a certain percentage of it however, and they publish that information every year.  In the case between USC and Presbyterian College, USC will meet 70% of a families need and Presbyterian will meet 85%.  Now let’s take a look at the numbers

Qualified Financial
  Percent of
Need Met
  Financial Aid
$13,000 x 70% = $9,100 $8,900 USC
$27,000 x 85% = $22,950 $9,050 Presbyterian

Remember that the Adjusted EFC is the original EFC plus the amount of Unmet need.  In this case USC only met 70% of the family’s need, which means that didn’t meet 30%.  That $3,900 that USC didn’t provide for the family gets added to the total out of out of pocket costs (the EFC).  In other words, this family is going to have to come up with the difference above and beyond their EFC.

Same is true for Presbyterian.  They met 85% of the need, but they didn’t meet 15% of the need.  That difference of $4,050 gets added to the EFC to determine the new out of pocket costs.

But look at the numbers!  There’s only a difference of $150 a year!  And we are far from done comparing the two.  Let’s take a look at another very important consideration:

Percent Loans to Scholarships and Grants

We just saw that the out of pocket costs of the school are about the same.  Now let’s see if the TOTAL cost of college is comparable.  Remember that “Financial aid” can either be in loans or free money like scholarships and grants. 

Typically, private colleges have significantly more in their endowments to scholarship students than state schools do.  A safe number to assume is that state schools award 50% – 60% in loans and private schools only award 20% – 30% loans.  Let’s see how this plays out in our example.

Financial Aid

% of Aid
In Loans

Total Aid
In Loans
Total Aid In
USC $9,100 x 70% = $6,370 $2,730
Presbyterian $22,950 x 15% = $3,443 $19,507

How about those numbers?  USC awards $6,370 in loans while Presbyterian awards about half that.  So it turns out that USC is actually more expensive on the overall than Presbyterian. 


Unmet Need


USC $5,000 + $3,900 + $6,370 = $15,270
Presbyterian $5,000 + $4,050 + $3,443 = $12,493


Granted, not all the numbers will work out this way when comparing a private to state school.  The point is that it’s definitely possible if you take the time to look and do your homework.  Better yet, hire a professional who is trained and familiar with which colleges offer the best “value”.  Even if you have to spend $10,000 more over 4 years, what’s the value of the education? 

Keep in mind also, that private colleges graduate their students in 4 years at a significantly higher rate than a state school.  So that $10,000 difference can easily be made up if the student fails to graduate in four years from a state school.

Final Word – Don’t look at the sticker price of the school!  You never know what will shake out.  In fact, consider private schools!  There are thousands of great schools that your student can choose from.

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