Where you or your child goes to college (in-state or out-of-state) and what type of college you choose (private or public) can make a big difference – academically, socially, financially, and from an admissions standpoint.

Yet, many students and parents unwittingly make a big mistake when applying to college and selecting the wrong institution.

Picking the wrong college can cost you enormously, but probably not how you think.

Most families believe that a public school is cheaper than a private one – or that in-state and local schools are automatically less expensive than out-of-state schools.

I’m going to share why these assumptions can be wrong – and costly.

But first, let me tell you a story about my family.

My husband, Earl, and I moved with our teenage daughter, Alexis, from New Jersey to Texas in 2019.

Once our daughter entered high school in 2020, we quickly learned one big difference between teenagers in our small town in the Garden State versus students here in the suburbs of Houston.

What’s the difference?

Getting off the Block – or Not

In this area of Texas, the vast majority of students want to go to a public school here in the state.

They are hard-core Texas A&M fans who aspire to become Aggies. Or they’re just salivating to attend UT Austin, the premiere flagship school in the state.

By contrast, when we live in Mountainside, NJ, most teens relished the idea of going far from home. They talked about going to Yale in Connecticut or USC in Southern California. They didn’t mind “getting off the block,” as we call it – or moving away from the area they’d always known.

Sure, many kids set their sights on Rutgers University or Princeton; both schools are in New Jersey. However, a high percentage of Jersey teens expressed a preference for going out of town.

At first, I thought this seemed to be the case anecdotally or a phenomenon among our family’s peers. But … nope!

In fact, New Jersey ranks as the biggest exporter of students who go out of state for college.

According to data from the National Center for Education Statistics, around 32% of New Jersey high school grads attending 4-year colleges attend out-of-state institutions. This is the highest rate in the country.

The national average for out-of-state enrollment is around 16%. So, New Jersey’s rate is double the typical state.

In 2019, New Jersey exported over 25,000 students to other states for college, importing around 11,000 students. (New York and Pennsylvania are top destinations, but many NJ students also attend colleges farther away in states like California, Massachusetts, and more).

Proximity to so many college options in the Northeast, combined with a culture of leaving home, contribute to NJ’s high outmigration.

Meanwhile, according to 2021 data from the Texas Higher Education Coordinating Board, about 16.5% of Texans who go to 4-year institutions choose out-of-state schools. This percentage has been fairly stable, ranging from 15-17% over the past decade.

For the class of 2021, around 27,500 Texans opted for out-of-state 4-year colleges. Popular destinations include Oklahoma, Louisiana, Arkansas, and New Mexico. But others also go farther away to states like California, New York, and others.

All of which brings me back to the point of this article.

If you or your child is currently narrowing down your list of colleges, I have some advice to share.

I think it’s a big mistake socially, academically, from an admissions standpoint, and especially financially to ONLY consider in-state public schools.

Hear me out – and allow me to explain why applying exclusively to local public colleges could be a major blunder.

First, I’ll address the benefits of going away to college (the out-of-state factor).

Then, I’ll address the benefits private schools may offer over public institutions (the private vs. public school factor).

The Social Benefits of Moving Away From Home

Going off to college forces kids to grow up. They become more responsible and independent when they can’t easily run back to Mom and Dad’s nearby house.

Students mature emotionally and psychologically when they leave the comforts of home. They learn to adapt to new people and surroundings. Going away pushes teens out of their comfort zone so they can develop key life skills.

The Academic Benefits of Leaving Your Local Bubble

Going away to college does more than help students grow and mature socially. It can lift their aspirations and elevate them academically, too.

When they go to a local school, many students say it can often feel like they’re attending the college version of high school – where they see the same people and sometimes don’t feel as academically or intellectually challenged.

Being in a far-flung state means they’ll have to meet, interact with, and get to know new people from different backgrounds and upbringings. They’ll have to debate ideas with those who have different views. They may also get a more rigorous college experience in the process, which goes for work inside and outside the classroom.

Academically, going away pushes students out of their comfort zone so they can be exposed to new perspectives and ways of thinking. This expands their worldview. It can also strengthen them academically if they are planning to pursue graduate or professional school or even do a study abroad program where they’ll have to mix with people of various backgrounds.

The admissions benefit of being an out-of-state student

Many colleges love to woo out-of-town students, especially high-achieving students or those with special talents (such as athletic, artistic, or academic achievements, along with civic or volunteer interests). Colleges want to create geographic diversity in their student body because school officials know it fosters a richer dynamic on campus.

It’s true that public colleges have to meet certain mandates – like allotting a specific percentage of their available seats to local, in-state residents. But even then, college admissions officers are looking for a talent pool of out-of-state students to round out their list of enrolled students.

Consequently, many colleges and universities in America look to build a mosaic of students that represent all walks of life. They want diversity not just in racial, ethnic, or gender terms but also diversity from a geographic point of view, with students coming everywhere, from rural or small towns to urban centers or big cities. Such students can gain an admissions edge over local students who reside nearby or in the same state as a college.

The Financial Benefits of Tuition Discounts

Additionally, if your family is searching for an affordable college option, students should not overlook private institutions that happen to be out of their state of residence. Many private schools offer significant tuition discounts, making their net price very competitive with public state schools.

This practice, known as tuition discounting, is quite common among private non-profit colleges.

According to the National Association of College and University Business Officers, 341 private non-profit schools discounted their published tuition by an average of 56% for incoming first-year students in 2022-2023.

Across all undergraduates, the average tuition discount rate reached 51% – an estimated record high. Put another way: if you see a private school’s advertised tuition at $40,000, chances are it’s going to give you a financial aid package for at least half of that.

Private colleges aim to offset their high sticker price through grants, scholarships, and fellowships. After discounts, the final out-of-pocket cost for families can be comparable to public university options.

Also, with private schools, generally, the higher the sticker price of a college’s tuition, the higher the discount the college will offer when it grants a financial aid package.

For example, among private non-profit colleges charging over $41,000 per year, the average freshman discount rate was 62.5% in 2021-22.

Discount rates have also been climbing over time. In 2011-12, the overall average freshman rate was 42%, compared to 52% in 2021-22. As you can see, private schools are increasingly using discounts to attract students.

At private non-profit colleges with smaller endowments, the average discount rate can exceed 70% for incoming first-year students. So imagine you saw a school with a $50,000 price tag for tuition, and it gave you or your child a discount (i.e., a scholarship or institutional grant) of 75% off tuition. That would be a $35,000 discount, bringing the actual tuition costs down to just $15,000.

You can use the net price calculators mandated by the federal government on every college website to get a customized estimate of your anticipated out-of-pocket cost.

Another tip: check out the U.S. Department of Education Score Card tool online at https://collegescorecard.ed.gov/. Just enter a school name in the search bar and click on the college or university’s name. The tool will show you a ton of info about that campus – everything from its graduation rate and average out-of-pocket cost to the median earnings of its graduates and the amount of student debt they carry.

Other Reasons Colleges Try to Lure and Attract Diverse Students

Private schools also hope to attract talented students from diverse socioeconomic backgrounds by providing more generous financial aid.

Socioeconomic diversity matters within higher education, too. For so long, many colleges have been (and remain) exclusive places where wealthy families who could afford to write big checks send their kids.

But colleges know that if they simply take all the rich kids, they’ll have a lot of uniformity and groupthink without the benefit of students who can bring fresh perspectives, ideas, and experiences that can enrich a college campus.

The Admissions Benefit Of Attending Private Schools

Applying to a private school or several private colleges or universities might also stack the deck more in your student’s favor when it comes to admissions.

According to data from the National Center for Education Statistics (NCES), there are nearly 2,700 four-year, degree-granting colleges and universities in the United States in the non-profit sector.

The NCES tracks higher education institutions in their Integrated Postsecondary Education Data System (IPEDS). In 2020, per IPEDS data, there were:

2,679 4-year, degree-granting, non-profit institutions
772 public institutions
1,907 private non-profit institutions

This count includes universities, liberal arts colleges, teachers’ colleges, technical colleges, and more. It does not include for-profit institutions.

So, public schools comprise only around 29% of all 4-year nonprofit institutions. The other 71% are private nonprofit colleges.

Isn’t that a shocker? Put another way: about 7 out of 10 four-year schools in this country are private institutions; only about 3 in 10 colleges and universities are public schools.

This disproportionate ratio exists for several reasons.

For starters, public schools are funded and run by state governments, so there are political and budget constraints on creating more.

Additionally, private schools can be founded and funded independently through private donors, alumni networks, religious organizations, and more.
Finally, many private “liberal arts colleges” were founded in America over the past centuries before widespread public education. This fact alone helps explain the higher number of private institutions.

Even though more than 80% of full-time students at both public and private non-profit colleges receive some form of financial aid, there are often big financial outcomes between the two.

Which is Better Financially? Princeton vs. Rutgers

Below is some comparison data between Princeton University and Rutgers University, New Jersey’s premier private and public institutions.

Check out their costs, financial aid, and student debt statistics:

According to the schools’ websites, for tuition, fees, room and board, Princeton’s total cost of attendance in 2023-24 was $83,140. Meanwhile, Rutgers’ estimated total in-state cost of attendance was $37,849 – less than half of Princeton’s.

But look at how much money the two schools dole out – and the differences in their financial aid packages to students.

At Princeton, 66% of students receive financial aid; the average aid package is $70,000 annually. Meanwhile, at Rutgers, about 75% of students receive financial aid; the average aid package for first-year students is $14,633.

So right off the bat, Princeton’s net cost is $13,140 – about $10,000 less than the net cost of $23,216 at Rutgers.

Drill down deeper, and you’ll see that Princeton grads fare even better financially – despite the school’s high sticker price.

At Princeton, the school has a “no loan” pledge, meaning none of its financial aid awards include student loans. Princeton meets 100% of the demonstrated financial need for admitted students. Rutgers does not guarantee meeting full-need. So, part of the financial aid package from Rutgers would come in the form of student loans, which have to be repaid.

At Princeton, only 2% of students take out federal loans by graduation, and the median total debt after college is $10,320, according to the Department of Education’s College Scorecard. At Rutgers, 40% of students get federal student loans by graduation, and their median total debt is $21,500.

So, in summary, while Rutgers provides decent financial aid as the flagship public university, student debt loads are twice the amount compared to an elite private school like Princeton. Moreover, far more students at Rutgers need to borrow for college than at Princeton.

It’s interesting to see the contrasts between a private institution with a huge endowment and a large public state school. Even though the sticker prices are very different, both try to provide affordable access through financial aid.

However, the debt burdens on students end up being vastly different. This highlights how individual campus resources and college policies on aid and loans really impact graduates.

I’m Not Anti-Public Schools

Now, please don’t get me wrong. I have nothing against public colleges. Two of my children attended great public schools: UT Austin and North Carolina State University. And since we lived in New Jersey at the time, they both were out-of-state students initially.

However, my oldest daughter initially had an out-of-state tuition waiver as part of a scholarship package. Later, both my daughter and son attained in-state residency after their sophomore years, and this process lowered their tuition substantially.

So overall, my advice is this: when evaluating college affordability, students and families should look beyond just the published tuition rates. With generous tuition discounts, private non-profit institutions may offer an unexpectedly reasonable net price. Do some real homework to see what you might be offered academically and financially.

You should also look beyond the public schools in your state, even if you reside in a place with fantastic public schools, like UT Austin, UCLA, University of Michigan, or the University of Virginia.

Families should also have conversations as early and often as possible about both college admissions (i.e., the likelihood of a student getting into a given institution) and the financing of higher education (i.e., exactly how college will be paid for and what scholarships or tuition discounts are likely to be obtained).

Final Advice

There’s absolutely nothing wrong with dreaming big when it comes to college aspirations.

The definition of a “dream college” varies student by student and family by family. There’s no rulebook that says a person MUST go to a private, public, or liberal arts college – or a college in-state.

For some, a dream school could be a research university, an arts-focused institution, or a conservatory. Then there are those who want a specific collegiate experience, perhaps at a minority-serving institution such as an HBCU or a military service academy.

Still others have their hearts set on an in-state public school, an elite liberal arts college, or an Ivy League school.

No matter your preference, plan ahead as much as possible and do your research so you don’t make assumptions about potential outcomes.

The bottom line is this: Don’t limit your college search simply because you think prestigious or out-of-state schools are out of reach financially.

And don’t assume attending a public in-state institution is automatically the most affordable path. Run the net price calculators on college websites and have candid conversations about college options early and frequently as a family.

You may be surprised at the admissions decisions and financial aid offers you receive if you broaden your search beyond local state schools.

College is a huge investment, so make sure you consider all the academic, social, geographic, and financial factors to find the best overall fit.

With smart planning and an open mind, your student’s dream college could end up being within reach, after all.