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Net Price Calculator Update: Are they working?

Earlier this year I wrote about the planned requirement for colleges to provide Net Price Calculators (NPC) on their websites in a move toward transparency and increased availability of information to prospective students. The U.S. Department of Education's (USDOE) goals for the NPC requirement include providing prospective students with "an idea of what college costs would look like based on their individual circumstances, such as the size of their family and their family's income. This information would go beyond a school's 'sticker price' to help students and families better estimate their actual costs to attend that institution, once grants and scholarship aid are taken into consideration." 

The Higher Education Opportunity Act of 2008 (HEOA) required all institutions receiving federal financial aid – and enrolling full-time, first-time degree or certificate seeking undergraduate students – to post a net price calculator (NPC) on their websites by October 29, 2011. That deadline has since passed and there is growing controversy about how accurate these calculators are. Several concerns are outlined below. 

  • NPCs are not all created equal. The USDOE provided a calculator template that can be used or adapted by individual institutions for use on their websites. There are also a variety of third-party calculator products provided by vendors such as The College Board and All include basic components required by the HEOA, but additional considerations may vary by school. Some, for example, include work-study estimates, while others do not.
  • Timing makes a difference. Specific financial aid package calculations, provided by individual institutions, can be complex and can change based on characteristics of the current applicant pool and enrollment. Calculating costs at different times of year (i.e. fall and spring) may result in different estimates. The College Board provides this information as part of a list of guidelines for counselors working with prospective students. 
  • It all depends on the data provided. Keep in mind that NPCs are provided by each school, to calculate that school's costs. The accuracy of an individual NPC is directly linked to the accuracy of the information that has been loaded into the system by that school. Miami's Sun Sentinel reports for example that many Florida schools are using 2009 or 2010 numbers in their NPCs that do not reflect more recent tuition increases. 
  • Customization may lead to confusion. Since each school can build or otherwise procure its own calculator system, the terms and labels used, such as "net price," "out-of-pocket costs", or "estimates of tuition and expenses" can vary from school to school. This, along with the fact that not all NPCs calculate the same types of information in their estimates, can make it more difficult to compare costs across multiple institutions.
  • Finding a school's NPC can be challenging. Look for NPCs and related information about costs on your school's website. You may find these resources on pages related to financial aid, admissions, student information, the school's home page, or other locations as determined by the school. And look for alterative titles for the NPC itself, such as "financial aid estimator." Read all of the information carefully! Each school may include specific information about its calculator, instructions for proceeding, school policies related to financial assistance, and a variety of disclaimers.
  • Understand the difference between a loan and a grant or scholarship. While loan amounts may be subtracted from the total cost of a college as part of a net price calculation, they do have to be paid back eventually. If you accept a loan, understand the terms and timelines involved and what you will be responsible for repaying after graduation or if you withdraw from school.

Take a closer look at a few examples of the different ways NPCs work and are presented online: American University | Babson College | Chicago State University | Shenandoah University | University of Phoenix

Using NPCs in Your Decision Making Process

There are many facets to the decisions you will need to make about your pursuit of higher education, including accreditation, marketability, academic quality, career preparation, and availability of support services. Your budget and the cost of this pursuit should also be on your checklist for choosing a school and program. What can you expect from NPCs? What role do they play in your ongoing research about higher education options?

  • NPCs provide more information, sooner. According to The College Board, a majority of students will remove a school from consideration based on the 'sticker price' alone. This price does not take into consideration financial assistance in the form of loans, grants, or scholarships. NPCs are one way to estimate actual costs before getting final information about your financial aid package, which usually comes much later in the process. So, NPCs allow you to both consider and potentially compare a wider range of schools based on a better estimate of what your costs will be, earlier in your research process.
  • NPCs generate helpful estimates. The key word to remember here is estimate. NPCs calculate estimates of costs based on the information provided by the school and the information you provide about your personal finances and those of your family. The more accurate the information provided by both sides, the more accurate the estimate that results from the use of an NPC. Know that final numbers may differ from what you learned from using an NPC.

While NPCs are a step in the right direction, they appear to be a work in progress. Do your own research. Ask all of the questions you have. If the schools you are considering don't fall within the category of those required by the HEOA to provide NPCs online, you may still find related details and other types of cost estimation tools available. Ask your prospective schools' admissions representatives for more information.