When students start creating their college list, smart families make sure they use the Net Price Calculator on all possibilities before adding them to the final list. Net Price Calculators (NPC) provide families with the estimated price they will pay after deducting for gift aid. This is called the average net price. Essentially, NPCs provide the average paid by students with similar financial backgrounds excluding loans and work-study. They have only been around since 2011 and can be a valuable tool for families targeting colleges generous with financial aid. However, they aren’t perfect and anyone who uses NPCs need to keep the following in mind:
1. Net Price Calculators are only ESTIMATES!
Remember, the number you get is based on averages. That means that some students probably received considerably more while others received a lot less. The school isn’t promising you the amount–most will require you to check off a statement acknowledging this before providing the estimates.
Furthermore, at best (see below) they are an estimate based on last year’s information. You are also only providing a fragment of the information for the estimate compared to what you would on the actual financial aid application. Use the results with caution.
2. Colleges accepting federal funding are required to post Net Price Calculators
This doesn’t mean that they have to make them easy to find. In most cases, you’ll find the NPC somewhere with the financial information-which also isn’t always easy to find. Usually, the financial aid information can be easily accessed from the admissions section of a college’s website. Sometimes, you’ll find the NPC listed under required information. Before spending too much time searching through the college website, just do a regular website search of the college name followed by “net price calculator.” And then wonder why they made it so difficult to find.
3. Net Price and Total Net Cost are not the same thing
While the federal government mandates that colleges are required to provide Net Price Calculators, it didn’t specify the format for the results. So some colleges provide additional “helpful” information as part of the NPC results such as Total Net Cost. The Net Price is defined by the government as the cost after deducting gift aid. Some colleges will list Total Net Cost which will be even lower because they deduct student loans from the price as well.
Usually, they’ll only deduct the maximum allowed under the federal Direct Student loan programs. Some, however, will essentially zero out the costs by including PLUS loans which can cover the entire cost of attendance. Colleges that do this often have a habit of listing loans under the more innocuous term of “self-help aid.” And guess which number is more prominent in these cases, net price or total net cost? Pay attention to the numbers.
4. Colleges aren’t required to update Net Price Calculators
That’s right, the federal government requires colleges to have NPCs but didn’t bother to require them to use the most recently available information. Some colleges may be using data from several years ago.
5. Net Price Calculators don’t have to list your Expected Family Contribution (EFC)
Even though the NPC is essentially calculating your EFC (even if it’s based on averages), the results may not show your EFC. This is why it’s a good idea to know your estimated EFC before using NPCs so you have some idea of how likely the college is to meet your need as defined by the financial aid methodologies.
6. Not all Net Price Calculators are created equal
The vast majority of colleges do not create their own net price calculator. Rather, they license an application from one of the major providers or use the free version offered by the federal government. The free government version has some major limitations.
The first is that it doesn’t ask for actual income but uses income categories. That means that those estimates for those in the top or bottom of the category are likely to be a less reliable estimate than those in the center. This is especially a problem for those in the top category of $110,000 or more. You can usually identify such calculators by the logo. However, some will use their own logo. In that case, look for income questions based on categories rather than actual income.
Another problem is that it starts by asking if the student will be applying for financial aid. If you answer “no,” the process stops and the result is listed as the total cost of attendance based on your residency status and preferred housing options. Therefore, even if you aren’t sure you’re going to apply for financial aid, you need to answer “yes” to the question.
7. Some colleges will use NPCs to estimate merit aid awards
Since you’re trying to figure out how much you’re going to pay for college, some colleges use their NPCs as a way to show students how much merit aid they’ll qualify for as well. These NPCs will ask about GPA, tests scores, and class rank in addition to financial information. This can be a great way to see how much your merit aid might change depending on your test scores. Again, be sure to read the fine print to see the conditions of the estimate.
8. There may be major privacy issues when using some Net Price Calculators
Furthermore, for some schools, information such as residency and GPA is required to complete the form. On the positive side, the Shopping Sheet display does make it clear that loans and work-study are what you use to help pay for the net price and is overall a useful display of information. The point is to be aware of how your personal information is being used.
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