One of the most infuriating aspects of the college admission process is this: Traditionally, you wouldn’t know what any college was going to cost you until your child received his or her financial-aid or merit-aid package. Even worse, you might not have gotten the package until spring, giving you precious little time to digest the offers and select a school by the deposit deadline, which is often May 1.
You can stop the guessing, however, by using federally mandated net price calculators long before your child applies to a school.
These calculators provide you with a personalized estimate of what a school will cost you. When using a calculator, some families will discover that the cost of a $50,000 college will be $30,000, $20,000 or lower. For other families, the cost really will be $50,000.
Whatever the verdict, it’s important to know what the price will be before your child falls in love with any school if you don’t want to pay full price.
You need to know these seven things about net price calculators:
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 $20,000 scholarship from the school and a $3,000 state award. The net price for this student will be $27,000.
The net price will be 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 one affluent mother’s experience on my college blog, TheCollegeSolution.com: Case Study: What 66 Schools Would Cost This Family.
2. Calculators will vary in what information they require.
To use a calculator, you will often need your latest tax return and bank and investment statements. If your child has income and a bank account, you should gather that information, too.
If the school provides merit scholarships as opposed to just need-based aid, it will often ask for additional information such as a teenager’s GPA, test scores, class rank and activities.
3. Some net price calculators are inaccurate.
The weakest calculators rely on the federal calculator template. Many schools using the federal template are state universities, but some private schools, such as New York University, Carnegie Mellon University and American University, use this inferior calculator, too.
Schools that rely on this federal model do not ask questions that would determine if a child would qualify for merit scholarships. These calculators focus on whether an applicant would qualify for need-based aid. Even then, the need-based aid answers are simply averages.
You can’t expect to get a solid cost verdict from any school using a calculator based on the federal model.
4. Look to see that the costs are up-to-date.
A 2012 survey of net price calculators conducted by the Institute for College Access & Success revealed that 40 percent of schools were relying on old cost figures for their calculators, with some going back as far as the 2008–2009 school year.
Schools that use the federal template are using cost-of-attendance figures that are at least two years old.
5. Where you can find net price calculators.
Schools must post on their website a net price calculator for freshmen and another for transfer applicants. It can be hard, however, finding these calculators. Some schools don’t want you to use them.
It can be easier to find a school’s calculator by using a search engine such as Google.
6. Use net price calculators strategically.
By playing around with these calculators, you can learn a lot about what a college values in its applicants. For example, what does it take for a teenager to capture a great award from a particular school?
To illustrate this point, I’m going to use the experience of a father whose son is a freshman at Northeastern University in Boston.
When the father first used the net price calculator, he plugged in his son’s SAT score of 1,300 and discovered that the award from Northeastern was projected to be $20,000 for the first year. After his son earned a 1,340 score on the SAT, the dad redid 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. Could a boost of a few SAT points generate more money from schools on your teen’s list? Would a slightly higher GPA matter?
It’s worth turning to net price calculators to find out.
7. Measure the impact of home equity on financial aid awards.
You can also use these calculators to see how home equity might shrink an award.
I wrote about how home equity can impact aid in this blog post:
Will Your Home Equity Hurt Your Financial Aid Chances? A Case Study.
Unless you don’t mind paying full price for any school your child is interested in, use net price calculators long before your child applies anywhere.
About Lynn O’Shaughnessy
Lynn O’Shaughnessy is a best-selling author and nationally recognized expert on college planning. The second edition of her book The College Solution was released in 2012. Lynn also writes a blog for CBS MoneyWatch and her website, The College Solution. A former Los Angeles Times reporter, she has written and been interviewed about college issues by numerous national media outlets. Lynn also shares with parents how they can make college more affordable in her six-week, online course, Cutting the Cost of College.
The links above will redirect you from the BAM ALLIANCE site to other sites and content not related to the BAM ALLIANCE. The BAM ALLIANCE does not endorse or make any claims about the accuracy or content of the information contained therein. The security and privacy policies on these sites may differ from the BAM ALLIANCE.