Home » Blog » Tim Twellman » The Cost of College: Calculate Your Family's Real Contribution, Not How Much You Can Borrow!

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Tim Twellman
Tim Twellman


For the past decade, economists have debated why the cost of college continues to rise in this country. Some blame it on the regulators, the banks, the student loan providers or even the colleges themselves…  But, WHO ultimately pays for college? WHO makes the final decision? There is an underlying issue that continues to be overlooked in this country …

We, as individuals, are responsible for the cost of college!  We live in a country that does NOT force us to do anything. We have the freedom to choose whatever we think is right and, ultimately, what allows us to sleep well at night. My suggestion is to take a step back and to really look at why the cost of college continues to rise. Do the regulators, the banks and the student loan providers have anything to do with it? – Yes, they play a part, but we are the ones who pay for college, and that means we are the reason college is so expensive. 

Elementary economics teaches that supply and demand determine the price for a particular service or product. When it comes to college, we are the demand; we are the consumer of the product (a college education), so if we change, the price of college will change! Said another way, if we stopped stretching to pay such high prices for college or borrowing at alarmingly high rates to pay for college, then the cost of college would have to change … because we changed!

If we knew what we really owed for college - its true cost -  we would change our choices.  We would make choices that were REAL and actually made sense for our families. 

So, how do we change and make better choices for our families?

The first step is to understand what we really owe for college. If you have had a child go to college, I am sure that you are familiar with the term "Expected Family Contribution" or EFC.  It's a complicated formula the government uses to calculate how much you can borrow in federal loans for your child’s education based on your combined family income and other financial metrics. Families everywhere use this formula to help them determine which colleges they can afford, but, ultimately, the EFC lies at the very root of the problem. Why?

Because it doesn’t talk about what you can afford or what you owe; it only deals with what you can borrow. In doing so, it promotes overspending. 

Just so you understand, whether you pay for college today or borrow to pay for it tomorrow, you owe the money.  So, let's just forget about the EFC and look instead at what is your real family contribution (what I will call your RFC) when you are deciding on a college for your child.  You can calculate your RFC by using this simple formula: 

Total 4 Year College Cost minus Total 4 Year Scholarship = REAL> FAMILY CONTRIBUTION

Note that your RFC does not differentiate between paying cash and paying by taking on debt. Because you have to pay, sooner or later, they are the same! Your RFC will show you the TRUE expense of college and it will create a more realistic approach to paying for college.

Using the RFC will help you to:

  1. real cost,which will likely lead you to ...
  2. pick the right college for your child (one you can afford), thereby ...
  3. creating social change.

Intrigued by this approach? You can learn more at www.thecollegeprogram.com.