A financial analysis of private and public college

College can easily set you back hundreds of thousands of dollars. Whether you pursue a public or private education can have a big impact on your overall costs. It can also influence your earning power in the future, which is why it’s a decision that shouldn’t be made lightly.

When it comes to choosing between public and private higher education, it's important to weigh the costs against the benefits. Only then can you determine which one will give you the best return on your investment.  

Tuition and fees

There are a lot of variables that go into determining the true value of a public or private college education. Take tuition for starters. If you’re on a budget, most of the time a public college is going to be a less expensive option. State colleges and universities receive public funding to lower the cost of schooling, which makes it affordable for more students. Private colleges don’t get those subsidies and charge more for tuition as a result. However, if you go to a state university as an out-of-state student, the cost can be just as hefty as a private institution – the lower tuition only applies if you attend a public university in your home state. 

According to the National Center for Education Statistics, the average tuition and fees for a public four-year institution in the 2022-2023 school year was $9,800, down 5% from 10 years ago. At a private nonprofit college, however, it was $40,700, an 8% increase over a decade. Also, students at both private and public colleges will pay the same for books and supplies even though there is such a large price disparity between state and private institutions of higher learning.

Factor in financial aid

After you figure out how much tuition and fees will be, you have to weigh the financial aid offers you’ll receive. While private school may be more expensive, receiving financial aid, grants and/or scholarships may lower costs enough to be worth it.

Location matters

Beyond tuition and fees, college-bound students have to consider the cost of housing. Staying on or off campus raises the overall cost. That too will vary depending on the school and its location. If you are going to school in New York City, the cost for an off-campus apartment will be more expensive than housing in Mobile, Alabama.

You should also consider the cost of traveling back home when factoring in the total cost. If you want to visit home often and choose a school across the country, it can get expensive. If you select a local school, you may be able to live at home with your parents, which will lower the overall cost.

Does the degree match the price?

One of the biggest factors when considering a private versus public college education is the degree you’re pursuing. Student debt is a big problem in the U.S. Many college graduates come out of school with debt they are ill-prepared to pay back. This is where return on investment (ROI) comes in. 

Consider a student pursuing a teaching degree. Attending an Ivy League institution, though prestigious, may not increase the student’s earning power as a first-year teacher, but it is going to potentially mean years of paying down debt. If the student pursued a degree at a state school, they might not be drowning in debt upon graduation.

On the flip side, a person earning an engineering degree might earn more upon graduation and will have a better ROI if they choose a private college, depending on the caliber of the school. To ensure you are making the right decision based on the degree you’re pursuing, check the salaries in your chosen field and hiring rates. That will help you determine if you can afford to pay back the student loans once you graduate. 

The bottom line

College isn’t only about pursuing a degree and landing a job. It's a rite of passage for many, which is why a lot goes into the decision. By approaching the selection consciously, focusing on ROI, you may be able to ensure you aren’t saddled with student debt you can’t pay back.

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