Paying for College: Do you know about this “secret” tool?

The price tag for a college degree can be staggering. What can you do? Understanding how it all works is key for families to find colleges that you can make work financially. (Our Smart Money Moves for the College-Bound free webinar is a great first step for every family.) In addition, families can take advantage of every resource available to guide their search.

One overlooked tool in your toolbox should be the “Net Price Calculator.” In 2008, the US government passed the Higher Education Opportunity Act which requires every postsecondary institution that enrolls full-time, first-time students to post this calculator on their website. Those institutions that do not enroll full-time, first-time students do not need to have one.

What is a net price calculator?

The net price is the estimated amount an individual student is expected to pay for one year of college after factoring in grants and scholarships that do not need to be repaid. The university provides (again, by law) this calculator on their website in order for prospective students to see what students similar to them can be expected to pay.

Sometimes you might have to search “net price calculator” in the site’s search in order to find it. They don’t always put it front and center for you to find. Or you can visit the US Department of Education’s website to use their search feature.

Beware! Not all calculators are created equal.

The government has a minimum set of inputs that must be present in the calculator. They include: “data elements to approximate the student’s Expected Family Contribution (EFC), such as income, number in family, and dependency status or factors that estimate dependency status.”

Institutions can request additional details like GPA and more detailed financial information in order to provide a more accurate estimate (especially for things like estimated merit aid), but they are not required to do so.

As a result, families should always review the college’s website for details about how they award aid and what types of scholarships are provided. Be aware that the results of some calculators will include federal student loans and work study money which is not “free” money to you.

The real advantage of a net price calculator…

…is to try to approach an “apples to apples” comparison of college costs. If you’ve spent any time trying to pull data about costs from a college’s website, you’ll see that there’s little consistency from school to school. Different major programs may have different fees. Finding scholarship information will probably be in a totally different place on each website. It can just get really complicated, really fast.

The bottom line? Net price calculators give you a better sense of what the cost may actually be. Take advantage of those net price calculators to come closer to a more accurate idea of total cost and a better comparison to other colleges, but always keep in mind that these resulting numbers are still just estimates.

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