Coming Soon: Reliable College-Cost Calculators
Soon it will be. The federal government requires all colleges to have net price calculators, or NPCs, on their websites by October. The calculators are meant to provide a reliable estimate of how much it will cost to attend a particular college, based on a family's financial circumstances.Only a few hundred of the 7,000 U.S. colleges already have NPCs, according to Mary Fallon, a spokeswoman for Student Aid Services, which designs NPCs for colleges. So the federal mandate won't help high school students (or their parents) who need to shop for a college now.
But come October, those looking to start college in 2012 will be able to compare costs at schools across the country. "This is kind of a way to encourage more people to apply for college and apply for aid," Fallon told Money College in a phone interview.
Like figuring the cost of a car, a home or even groceries, pricing a college will be done through an online calculator that should take eight to 12 minutes to complete. While that can be great for the student (or whomever is footing the cost), it may not be so great for a college. Once you see how much more your favored college will cost than your second or third choice, all of a sudden that third choice (which might not be so near a major metropolitan area) can look a lot more enticing.
The "net price" determined by the NPCs is how much the student pays to attend the college--after subtracting grant aid and other discounts that the college expects to give you. The FAFSA program, the federal government's Free Application for Student Aid, started Jan. 1 to determine eligibility for college aid, and one goal of the NPC is to match what FAFSA determines students should get in financial aid.
But one major problem: If schools go solely with the NPC template provided by the federal government, it's flaws could lead to incorrect calculations. For example, colleges that provide lots of large scholarships and other merit awards, such as private colleges, could find that in using the template they're providing wrong information on how much it would cost a student to attend their college.
We should note here that you couldn't use the generic federal NPC template if you tried; it's only available for colleges to modify; students or their parents must use the NPC that's specific to each college that they're interested in.
Colleges should modify the federal NPC template to match how they give aid, Fallon said. Some colleges may need tuba players and will offer more aid to them in some years, while the next year they might be looking for more art students. College aid isn't the same across the board.
According to a CBS Money Watch story, the president of StudentAid.com, which is creating custom calculators for at least 42 colleges, analyzed the federal calculator. Using 145,000 actual student profiles, he found that the calculator was inaccurate 65% of the time.
Some schools, such as the University of Arkansas, have had their student aid calculators up for some time. The Arkansas calculator is estimated to take 12 minutes to complete, and requires having this information at hand:
- student and parent tax returns from 2008 and 2009
- earnings statements, such as W-2 forms and recent paycheck stubs
- bank statements
- student merit information, such as a GPA
- standardized test scores on the SAT or ACT
Why not rely on the annual ranking guides to gauge the costs of college attendance? They don't take into account a family's particular financial status and how much aid their student might get from a college. That's what the NPCs are for, and they should help reduce some of the sticker shock that comes with shopping for a college. The cost of a $50,000 college education could even drop to $20,000 or less, depending on your family's finances.
If you don't have the time or energy to enter your financial information six times at the six colleges you're considering, there are services that charge a fee of about $50 to compare six colleges for you.
Or instead of looking at college prices at the last minute, after you've been accepted to a school, you could start comparison-shopping during the last few years of high school and avoid the worry and rush. You'll save some money by not paying a service to do the work for you and you might use, in high school, some of those math and reading comprehension skills you've learned in the process.