Public vs private college: How to decide where to go to school

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In March and April each year, tens of thousands of prospective college and graduate students anxiously wait for acceptance into their top schools.

But the prestigious names often come with a hefty price tag, plunging many into a gut-wrenching dilemma: How to decide where to go to college. Deciding on a private university could mean higher tuition bills that yield exclusive professional connections, while smaller, less recognizable state and public schools boast lower cost at the expense of more crowded classroom settings.

“I don’t think it’s ever worth it to be mired in debt,” said Laurie Martin, director of undergraduate and graduate consulting at Stratus Prep in New York City. “Don’t get caught up in a certain name, but look at the full spectrum at what the school has to offer.”

What college should I go to? Consider all the factors during your college search

At Stratus Prep, which counsels several hundred prospective undergraduate and graduate students each year, they stress fit above all else when advising their clients.

“It’s like putting together pieces of a puzzle and it’s specific to every person,” Martin said.

The counselors look at several factors and encourage students to take them into consideration when deciding where to go to college:

• Scholarship availability

• Classroom size

• Diversity of student population

• Admissions acceptance rates

• Cost of attendance

And, yes, finances play a major role in the students’ decisions.

“It carries a lot of weight,” Martin said. “College is always going to be an investment, but … if they could get to the same plateaued success without spending all this extra money, then certainly we would tell them to do that.”

How to pay for college

The average cost of an Ivy League degree at one of the big 8 for the 2023 academic year was $59,985. That’s a lot compared to a public 4-year degree which averages around $27,146 per year in 2024 for an in-state public school. But regardless of your school choice, you might be digging deep into your pockets to cover the costs.

Filling out the FAFSA and applying for federal financial aid is the best place to start, then applying for scholarships and grant money. Students will want to maximize the gift aid that they receive, as it doesn’t need to be paid back. Consider also looking for work-study jobs that will help with resume building.

Federal loans are the first stop when looking to borrow for an education. They tend to offer the lowest interest rates and take your Free Application for Federal Student Aid (FAFSA) into account. If you are still looking to close the affordability gap at that point, then you might consider private student loans¹.

Calculate your college costs

Understanding the true cost of attendance is crucial for making an informed decision about your higher education. Here are some factors to consider:

Tuition and fees: This is typically the largest expense. Remember that out-of-state public universities and private colleges often have higher tuition rates.

Room and board: If you’re planning to live on campus, factor in the cost of housing and meal plans.

Books and supplies: Textbooks, course materials, and technology can add up quickly.

Personal expenses: Don’t forget about daily living costs like transportation, clothing, and entertainment.

Financial aid: Subtract any scholarships, grants, or work-study opportunities you’ve been awarded.

Once you have these figures, you’ll have a clearer picture of your total college costs. If there’s a gap between your available funds and the total cost, you may need to consider student loans.

Big name or big savings? Are Ivy League school tuitions worth it?

Despite prices, there is something to be said about graduating from the most selective and renowned universities. However, it might not be because of the degree you earn, but the doors it can open.

“There are valid reasons to choose an institution that’s more prestigious, but I don’t think it’s the prestige in itself,” said Heather Jarvis, founder of AskHeatherJarvis.com. “There are certain schools, the fanciest schools, that open doors that cannot be opened any other way.”

“They have a unique alumni base, for example, that may be connected to certain employment opportunities in a way that is special and that you can’t get just anywhere,” she said.

But choosing a school based on name recognition alone, however, could be a costly gamble.

College ROI: Find colleges with the best return on investment

Return on investment, or ROI, is the measure of the efficiency of an investment. In the case of a graduate or undergraduate degree, how do the gains of this time and financial investment compare to the cost? You might also calculate your own personal ROI based on your field of study, job prospects, and financial profile:

ROI = (Gain from Investment – Cost of Investment) / Cost of Investment

Even though Martin and Jarvis note that private colleges often offer generous financial aid packages, the Ivies can be outranked both with and without financial aid by smaller and lesser-known institutions.

The right academic program for you might not be at an Ivy League school

Both Martin and Jarvis recommend choosing schools that have well-known degree programs in the student’s preferred industry, including state schools. For example, if you’re planning on medical school, it’s worth noting that the top medical schools aren’t always Ivies – different from business or law schools.

“A lot of the tech firms or a lot of the cutting edge companies, are looking for something more than just a name of the school on a resume,” Martin said.

Both the University of Illinois and the University of Southern California are in the top five for accounting departments, she said, while the University of Wisconsin, with in-state tuition totaling less than $15,000, is ranked in the top five for education.

“People are understandably concerned about making the right decision. And it’s stressful because there are so many factors that matter,” Jarvis said. “I think that people need to consider their own goals and desires.”

And Jarvis pointed out one other factor when considering private universities versus public colleges.

“It can be easier,” she said, “to distinguish yourself sometimes on a smaller campus or at a campus that is less competitive.”

Using the Earnest Student Loan Calculator

No matter which college option you choose, you may need to explore private loans to help cover the expenses. To help you better understand your potential loan payments and options, our student loan calculator can be an invaluable tool. By inputting your estimated loan amount, interest rate, and loan term, you can see how these estimated factors affect your monthly payments and the total cost of the loan over the life of the loan. This information can help you make more informed decisions about how much to borrow and which repayment options might work best for your financial situation.

Remember, while student loans can be a useful tool for financing your education, it’s important to borrow responsibly. Only take out what you need and consider your future earning potential in your chosen field when deciding how much debt to take on.

The opinions expressed by the interview subjects are not necessarily those of Earnest. This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.

¹ Before applying for private student loans, it’s best to maximize your other sources of financial aid first. It’s recommended to use a 3-step approach to assembling the funds you need: 1) Look for funds you don’t have to pay back, like scholarships, grants, and work-study opportunities. 2) Next, fill out a FAFSA(R) form to apply for federal student loans. Federal Direct subsidized and unsubsidized loans, excluding PLUS Loan for Parents and PLUS Loan for Graduate and Professional Students which require a credit check and a credit worthy endorser if the parent or graduate or professional student has adverse credit, do not require a credit check or cosigner, and offer various protections if you're struggling with your payments. 3) Finally, consider a private student loan to cover any difference between your total cost of attendance and the amount not covered in steps 1 and 2. For more information, visit the Department of Education website at https://studentaid.gov/.