Paying for College

Finding The "True" Cost of College

One of the dangers of shopping for colleges is looking only at the so-called "sticker" price. The analogy is car shopping. When you go to a dealer's showroom or car lot and wander among the shiny new vehicles there, perhaps your first stop is the price sticker in the window behind the driver's door. This usually results in the common syndrome called Sticker Shock, when your head spins and your wallet (not to mention your credit rating) groans.

Same thing with colleges. Look on most any college's Web site these days. What do you see under "student budget"? Hint: A total annual cost of anywhere between $16,000 and $60,000. In some cases, that doesn't even include the cost of books and sundries. But wait a minute. Are those numbers really what you'll have to pay? Enter the Net Price Calculator, which is due to debut October 29, less than two weeks from now.

This new tool may well add some clarity to the confusion, shock, and selection process of high school seniors and their families trying to deal with the simultaneous issues of getting into college and figuring out how to pay for it during these difficult economic times.

The Houston Chronicle posted an interesting explanation about what you'll begin seeing appear starting October 29. Here are some highlights of that preview.

Students checking out colleges this fall shouldn't rule out any options based on price alone.

The tuition and fees that schools publish online are often far more than what families end up paying. The problem is that the true cost of attendance - after subtracting federal, state and school grants - isn't always clear until students receive their financial aid award letters.

But starting Oct. 29, colleges will be required to provide "net price calculators" on their websites. These will give families a better sense, early on, of what their actual costs would be for that particular year. This is expected to help students get a more accurate assessment of the range of schools that are within their reach.

"The sticker price is what people look at, but it's not a good indicator of what your cost is going to be," says Laura Asher, president of the Institute for College Access & Success, which advocates for more affordable education. "Sometimes you'll end up with a better deal at a school that looks more expensive on the surface.

At private colleges, which tend to have bigger endowments from which they can provide aid, the average published cost for tuition and fees is $37,000. But that figure drops to $21,000 after factoring in grant aid, according to the College Board, which tracks trends in education pricing.

At public schools, the average published total for tuition and fees of $16,000 drops to $10,000 when factoring in grant aid...

So, you should be able to see that uninformed sticker shock can be highly misleading when it comes to making a decision about college selection. But how do you deal with one of these Net Price Calculators?

...To start, it's important to understand what exactly the "net price" entails.

This is defined as the total cost of attendance - including books, room and board - after the total estimated grant aid a particular student would receive from the school, the state and federal government.

Schools are given a lot of leeway in how they arrive at this figure, however. This means that the calculators can vary significantly in how much financial information they'll require.

The U.S. Department of Education provides a fairly simple template that asks just 10 questions. But schools can use their own or other outside calculators that require more detail information.

The College Board, for example, makes a much more involved calculator that will be used by 300 schools. The calculator takes students through a five-page survey that asks for information such as dividend income, contributions to retirement plans, home values and tax deductions.

"For better and worse, there's no limit to what schools can add," Asher says...

Like working with any new procedure, encountering a college's Net Price Calculator can be a bit intimidating, daunting, or even confusing. There is hope, though.

...Even if the calculator spits out a net price that's slightly out of your reach, don't be discouraged. The calculator might not have taken into account special circumstances, such as recent unemployment or academic achievements, that could qualify you for more aid.

"If you see a number that's on the margin, call the financial aid office to continue the conversation," Asher says. "The purpose is to provide an estimate. It's personalized but not precise."


To see what others have said about Net Price Calculators, check out the comments on this College Confidential discussion forum thread. In the meantime, keep an open mind about college costs. Many times, where there's a will, there's a way, especially when there's also a Net Price Calculator.


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