Why You Need to Understand the Difference Between Public and Private Colleges

Hands counting money to Understand the Difference Between Public and Private Colleges

And it’s not just that private colleges are more expensive than public colleges. Of course, they are. Anywhere from 2 to 4 times the cost of a public university. Yet, most families quickly learn that private colleges are more likely to offer generous financial aid to be more competitive with the public institutions and convince students to attend.

But that’s not the difference I’m talking about. The difference that too many families forget is that lower priced (I really can’t bring myself to say inexpensive or low cost) public universities are for students who are state residents. Public universities generally charge out-of-state residents higher tuition, often substantially higher, than those paid by in-state students.

The reason is simple. Public colleges are partially funded by the state governments. This means that the state governments aren’t interested in using their money to help pay the tuition of other states’ residents. Or another way to look at it is that state residents are getting a discount when they attend their states’ public colleges because they have already been paying part of the tuition through taxes.

Therefore, since out-of-state residents haven’t been paying taxes that help fund the public colleges, the public colleges charge them more.

The problem is that an increasing number of public universities are charging out-of-state residents much more. We’re talking substantially more than the “subsidy” the state provides to the colleges.

There are 16 states universities where the total cost of attendance for out-of-state students is over $50,000. These include the University of California schools, University of Michigan, University of Virginia, University of Colorado, and the University of Texas. This is at least $20,000 more than the price in-state students pay.

And unlike private colleges that cost the same, these public universities generally don’t offer out-of-state students financial aid. They don’t need to.

After all, they tend to be popular schools and don’t have any problem attracting students. In fact, many admit out-of-state students because they are an additional source of revenue. High out-of-state tuition helps make up for a general decline in state funding. Instead of the states subsidizing state residents’ tuition, out-of-state students are.

Unfortunately, too many families have students applying to out-of-state public schools without understanding how much more they’ll have to pay to attend. In terms of paying for college, it combines the worst part of the public and private college: high cost with little to no financial aid.

There are public colleges that have much lower out-of-state tuition than others. The cost for some is actually still lower than a private school and there are some that don’t charge out-of-state residents anything extra. But these don’t tend to be the popular big name universities most people have heard of.

So unless you’re willing to pay the cost of a private college for a public university education, you need to make sure your student understands which public colleges are affordable and which are not for your family.


You can learn more about the cost of public universities in the Introduction Cutting College Costs class–it’s FREE!

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