As parents of college-bound students, you know that higher education comes with not just academic…
What is the Net Price Calculator About, Anyway?
In their quest to prepare for the costs associated with college, many families look to the Net Price Calculator on college’s websites to help them get an idea of how much they will have to pay for their child’s education. Net Price Calculators are supposed to calculate the amount that a student would pay to attend a college or university in a single academic year, considering any scholarships and grants the student may be eligible to receive.
Sounds great, right? Unfortunately, many families are not aware of the pitfalls associated with the Net Price Calculator. They end up either discouraged (because the calculator gave them a higher number than expected) or excited (because the calculator gave them a lower number than expected). What they don’t realize is that they can’t really depend on the accuracy of the number that was calculated either way.
Colleges don’t have these calculators because they want families to know more about the price. They have them because they are required by federal law.
Everyone knows that college is expensive, so it is in the best interest of colleges to present a simple calculation that makes families feel as though they may be able to afford to send their student. They want to give them just enough information to satisfy the requirement, without completely scaring them away. The problem with this “bare minimum” approach is that families are left with a vague estimate that is ultimately not very useful, and often quite misleading.
College websites are sure to inform it’s Net Price Calculator users that it is an “estimate” and that it should “not be considered an actual award” or a “final net price” and that it is “not binding,” but many of them do not inform it’s users on the different assumptions and formulas used to calculate the net price so they can have a better understanding of the reliability of the number.
All Net Price Calculators are not created equal
To receive the most accurate price estimate, the formulas in a calculator would have to incorporate several data points that affect the cost of attendance and ask its users more in-depth questions about finances and the student profile. The U.S. Department of Education Net Price Calculator template that colleges use as a starting point to ensure that they are compliant only requires that:
1) The college’s formula includes the cost of attendance (which by definition should include: tuition, fees, books, room, board and other expenses).
2) Median amounts of grant and scholarship aid awarded to full-time, first-time degree-seeking students by EFC range.
3) The calculator asks families a maximum of eight questions to ascertain the student’s dependency status and an approximate EFC.
Here are some reasons why the Net Price Calculator estimates may be inaccurate:
● Some colleges include all aspects of the cost of attendance and use up-to-date, accurate numbers, while others may exclude room and board, fees, and/or other expenses
● Some colleges use very detailed grant/scholarship information on a wide range of students, while others only include government grants and do not ask any questions about GPA or test scores to include merit scholarships in the calculation.
● Some colleges ask several financial questions to help estimate EFC, while others do not. A sampling of Net Price Calculators that were studied found that questions can range from 8 to 28.
It is solely at the college’s discretion to decide how they design their net price calculator, leaving families with varying degrees of accuracy between colleges. No two calculators are the same, which makes it difficult for a family to accurately compare costs.
So, is the price that the net price calculator provides a completely useless number?
No. But, families and students should approach them knowing that the number it calculates may not be totally accurate. It should be considered a very rough estimate of college costs, as opposed to a true predictor of actual costs.
The price calculated could also be used to compare what the student actually receives on their award letter. Although colleges inform Net Price Calculator users that the number is not binding, it can be used to help you know if you should appeal for a better award. If the award you receive is significantly lower than the number provided in the Net Price Calculator, it is an indication that you should at least try to appeal and have your award reassessed.
If you would like a more accurate idea of what you can expect to pay for college, start the research and preparation process as early as possible and consider getting help from trusted college funding professionals.