The U.S. Department of Education posted average net price data for thousands of individual colleges to its College Navigator web site last week. This is the first time such data have been publicly available and comparable at the college level. Meanwhile, colleges are working to meet a new federal requirement for “net price calculators” to give students individualized estimates of college costs and aid. This increased focus on net price should help students and families make more informed choices, but only if the new information helps them understand what they will actually have to pay, now or in the future.
Discussions of college costs often focus on the “sticker price” of tuition and fees. However, the full cost of attendance includes other expenses such as books, transportation, and room and board (or basic living expenses). The “bottom line cost” for students and their families is the part they will have to cover from work, savings, and loans: in other words, the full cost of attendance minus any grants or scholarships.
In the Higher Education Opportunity Act of 2008, Congress adopted this bottom-line definition of “net price” and mandated disclosures through College Navigator (campus averages) and “net price calculators” (individualized estimates) on all college websites. While the calculators will not be mandatory until October 2011, many colleges are already developing or using them.
At the recent National Association of Student Financial Aid Administrators (NASFAA) conference, there was considerable discussion of these calculators among aid administrators, as well as companies and organizations hoping to help colleges set up their calculators. StudentAid.com, the Voluntary System of Accountability (VSA), the College Board, Noel-Levitz and the U.S. Department of Education are all developing tools to help colleges implement calculators that comply with the new requirements. Those discussions and an early look at some of the some of the calculators already out there raise a few concerns about how helpful they will be to students and families.
We believe that for these calculators to be effective, they must:
- be easy to find and use
- highlight the “bottom line cost”
- provide reasonably comparable results across colleges
However, federal requirements allow colleges a great deal of flexibility in both the content and location of these calculators It would be a shame if colleges undermine the spirit of the law by burying the calculators deep on their websites, or by obscuring the “bottom line cost” figure required by Congress and highlighting other figures instead. For example, some calculators highlight the cost of attendance minus student work-study earnings and loans and parent loans as well as grants, so that the highlighted price comes out to zero for every student!
Work-study and loans are important resources for covering college expenses, but they do have a cost. Work-study wages must be earned, and loans must be repaid with interest. Highlighting a low “out of pocket cost” distracts from the very real – if delayed – costs of these forms of financial aid. Obscuring the distinction between aid that doesn’t have to be paid back, and aid that must be earned or repaid, does students and families a real disservice.
We look forward to analyzing the net price data in greater detail and participating in the ongoing discussion about the best ways to ensure that consumers have the information they need to make informed college choices.
-Matt Reed, Program Director and Diane Cheng, Research Associate The Institute for College Access & Success