Net Price Calculators Can Demystify the Cost of College
By Yaffa Klugerman
November 14, 2011
Kelsey Gooden, 17, hopes to attend a New York college with a solid acting program, but she knows that her dream is an expensive one.
Gooden, a senior at Old Mill Senior High School in Millersville, Maryland, has been comparing tuition prices and finding out just how prohibitive they can be. The published cost of tuition, fees, room and board at Syracuse University--one of her top choices--is just under $54,000 a year. She knows that the cost is far more than she and her family can reasonably afford.
"With this economy," Gooden says, "price is a big factor in going to college."
Relief From Tuition Sticker Shock
But a new resource can offer some hope for Kelsey and for many families that are searching for affordable higher education. It's called the net price calculator, and it can be found on virtually every college and university website in the United States, thanks to a federal mandate that went into effect at the end of October. The calculators allow prospective students to enter information such as income, savings and family size to determine financial aid eligibility. Based on that data, the calculators compute a "net price"--the amount a particular student can expect to pay after receiving financial aid.
Such information is crucial when considering colleges because the actual price of attending an institution can often be tens of thousands of dollars less than its sticker price. At McDaniel College in Westminster, Maryland, for example, the published price of tuition, fees, room and board for 2011-12 on-campus undergraduate students is just under $45,000. But according to Patty Williams, the school's director of financial aid, perhaps 5 or 6 percent of their students actually pay that full price, while the rest receive various levels of financial aid.
A net price calculator, Williams says, helps communicate that fact. "We put it up there not so much to increase applications," she explains, "but so that we wouldn't scare people away. So that we could say, 'Yes, McDaniel is affordable, don't cross us off your list.'"
Similarly, Syracuse University's net price calculator can paint a completely different financial picture for prospective students. According to the net price calculator, a theoretical family of four that earns $100,000 in annual income, owns a house worth $200,000 and has $10,000 in savings could expect to pay just under $30,000 for annual tuition, fees, room and board. With student loans and work study factored in, the price drops to about $21,000.
Calculators Vary From One College To Another
Despite the usefulness of net price calculators, financial aid experts are quick to point out that their accuracy is not guaranteed. "The calculators are a step in the direction of helping families make a more informed decision about college affordability, but families should use them with caution," says Mark Kantrowitz, publisher of Fastweb.com and FinAid.org. "These calculators are in their infancy and are suffering from teething pains."
Part of the reason for this is because most of the calculators are new, and thus it's too early to predict how well they will estimate costs. In addition, net price calculators can vary significantly from one college website to another, and some may generate a net price that overstates or understates the true bottom line cost. For example, some calculators that are based on the free federal template ask few questions, require little time to complete, and are based on two-year-old data that is updated in December.
McDaniel provides a custom net price calculator on its website, which takes longer to complete but includes more data for determining the final figure. "I knew when I first saw the federal templates that we could not use that," says Williams. "It's too simplistic. I don't think it can give a very accurate estimate of the Expected Family Contribution for the family just based on the bare-bones data that it asks for. If it were that easy to apply for financial aid, how great that would be, but it's not."
Jeff Whorley, president of Student Aid Services, Inc., which has created custom calculators for over 580 campuses including McDaniel, agrees. "Overly simplified, very short calculators are just not very accurate," he says.
Whorley notes that many of their clients have opted to include features that compute military aid, translate the calculator results into Spanish, and even provide the total cost of a degree with post-graduation monthly loan estimates. "We expect the number of schools choosing to move to more accurate, customized calculators to continue to grow," he says, "as more become aware of how much an inaccurate net price calculator can overestimate or underestimate actual costs."
Be Wary of Results
In the meantime, however, families should be wary about figures generated from net price calculators. "The calculators are good for determining whether a college falls inside or outside the ballpark of affordability, but are not yet good enough for distinguishing between home plate and center field," Kantrowitz says. "The calculators should not be used for comparing colleges. They can be used to identify additional colleges worth considering, but should not be used to exclude any colleges from the initial selection, since they are not yet accurate enough."
But he predicts that in time, they will be. "After a few years of refinement," he says, "the net price calculators should become valuable tools for families."
