By Douglas Fehlen
Actual College Costs Elude Consumers
The current economic difficulties in the U.S. are causing families to rethink many financial decisions, including how much they spend on college. Many students are 'buying down' while choosing a college to avoid taking on massive student debt. People determined to make smart financial decisions about college, though, often run into a major challenge: It can be very difficult to accurately determine what the actual cost of attending a particular institution will be.
Those who have spent any amount of time looking into the cost of college know that a school's so-called 'sticker price' can differ significantly from the actual amount a person will pay. Many prospective students are drawn to public colleges and universities because these schools are widely regarded to be less expensive than private institutions. Factoring in the potential for generous financial awards, however, private schools can actually be less expensive than public colleges.
The price a student pays for college can vary depending on a wide range of factors not necessarily reflected in a school's list price. Parent earnings, residency status and academic performance can significantly affect what individuals ultimately pay. Many higher education officials have been critical of some postsecondary schools for not providing 'real' numbers on what they actually cost students. These observers suggest that failing to provide this information for individuals doesn't allow them to make fully informed decisions about their academic careers.
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A New Tool for Students
Now students have a new tool that helps provide a more accurate picture of what they'll pay while attending a particular school. Beginning in October, U.S. colleges and universities have been required to provide a 'net-cost calculator' on school websites. This calculator must factor in all of the potential costs students might incur at a school, including tuition, fees, accommodations, transportation, books and classroom resources. The net-cost calculator then determines the approximate amount an individual can expect to receive in both need- and merit-based aid based on parent earnings, academic performance and other factors.
Enacted as part of the Higher Education Opportunity Act of 2008, net-cost calculators on school websites are intended to introduce greater transparency into the college admissions game. These online tools allow students to be better informed during the college selection process by providing firmer figures on a school's actual costs. The calculators also provide individuals with cost-effective suggestions for paying out-of-pocket expenses, including work study programs and low-interest government loans.
An Imperfect Tool
The introduction of net-cost calculators on college websites has been met with praise by higher ed officials, but some warn that potential dangers persist. These observers emphasize that calculators still only provide estimated costs - not binding figures that a school will be held to. Students who make college decisions without keeping this in mind could be in for a shock when actual financial aid is determined. Additionally, advocates point out that cost estimates pertain to only one year of study; they do not account for potential increases in tuition, housing or other fees associated with college - nor possible changes to a student's financial aid package.
Observers note another potential problem with net-cost calculators: There is a wide degree of variation between them. Some colleges have adopted a cost-estimate equation based on a Department of Education template that accounts for data gathered in a nine-question survey. Other schools ask for much more extensive information, aiming to better pinpoint how much students can expect to pay for a year of college. This disparity between calculators, critics say, can make it difficult to draw comparisons between two or more schools.
Not sure what type of higher ed institution you want to attend? Check out what students say about public colleges vs. private schools.