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Find Out What School REALLY Costs: How to Use a School Net Price Calculator

Everyone knows college is expensive, but did you know it's not as bad as most people think? There are even new tools out there specifically designed to help students and their families get a better understanding of how much college costs - but can anyone find them?

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By Eric Garneau

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How Bad Is It?

A new report from the nonprofit advocacy group College Board brings frightening news to prospective college students and their families - the cost of college is on the rise again. According to the report (as conveyed in Bloomberg Businessweek), the average price of a private 4-year college has risen 4.5% since last year, while for public 4-year schools that number's up by 8.3%. In-state students can now look forward to a yearly average tuition of $8,244 at those institutions.

But over in The New York Times, professor Judith Scott-Clayton offers up a surprising rebuttal to the College Board's report. In a piece entitled 'College is Cheaper Than You Think,' Scott-Clayton points out that when grants and tax-based financial aid are considered, college is actually on average less expensive to attend than it was five years ago. Here are some facts to consider:

  • Since the 2005-2006 school year, grant aid has increased 40% and tax-based aid has jumped up 78%. That equates to $6,500 in grants and $1,000 in tax-based aid annually for the average undergraduate.
  • Overall only about a third of college students pay full 'sticker price' for their schools.
  • The gap between sticker and actual price in theory allows schools to better distribute aid to students who need it rather than subsidize the education of all their students equally.
  • On average, the actual price of public 4-year schools is only $170 higher now than it was five years ago. For private, nonprofit 4-year schools, it's actually $500 lower. Public school students on average pay less than a third of the published price, while private students fork over less than half.

So why don't more stories focus on the above information? Why isn't it more widely publicized that higher education is more affordable than most people think? Sensationalistic journalism aside, the truth is a lot of people just don't know about all the financial aid benefits they can get when they start looking into how much college costs. That's why, as part of the Higher Education Opportunity Act of 2008, all higher education institutions that participate in federal student aid programs were required to post net price calculators on their websites as of October 29, 2011. With such a mandate, the federal government hopes to foster a more transparent environment where students and their families can garner a more realistic idea of how much their desired schools will end up costing.

Not So Precise

Though the U.S. Department of Education provides a template net price calculator to interested institutions, there's not really a standard model schools are made to adopt - merely a list of five key points each calculator must include (like sticker price, median aid received by students at the institution and questions regarding students' tax status). That produces, as Scott-Clayton notes, a program designed to help eliminate college cost confusion that can actually increase it.

Scott-Clayton points out that net price calculators run the gamut from asking for more complex information than the typical visitor will have on hand to being too simplistic to really be that much help. To get a better hold on their usefulness (or lack thereof), we checked out a few schools' net price calculators ourselves using the college rankings found in U.S. News & World Report - since one could reasonably expect that top schools listed there would draw more inquirers than many.

According to U.S. News, the highest-ranked private 4-year institution is Harvard. Harvard's website makes a key point clear immediately: one important aspect of these net prices calculators concerns how easy they are to find and access, since presumably incoming college students won't know to look for them. There's no link to the calculator on Harvard's front page, so we had to poke around a little. We first tried clicking 'Admissions & Aid' at the top of the page, which didn't do it. Next we clicked 'Apply to Harvard' in the site's upper left-hand corner, which actually took us to the same unhelpful page as 'Admissions & Aid.' Finally, we just typed 'net price calculator' into the site's search bar and hit enter, which brought us to a stand-alone site. There we were asked to read two pages of instructions and explanations spelling out that the calculator's merely used for estimation and its results are not binding. Once that's done, we actually got to use the calculator, a fairly simple 1-page experience that asks for estimations of parents' income and equity and not much else. Harvard's calculator clearly breaks down aid value at the bottom of the page and has a sleek, user-friendly design.

The highest-ranked 4-year public school according to U.S. News is the University of California - Berkeley, so it's there we turned next. This time, after not finding a link for a net price calculator on the school's home page we went straight to the search bar, which turned up what Berkeley calls the 'Financial Aid Estimator' (sounds more friendly, doesn't it?). The so-called Calculator first asks whether you're classed as a dependent or independent on your taxes. Once that choice is made, you're given a page to input relevant financial data, though in blank forms, not more friendly drop-down menus like Harvard's. These questions also focus a bit more on what the student earns than parental assets; students' worth was only given one space in Harvard's equation. Once all the data's put in, the site takes you to a separate page to break down your financial aid situation.

Despite their differences, both schools' calculators seem relatively inviting and ask for the same basic information, though again Scott-Clayton points out in The Times that many variations of these calculators exist. More troubling, though, is how difficult these calculators were to find. It seems you have to know to look for them to get a fair idea of what financial aid you can receive. If they're meant to make college costs more transparent, then they're not really doing their job. Like other changes to come out of the Higher Education Opportunity Act of 2008, the net price calculator is well-intentioned but somewhat impotent if not everybody knows that information is available. If they did, some journalists might stop decrying the astronomical costs of a college education and instead focus on how individuals can achieve that education perhaps more easily than they think - and that's a better story to report.

Once you get to college, you're going to have to pay for books, too. How can you keep those costs down?

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