Attention Parents: College Costs Are Plateauing

Plus, how to get the best tuition deal (hint: don’t take the first offer)

These days, even just thinking about the price of college is scary. But there’s hope on the horizon: The price of a college education is growing at the slowest rate in ten years. After skyrocketing in past years, the rise in tuition costs — after factoring in grants and financial aid — has slowed to right around the rate of inflation, according to data from the Department of Labor. The bad news? Prices are still pretty astronomical, especially at private and out-of-state universities.

Why is this happening? A few reasons. The number of graduating high school seniors is stagnating, meaning that colleges can’t hike up prices as much because there isn’t as much demand. Families have also gotten tired of taking on overwhelming amounts of debt. In the booming economy 10 or 15 years ago, families were more likely to borrow all the money they needed for college, assuming they could pay it back, says Kal Chany of Campus Consultants, Inc. Now, more families are thinking twice about letting their kids take out loans, instead looking for discounted tuition at state schools or community colleges and getting more strategic with the financial aid process. Plus, families are getting more savvy about negotiating aid packages and saving money, says Kathryn Flynn of Saving for College. So, what can you do to minimize the toll on your personal economy?

Fill out that FAFSA.

In 2014, families left $2.7 billion on the table by not taking the time to submit a FAFSA (Free Application for Federal Student Aid). This is a huge mistake. “Everyone should fill this out and see what happens,” says Flynn. “They might be surprised.” Federal aid formulas don’t factor in retirement accounts and home equity, where many people have their money stored (meaning those assets don’t hurt your application), and they treats 529 college savings accounts favorably. Plus, there are discounts for having more than one child in college. Submit your form as early as possible to qualify for first-come, first-served funding — this year’s application opens up October 1st.

Don’t get turned off by sticker price.

Many students assume certain private colleges with sky-high tuitions are out of reach and don’t even bother applying. That’s another misstep. As with cars, the sticker price is often higher than the one you actually pay — 35 percent of college costs are covered by grants and scholarships, according to Sallie Mae. That’s a bigger slice of the pie than parent contributions and borrowing, respectively.

Know that more expensive isn’t necessarily better.

The Great Recession taught us that just having a degree isn’t enough to ensure that you can pay back what you owe. To assess the real value of your degree, look to the career placement office from your college or university and check stats about entry level jobs you might be qualified for. A good rule of thumb is to not borrow more than your expected first year’s salary, says Chany. After that, you’re better off finding cheaper options, like state school or two years of community college then transferring to a four-year school, than saddling yourself with more debt.

Negotiate, negotiate, negotiate.

You know it’s important to negotiate your salary. But when it comes to financial aid packages, many people don’t realize they’re also open to discussion. If you’re unhappy with your package, make a case for more. The key lies in demonstrating your need and using numbers to show why the amount you’re being given doesn’t take into account your full situation, says Chany. Of course, schools may adjust if you got a better offer from another school and you’re a strong student, but they’ll still need you to make the case for why the numbers don’t add up, he adds.

With Ellie Schroeder

Jean Chatzky

Jean Chatzky