What to Know About College Net Price Calculator | pay for college

The listed price of a school rarely matches the actual amount families will pay for college, and many are often unsure of the true cost of college.

Colleges participating in federal financial aid programs are required to provide families with a net price calculator on their website. Schools have the option of using a federal template or creating their own calculator. Since the Higher Education Opportunity Act of 2008 first mandated their inclusion in late October 2011, lawmakers have taken steps to improve the implementation of net price calculators. In March, a bipartisan group introduced an amendment to the Higher Education Act aimed at making net price calculators easier to find and use.

The last research, published in March by a group of researchers from the University of Pennsylvania, shows that some colleges are not respecting the original federal mandate. Additionally, the report highlights other issues such as outdated data used in some net price calculators and discrepancies in how colleges define net price, making the tool much less useful to families.

These results can have a huge impact on potential students who make their decision to go to college.

Net price calculators are designed for new full-time students, but some colleges also offer separate calculators for transfer students. Calculator use should start early in the process of choosing a school, says Mark Kantrowitz, editor and vice president of research for Savingforcollege.com. Before going too far, families must first understand the concept of net price. According to US Department of Educationthe net price is “the amount a student pays to attend an institution in a single academic year AFTER subtracting any scholarships and grants the student receives”.

Each college’s net price calculator is different, but families should expect to provide basic personal information as well as the student’s dependent status and each parent’s adjusted gross income and assets. The federal model includes need-based and merit-based grants and scholarships in its calculations. If a college asks additional questions beyond those included in the federal model, Kantrowitz says they often pertain to a student’s academic record.

Net price calculators benefit families by providing information about financial aid at a particular institution early in the college search process and allowing families to compare the cost of colleges, says Karen McCarthy, director of the policy analysis at the National Association of Student Financial Aid Administrators. They can also help bust myths about affordability, especially the cost of private facilities, but estimated out-of-pocket costs should be taken with a grain of salt, she says.

“Before we had net price calculators, students often had no idea what their outgoings would be until they actually applied for admission somewhere, applied for financial aid, and received a award letter. At this point, they’re pretty far into the application process,” McCarthy says. “It’s helpful from that perspective: it gives you information earlier.”

But finding the Net Price Calculator can be harder than families think. The recent report, Questioning the Calculations, found that “to be used, an NPC must be locatable and have a consistently functioning link. We were able to navigate by clicking from the institution’s homepage to the net price calculator for 88% (69) of the selected institutions. For two establishments (one public, one private), no functional net price calculator could be found.”

The Department of Education advises colleges to prominently display the calculator on their websites, but for some institutions it may be more easily accessible via a Google search.

Once a calculator is located, families need to know how the net price is calculated at that particular college, says Laura W. Perna, the report’s lead researcher and executive director of the Alliance for Higher Education and Democracy at the University of Pennsylvania. When making a college decision, families may inadvertently compare net prices that don’t consider the same factors or use data from the same year, research shows.

One college may not consider housing as part of its cost of attendance when calculating net price, for example, while another may, making one college seem more expensive than another.

Similarly, net price calculators should only subtract grants and scholarships from the college’s list price to arrive at a net price, but this is not always the case. Grants and scholarships do not have to be repaid, but some colleges may deduct student loans from the cost of attendance, resulting in a lower net price than other schools. Families should be aware that student loans must be repaid, experts say, and should therefore be considered part of the price of attending college.

“Some of the practices we found are very misleading to anyone trying to navigate this process. Some of the information presented is incomplete, we found a few institutions that do not clearly differentiate between grants and loans, and it is really very important that people know the difference,” says Perna. “It’s really hard to (compare). Some institutions only highlight part of the costs, like tuition and fees. For students to compare between institutions, I think institutions should use federal definition.”

She says reading the fine print and talking to the college financial aid office can help families make sure they’re comparing apples to apples. A college usually lists the school year of net price results somewhere on the calculator.

Also, keep in mind that to be eligible for college financial aid, families must meet deadlines and complete the Free Application for Federal Student Aid, or FAFSA, experts say.

Once families start comparing net prices at different institutions, they should think broadly rather than relying on the net price estimate to be the correct amount of financial aid available to a student, Kantrowitz says. The estimate given in a calculator is not binding and does not take into account each student’s unique circumstances, including life events that may impact their ability to pay, and other standards that may be required for some grants and scholarships, such as GPA requirements.

“Unless it’s a very big difference, you should still apply to college. Even if it’s a $2,000 price difference, who knows. When you apply for financial aid in the end, your income may be different, your assets may be different, and when you use the actual college formula, you may get significantly different financial aid,” Kantrowitz says.

“It’s to see if the college is in or out of affordability,” he says. “I would be cautious about dropping out of one college because it’s $5 more than another college. $5,000, maybe.”

Are you trying to finance your studies? Get tips and more at US News’ Paying for College hub.

Eleanor C. William