Housing & Mortgage
Does that House Come With a Low-Cost, High-Ranked Public College?
The role of higher education in choosing your home’s location
The $1.57 trillion in outstanding student loans is pretty much all that needs to be said about the daunting cost of college.
Yet every family has options to find schools that are a good financial fit. Limiting the college search to schools where your kid is a good candidate for a tuition aid package that has a manageable net price, is the must-do for all families about to embark on a college search.
Households with young kids that are open to a move might also consider settling in states with strong public university systems. The cost to attend as an in-state resident is often less than half the net price to attend all but the most heavily endowed and highly selective private schools that heavily subsidize attendance.
The typically high cost of private college
The 2022 Wall Street Journal/Times Higher Education college ranking places Harvard, Stanford and MIT at the top. All three schools have net prices below $20,000, thanks to mega-sized endowments. That’s great news for the infinitesimally small number of applicants who will be accepted.
For everyone else, private schools tend to have higher net prices. Plenty of highly rated schools in the WSJ/Times ranking typically extract a lot more to attend. At the University of Chicago, New York University and Baylor the annual tab is between $35,000 and $38,000. Oberlin, Syracuse and Tulane all have annual net prices of more than $40,000.
The in-state alternative
There are plenty of public state schools with strong academic chops that will be far kinder on your family’s wallet. In the WSJ/Times Higher Education college rankings, the top five states with the highest rated schools are:
Michigan: University of Michigan-Ann Arbor (#24 overall)
There’s no requirement to actually live in Ann Arbor, but the college town is always popping up on “best of” lists. The recent average price per square foot in Ann Arbor was $295. The average sales price was just under $550,000. You can spend half as much for a home in Grand Rapids, Michigan. The average home price in Grand Rapids is around $240,000, with a per square foot cost of $169.
California: University of California Los Angeles (#27), University of California Berkeley (36), University of California Davis (40), University of California San Diego (43)
Yes, the big cities come with very big housing price tags. But move beyond L.A. and San Francisco/Silicon Valley, and costs come down plenty. The $494,000 average home price for a Sacramento home is less than half the cost of a San Francisco home. One hour north of S.F., the average price for a home in Santa Rosa ($844,000) is clearly steep, but a big peg down from the $1.25 million norm in San Francisco. The average Fresno home sale price was less than $400,000 recently.
Illinois: The University of Illinois Urbana-Champaign (tied for 45th)
Living along Lake Michigan’s north shore isn’t cheap. But keep in mind that communities with strong public school systems can make it an easy call to skip private K-12 school. The median home sale price in Winnetka is more than $1 million, and in nearby Skokie it’s less than $450,000. The in-land Chicago suburb of Lincolnshire boasts a strong school system. The recent median home price in Lincolnshire is about $500,000.
Washington: The University of Washington-Seattle (tied for 45th)
The Redmond price per square foot (home of Microsoft) and Seattle price per square foot costs are indeed pricey, with recently sold homes averaging $539 and $500, respectively. If you venture to the state capital, the Olympia average price per square foot was recently $284. In Spokane the price per square foot is around $200.
Indiana: Purdue University-West Lafayette campus (48)
South Bend, the home of the pricey private University of Notre Dame (recent net price of $30,500), can be a great place to raise a family. Then, you can send ’em to Purdue for less than half as much. Purdue-Lafayette’s net price this year is less than $13,000. The median home price in South Bend was recently around $150,000. In Fort Wayne, the average single family sale price recently is $230,000. In Bloomington (home to Indiana University, ranked #97 among all schools by WSJ/Times Higher Education), the average sale price for a single family home is nearly $310,000.
The average net price for all of these schools is less than $20,000 a year. UC-Berkeley is the most expensive at nearly $19,000, and the University of Washington-Seattle is the least expensive for in-state residents, with a net price for this year of less than $11,000.
Being able to spend $40,000 to $120,000 less for a four-year, in-state education can be the secret sauce to a stress-free retirement for you (and your adult children). If the lower price tag means you can continue to contribute to your retirement savings even while your child is in school, that increases your odds of reaching retirement in solid financial shape.
That’s going to be a big relief for your adult children as well. What so often gets lost in the college-financing conversations is that parents who forsake retirement savings to “afford” paying for college put themselves at greater risk of an underfunded retirement. That’s not just a worry for your kids, but it can also mean they will need to step in with financial support right at the point they are raising their own families.
For younger families who have yet to establish strong roots in a community, or their remote work life makes moving both practical and enticing, considering landing in a state with a strong in-state school system can be valuable advanced planning.
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