Understanding the true cost of college is one of the most important factors in planning.

It is normal for this part of the equation to feel a bit stressful and overwhelming. I have counseled hundreds of students and families over the years to address questions: “Why do costs and aid packages vary so much between schools?” or “How can I determine if this school is actually affordable?”

To answer these questions, I like to take a Maria von Trapp approach–let’s start at the very beginning.

How much does college actually cost?

Sticker price versus net price: Although much has been written about the escalating cost of college over the past decade, most families actually end up paying less than the price listed on a college’s website. Think of the published price of college as its “sticker price,” which can be reduced through financial aid. This reduced rate is called the “net price.”

Since 2011, the average net price has gone up 7.5% at private colleges nationwide, and residents of California have experienced increases of 8.4% at the University of California. This is much lower than the rate of sticker price increase. You should never rule out a college based on its sticker price alone.

Cost of Attendance: Colleges publish a “Cost of Attendance,” an annual estimate of charges your family would need to plan for if you were paying for everything out-of-pocket. These charges include direct costs, things the college will bill you for, as well as indirect costs, independent expenses.

Direct costs typically include tuition, room and board (housing and meal plans), and fees (such as technology and student activity fees). Common indirect costs are health insurance, transportation, books, technology, personal supplies (think linens, storage, notebooks, mini-fridges, clothes), and spending money.

Direct costs are fairly standard across students, but indirect costs vary in reality. Colleges provide an estimate of indirect costs based on a typical student experience, but families should consider their own student’s context. For example, book fees, software, and lab equipment for STEM majors tend to be underestimated in a college’s indirect costs, and a student traveling from far away may need to budget extra for airfare. On the other hand, some indirect costs may be overestimated, such as health insurance if a student stays on a parent’s work-provided plan.

Two noteworthy expenses rarely factored into cost of attendance are Greek life and studying abroad. It’s important to discuss how important these experiences are to your student and to budget separately for them.

You said most families don’t pay the full cost of attendance. How do schools determine if I need financial aid?

Colleges will calculate the difference between their Cost of Attendance and your family’s ability to pay to determine your financial need. Most start with your Expected Family Contribution (EFC), a dollar amount determined by a formula that uses FAFSA data such as income, assets, household size, dependents, and number of students in college. An important note–529 savings plans are not used in the EFC calculation! Many families fail to file FAFSA because they think they will not qualify, but don’t make this mistake. FAFSA is the gateway to almost all forms of financial aid, and individual institutions need it to get their own processes started.

To get a fuller financial picture, some colleges will require paid supplemental financial aid applications, such as the CSS Profile. Financial Aid officials can also use what is called “professional judgment” on a case-by-case basis in calculating need. For example, because you use prior-prior year taxes to file FAFSA, your income situation may have changed by the time you apply. Schools may consider extenuating circumstances at their discretion. For these reasons and because costs differ from school to school, your financial need can vary across different institutions. You may ave low financial need at a CSU, but higher need at a more expensive private school.

Is there a way to estimate what kind of aid I will get before I apply?

Depending on your financial need, you may qualify for federal, state, or institutional support. Grants (money that does not need to be repaid) and/or loans are typically based on financial need. Some scholarships and also consider financial need. In addition, your student may qualify for merit scholarship aid, which is usually based on your student’s achievements and independent of financial need.

You can approximate your true cost of college for your target schools by using that institution’s Net Price Calculator. The more information you can provide about your circumstances, the more accurate your projection will be. For a quicker estimate, use the “Net Price” tab to see cost by income bracket on the College Navigator NCES website.

About Laura Reisert Kalinkewicz, Ph.D.

Laura Reisert Kalinkewicz is a higher education professional with over a decade of experience. She oversaw undergraduate admissions at Pepperdine University and completed doctoral coursework at Azusa Pacific University. Her career has focused on counseling students, parents, colleges, and enterprise companies on admissions, financial aid, technology, talent, and workforce development. Visit Laura Reisert Kalinkewicz's profile.