One of the most infuriating aspects of the college admission process is this:
Traditionally, you couldn’t know what any college was going to cost until your child received his or her financial aid or merit award package. Even worse, you might not have gotten the offer until the spring, which would give you little time to select a school by the deposit deadline, which is often May 1.
Learn What You’ll Pay Before Applying
Applying to schools, however, doesn’t have to be a financial crapshoot if you use federally mandated net price calculators before your child applies to any colleges.
A net price calculator is supposed to provide you with a personalized estimate of what a particular school will really cost you. When using a calculator, some families will discover that the cost of a $50,000 university will be $20,000 or $10,000 or even lower. For other families, the cost really will be $50,000.
If you want to avoid budget-busting schools, it’s critical to know what the actual prices of particular schools will be before your child falls in love with them. In fact, turning to net price calculators could ultimately save you tens of thousands of dollars by focusing your efforts on schools that will be more generous to your family.
Every college and university that participates in the federal financial aid system, and that’s almost all of them, must post a net price calculator on its website for freshman applicants. Some schools also provide a calculator for transfer students.
Inside scoop on net price calculators
To squeeze the most value out of these calculators, here are 10 things you need to know about using them:
1. These calculators provide a family’s net price.
The net price represents what a student will have to pay after scholarships and grants from the federal and state governments and the school itself are subtracted.
Let’s say, for example, that a college costs $50,000 and the student will receive a $30,000 award from the school and a state grant of $5,000. The net price for this student would be $15,000.
The net price equals the true price of the college because it only considers free money and disregards loans when calculating the cost of a school.
You can see just how many different prices you can generate when using net price calculators by reading about the experience from a few years ago of a mother in Washington State:
2. Use net price calculators to test academic scenarios.
You should turn to these calculators to get a handle on what sort of applicants capture the best awards at an institution. What kind of grade point averages or test scores does it take for a student to win a greater award from a specific school?
To illustrate what we’re talking about, let’s look at the experience of a father whose son is now a junior at Northeastern University in Boston. When the dad initially used the net price calculator and plugged in his son’s SAT score of 1300 (out of 1600), the calculator estimated his grant at $20,000 for the first year.
After his son earned a 1340 score on the SAT, the dad retried the calculator and discovered that the teenager’s award had jumped to $34,200.
With this tool, you can manipulate the figures to see whether it would be worth it for your child, for instance, to take the SAT or ACT again. Would a higher test score boost your child’s potential package? Would a slightly higher GPA matter?
With so much money at stake, it’s worth taking the time to use these calculators strategically.
3. Use net price calculators to weigh impact of assets.
These calculators can also be handy when you want to figure out how a school treats assets, such as a small business, rental property, investments accounts and home equity for financial aid purposes.
I wrote an eye-opening blog post back in 2012 (see link below) that illustrates how differently schools treat home equity. You will learn in this class that private schools that use the PROFILE financial aid application can assess home equity in different ways. In contrast, schools that only use the FAFSA don’t ask about primary home ownership.
In the blog post, I wrote about an unemployed New Jersey dad/engineer, who inadvertently discovered how two dozen institutions including Boston College, Dartmouth, Villanova, University of Rochester, Dickinson College and Georgetown treated his home equity in significantly different ways that resulted in estimated awards that would have had the family pay anywhere from $0 to more than $40,000 for one year of college!
4. Calculators will vary in what information they require.
To use many calculators, and particularly those of selective private schools, you will need your tax return and bank/investment statements. If your child has income and a bank account, you should gather that information too.
If the school provides merit scholarships, in addition to providing need-based aid, a good calculator will ask for additional information such as a teenager’s GPA, test scores and class rank.
A thorough calculator could take you 15 or 20 minutes to complete.
5. Some net price calculators are inaccurate.
The weakest calculators rely on the federal-calculator template. Using a calculator that uses the federal template could take less than a minute to complete! The questions are minimal, which leads to dubious cost estimates.
These federal calculators are only meant to provide personalized cost estimates — faulty or not — to families seeking need-based aid. And even then, the need-based aid answers are simply averages.
The schools using the federal template ask only three questions if the family isn’t seeking need-based aid but would like merit aid. Here are the three questions that I answered when I tried out American University’s net price calculator:
How could this university provide an accurate net price when all it knows about potential applicants are their age, the decision not to apply for need-based aid and where they would like to live!
Based on the answers to these three questions, I received this net price estimate from American University:
These federally-based calculators that American and others schools use will be absolutely worthless for wealthier families strictly seeking merit scholarships. These calculators will also often be inaccurate for students of households of any income because they do not ask questions that would determine if a child qualifies for a school’s merit scholarships.
Slightly more than 50% of schools use the federal-calculator model. Many of the schools using the federal template are state universities, but some private schools have embraced this inferior calculator too. Besides American, private institutions that rely on the federal inspired calculators include:
- Bennington College
- Berklee College of Music
- Brigham Young University
- Duquesne University
- Gonzaga University
- New York University
Why Use Inferior Calculators?
You can’t expect to get a reliable financial-aid verdict from any school using the federal calculator template. So why would schools use a mediocre calculator? Here are two potential reasons:
- Creating an accurate calculator isn’t a priority for some schools, which may also believe that applicants aren’t interested in them.
- Private schools can favor mediocre calculators because the tools can mask the true cost of their schools. Admission officers may advise applicants to ignore worrisome calculator results and apply anyway because the calculator results are unreliable.
6. Observe how many questions a calculator asks.
Calculators that depend on the federal-template calculator ask few questions and don’t require the actual income that parents report on their income tax returns.
These federal-template calculators only provide income ranges and the highest income level the tool offers is “above $99,999.” (See below.) In addition, these calculators do not inquire about family assets!
7. Look to see that the costs are up-to-date.
When using calculators check to see if the prices are current.
Unfortunately, schools that use the federal template will be using cost-of-attendance figures that are at least two years old. I’ve found schools sharing much older cost data.
As you can see in the American example above that the cost estimate is based on the 2014-2015 school year even though I used the calculator in June 2017! Students using the calculator now would be interested at prices for 2018-2019 and beyond!
8. Net price estimates are not guarantees.
9. Double-check your figures.
Be careful when inputting your information into a net price calculator. If the outcome seems wrong, try again. Ask a school’s financial aid office if you aren’t sure what information is needed.
10. Where you can find net price calculators.
Schools are federally obligated to post their net price calculator for freshmen on their website and some offer net price calculators for transfer students. It can be hard, however, finding these calculators. Some schools don’t want you to use them because you could discover how stingy they are.
An easy way to look for a school’s calculator is to Google the name of the institution and net price calculator.
11. Check outside calculator providers.
There are at least two outside sources for net prices:
Each has its strength and weaknesses. Let’s take a look at each one:
College Abacus is a one-stop shop for accessing many net price calculators. The site allows a visitor to compare up to three different net prices at once.
The site asks for a tremendous amount of your financial information because it needs this data to answer all the anticipated questions that any school’s net price calculator would ask. Once you’ve inputted your financial data, you can obtain the results from a school’s net price calculator without leaving College Abacus.
Unfortunately, some schools block College Abacus from accessing their net price calculators because many college administrators do not want price comparisons to be so easy. So you may not be able to access all the calculators that you’d like at this site. The lofty goal of this site is to become the college-pricing equivalent of Kayak, Expedia, Zillow or other cost-comparison sites.
College Reality Check
College Reality Check is a site, courtesy of The Chronicle of Higher Education, which allows families an easy way to compare net prices of up to five schools at once. You can also compare other factors such as graduation rates, student loan default rates and estimated average monthly loan repayment amounts.
Keep in mind that the average net prices on this site, which come from the federal government, are for income ranges. Unfortunately, the highest income range is only $110,001 and above, which is not helpful because what a family with a household income of $110,000 can afford will be quite different than what a millionaire can comfortably cover.
What’s more, the net prices are only calculated for families who applied for and received financial aid, which includes federal college loans. It’s more likely that the net prices for lower income ranges are going to be more reliable because people in the upper income brackets are less likely to apply for aid.
In the example below, I obtained the average net price for families whose income ranges between $75,001 and $110,000. As you’ll see, the prices for students applying to these schools differ significantly.
I included Carroll College in Helena, MT, to illustrate this phenomenon – lesser-known schools in areas off the coasts are often less expensive. One of this school’s many selling points is its nursing school where students can graduate in four years unlike impacted nursing programs in state schools in California.
West Coast examples
The example below also shows that expensive schools with excellent financial aid (Pomona) can be cheaper than state universities. And finally, this tool shows how expensive some schools in cities on the West Coast are.
East Coast examples
I also generated a net-price example with East Coast schools. In this example, I also assumed that the family’s income was between $75,001 and $110,000. Once again you’ll see that the prices differ significantly.
- Use net price calculators before your child finalizes his/her college list. There is no point in letting your child get excited about particular schools if their costs will be exorbitant.
- Use these calculators strategically. See how assets and a child’s test scores/GPA could change awards.
- Ask a school how accurate its calculator is.
- Check how old each school’s cost figures are.
- Use the results of net price calculators to develop a list of schools that will be financially doable.