College parents’ task of estimating and preparing for the cost of college may just have become more realistic. As of October 29, 2011, all colleges receiving federal aid will be required to provide a Net Cost Calculator on their college websites. The new net-price calculators are intended to help future college students and their parents have a better sense of the cost of attending a particular college for a particular student.
According to the College Board, the average cost for tuition, fees and living expenses at a four year private college was $38,590 last year. Grants, scholarships and aid lowered that costs to an average of $11,380 to $17,130 for most students. Obviously, college “sticker price” may be dramatically different from the actual price. The new net price calculators are intended to help provide a clearer picture by making college financing more transparent and colleges more accountable.
Some college websites have contained price calculators for many years, but for many schools this new federal regulation, part of the Higher Education Opportunity Act of 2008, will require a new effort. Calculators may change and become either simpler or more sophisticated over time. While the Education Department has provided a simple template which colleges may use (containing only nine questions) some colleges have created their own versions or purchased templates from organizations such as the College Board or Student Aid Services. The more questions the calculator contains, the more accurate the outcome may be.
New price calculators can be an important and helpful tool to parents, but like any good tool, it is important to know how to use it. Here are a few suggestions to help you get the most benefit from this college estimator.
- Gather as much information as possible before you sit down to use the calculator. Much like doing your income taxes, or completing the FAFSA, most calculators will require you to input significant information. Having the information readily available will help the process go more smoothly. You may need information regarding your income, investments, home value, tax forms, business income, as well as student information such as SAT or ACT scores.
- Provide information that is as accurate as possible. The results that you receive from the calculator will be only as good as the information that you input. Be as complete and accurate as possible. Remember that this is a tool for you to get a clear picture of costs. Over or underestimating anything will give you an unrealistic picture.
- Do not be intimidated by a long form with many questions. Although this may be time consuming, you may get a more complete and accurate financial picture.
- Be cautious about comparing the information from one school with another. Each school may calculate the formula differently. Check carefully to see whether the school has included loans in their calculation, or federal work study, or merit aid. These factors can make significant differences.
- Look carefully at where the calculator appears on the college’s website. If it is hidden or buried deep within the website, that may indicate that the college would rather you not have quite as clear a picture. Keep this in mind.
- Work on the calculator together with your student. This will help him become more familiar with the process and realistic costs. This is especially crucial if your student will be responsible for any portion of college costs.
- Remember that the new price calculator is meant to be an estimator that will give you a ballpark, estimated, cost of attendance. The calculator cannot replace a good conversation with a financial aid representative from the college. Use the information from the calculator as a beginning point of conversation with someone from the college. Ask them to explain how it works. Ask questions about variations. Provide additional information that might not have been included. Nothing replaces a one-to-one conversation with a knowledgeable person from the institution.
- Keep in mind that the cost of attendance, although a major factor for most families, is only one piece of the picture of college. Involve your student in the process. Look at all of the other factors of the college experience. Include the costs as one part in a very large picture of the college decision.
Knowing the realities of the costs of college attendance, as harsh as those realities may seem, is an important step in the college search process. The new required college price calculators may open up new possibilities to some students as they, and their parents, dig past surface appearances.
The author of one recent article conducted an experiment by completing the calculator for a hypothetical family with a $60,000 income and 2 children. This author compared the cost of attending a large, Midwestern private college with a state school. The original cost of the private college was $59,783 and the state school was $22,150 (in state) and $42,166 (out of state). Because of the private college’s large endowment and scholarships, the final cost of attendance at that school was $11,000. The cost at the state school was not discounted and remained at $22,150 and $42,166. Obviously, this calculation might open up some important considerations and conversations.
Keep the new cost calculators in perspective, but take advantage of the new tool as one more important piece of information on the college journey.