Calculating the cost of college: A guide to finding a fair price to pay
I haven’t met anyone who looks forward to the process of figuring out what’s a fair price to pay for a car and then negotiating to get less than the sticker price from a dealership. That same anxiety is also true for students and families trying to figure out the cost of college.
But finally the federal government has taken steps to push schools to give families more price information. My hope is people will use it when making decisions about the colleges their children want to attend, ultimately reducing the debt they take on.
School officials often boast that many families don’t pay the sticker price for their institutions. In fact, the College Board, which puts out an annual report on the price of college, says about one-third of full-time students pay the sticker price of college without the assistance of aid.
Still, it was concern about the rising cost of college and the non-transparency of prices that led to a mandate in the Higher Education Opportunity Act of 2008 requiring all postsecondary institutions that participate in Title IV federal student aid programs to begin posting a net price calculator on their Web sites as of Oct. 29, 2011.
The act called on the Department of Education to also create College Affordability and Transparency Lists. This past summer, the department released lists that highlighted private and public institutions with the highest and lowest tuition and fees. The department also generated lists of schools with the largest increases in tuition, fees and net prices (cost of attendance after grant and scholarship aid). To view the lists, go to www.collegecost.ed.gov.
All this focus on net price is a good thing.
The net price is what you might have to earn, save or borrow to go to that school, said Lauren Asher, president of the Institute for College Access & Success, a nonprofit group that does research and advocacy work to help make higher education more available and affordable.
“The calculators have the potential to be very powerful tools to students and families as they are figuring out which schools to apply to,” Asher said in an interview. “They can open up horizons by giving you an early look at what a college may cost you so you’re not stuck with the sticker price.”
However, Asher is concerned about the location and quality of the calculators. Her institute released a report earlier this year after examining the calculators some schools posted before the Oct. 29 deadline. It found that calculators were placed in parts of Web sites that were difficult to locate, required too much financial information such as parents’ itemized tax deductions, or presented results in a way that gave an illusion of affordability. Institutions could develop their own net price calculator or use a template created by the Department of Education.
“Many ask for so much information that you are not getting that quick rough estimate to help you get started,” she said.
Asher provided these tips for finding and using a net price calculator:
●Be persistent. You won’t find the calculator in the same place on every Web site. It may be posted on the college’s homepage. However, you’ll likely to find it in the Financial Aid section, which is sometimes under Admissions. Also try searching for the calculator within the site or by using an outside search engine such as Google.
●The tool isn’t always called a “net price calculator,” so keep an eye out for the keywords “cost,” “estimator” and “financial aid.”
●Some calculators will make you provide detailed financial information before you get a net price.
●The most important number on the page is the net price. Focus on that dollar figure. Some colleges also subtract their expectations of how much you’ll need to earn through a work-study program and/or borrow to get a smaller cost figure, but it won’t be called “net price.”
●The estimates are only for the first year of college and apply to a particular academic year. Not all grants and scholarships are available for all years of college.
As schools and the Department of Education get feedback, hopefully the quality and information provided in the calculators will improve. I agree with Asher that if schools make the net price calculators hard to find or difficult to use it will undermine the reason they were required to post the information. The calculators were mandated to help students and their families determine upfront which colleges are within their financial reach.
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