Imagine that you're the proud parent of a soon-to-graduate high school senior who will soon be headed off to college. Should you send them away to a traditional university? Or should you encourage them to pursue their college diploma through an online program while living and working at home ?
To answer this question, we'll consider three options:
- A traditional 4-year public university.
- A traditional 4-year private univesity.
- An online private university.
We'll also be making the following assumptions:
- The student will need to pay room and board to attend the traditional public and private universities.
- Other costs of attending college, such as fees, books, etc. are equivalent among all institutions.
- They require 120 credits to graduate.
- Students at the traditional universities accumulate 30 credits per academic year.
- Students at the online university only take one class at a time, each covering a six-week period. They will typically earn 24-27 credits in a given year, but will require additional time to complete their academic degree program.
We found the following cost per credit for the 2008-09 academic year for the three types of institution:
| 2008-09 Cost of Tuition | ||
|---|---|---|
| Type of Institution | Cost per Academic Year | Cost per Tuition Credit |
| Public University | $6,585 | $219.50 |
| Private University | $25,143 | $838.10 |
| Online University | Varies | $494.00 |
We next took into account the rate of inflation for university tuition, which the College Board estimates to be roughly 6.5% per year. The table below projects the cost of tuition for each year of attending each type of academic institution:
| Year-by-Year Cost of Tuition, Accounting for Inflation | |||
|---|---|---|---|
| Year | Public University | Private University | Online University |
| Year 1 | $ 6,585 | $25,143 | $13,338 |
| Year 2 | $ 7,013 | $26,777 | $12,627 |
| Year 3 | $ 7,469 | $28,518 | $15,128 |
| Year 4 | $ 7,954 | $30,371 | $14,321 |
| Year 5 | - | - | $ 11,439 |
| Total | $ 29,021 | $110,810 | $ 66,860 |
In the table above, we assume that students attending the online university alternate between 27 and 24 credits each year, which leaves 18 credits left to be earned during the fifth year.
Now that we have the tuition picture, let's consider the cost of room and board for each type of institution. Here, we assume that these costs represent what is required to support your student at college, which would be in addition to those you currently require to support your own household with them at home. We obtained our basic values for room and board by subtracting the cost of tuition from total college costs for 2006-07 academic year data from the College Board (using Figures 3 and 4), then updated it to the current and future years based on the rate of change that they've indicated the year-over-year change between 2007-08 to 2008-09:
| Year-by-Year Cost of Room and Board, Accounting for Inflation | |||
|---|---|---|---|
| Year | Public University | Private University | Online University |
| Year 1 | $ 7,760 | $ 7,949 | - |
| Year 2 | $ 8,160 | $ 8,349 | - |
| Year 3 | $ 8,560 | $ 8,749 | - |
| Year 4 | $ 9,360 | $ 9,549 | - |
| Year 5 | - | - | - |
| Total | $42,800 | $43,745 | - |
Now, we'll add up the totals for tuition and room and board, then find the total cost of each type of institution per credit:
| Estimated Total Cost of College and Total Cost per Tuition Credit Earned | |||
|---|---|---|---|
| Type of Institution | Public University | Private University | Online University |
| Total Tuition Cost | $ 29,021 | $110,810 | $ 66,860 |
| Total Room and Board Costs | $ 42,800 | $ 43,745 | - |
| Estimated Total College Cost | $ 71,821 | $154,555 | $ 66,860 |
| Total College Cost per Tuition Credit Earned | $ 598.51 | $1,287.95 | $ 557.17 |
So, we see that when you factor your child's living expenses of being away at college into the picture, even a taxpayer-supported public university may not offer the best deal.
Then again, if you can have your child live at home while attending a traditional university, that might provide the lowest all-round costs. The downside to that scenario though is that the time for classes and commuting would limit your college student's ability to be able to work while going to school.
Labels: education, personal finance
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