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College isn't nearly as costly as you think

Anyone with a passing interest in college knows the sticker price of a bachelor's degree has been outstripping inflation for years.

What many people don't appreciate, however, is that most families don't pay full price. Far from it. A new report on the pricing of private colleges and universities reveals that the percentage of students who are capturing scholarships and grants is at an historic high.

Nowadays, nearly everyone gets a price break.

How to maximize financial aid and save for college 03:37

Eighty-nine percent of freshmen who attend private institutions are receiving awards from their schools, according to the annual tuition discount survey that the National Association of College and University Business Officers conducts. This statistic clearly illustrates that it's not just "A" students who capture scholarships from schools. Far from it.

The report also documents that the size of the typical institutional award is at an historic high. The average college award slashes 54.3 percent off the published tuition price. That means the typical award at a school charging $35,000 for tuition would reduce the price by $19,005.

If you're looking for bargains, keep in mind that some types of institutions are more likely to hand out awards than others. At institutions that offer few if any Ph.D. programs, an astounding 94 percent of freshmen receive awards.

Following close behind these universities are small institutions that give awards to 91 percent of their first-year students. Many of these small schools are colleges that primarily or exclusively educate undergraduates.

Obama urges every high school student to apply for college tuition aid 02:21

Research universities, a category that encompasses most of the schools with the biggest brand names, discount the least. Just 66.5 percent of freshmen received scholarships or grants from research universities. The No. 1 priority at these schools is professor research and second is educating Ph.D. students.

It's easy to explain why so many schools are handing out so many awards. The frenetic media hype makes it appear that most schools are rejecting the majority of their applicants, but this just isn't true.

At most institutions, college is actually a buyer's market. Senior admission officers at colleges and universities worry that they aren't going to fill their freshman slots each year. To attract enough students to their campus, many schools must sweeten their offers.

Inside Higher Ed, a respected trade publication, commissions an annual Gallup survey that strongly suggests most college admission offices are at the mercy of fickle 17- and 18-year-olds. In last year's survey, 61 percent of admission directors at private and public colleges said they hadn't filled their fall classes by the traditional May 1 deposit deadline.

The schools that are largely immune to this institutional worry are, again, research universities because they enjoy great brand names and high rankings from U.S. News & World Report. Schools like Harvard, Stanford, MIT and Princeton could double or triple their prices and still spurn most of their wealthy applicants.

Consequently, elite research universities don't have to embrace merit scholarships like nearly all other higher-ed institutions. Research universities tend to give excellent financial aid, but they often require wealthy students to pay full price or close to it.

So, what does a college buyer's market mean for families? If you apply to a private college or university, the odds are extremely high that you'll receive a price break, unless you have a high income or your child's list is stuffed with prestigious research universities.

Also, because most schools have to try harder to attract students, don't assume that the first award your child receives has to be the last. You can negotiate.

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