For many students and parents, college enrollment decisions come down to cost. That’s why the federal government requires every college and university that offers federal student aid to have an online net price calculator.
A college’s net price is its attendance costs that students and parents need to pay out-of-pocket or through student loans. It’s calculated as the college’s total cost — including tuition, room and board, and books — minus any grants and scholarships for which a student is eligible.
You can find each institution’s net price calculator on its financial aid website. Many are also included in this list. Keep in mind that to be eligible for federal grants, loans and work-study programs, you need to fill out the Free Application for Federal Student Aid. Our FAFSA Guide and Tutorial can walk you through the application process.
You can explore schools’ net price calculators before or after filling out the FAFSA. Here are three things to keep in mind when using the calculators.
1. Net price calculators are a more accurate indicator of cost than tuition.
Don’t let a school’s sticker price — the total cost of tuition, room and board — prevent you from applying. That might not be the amount you’ll actually pay.
“You never know what type of aid an institution offers,” says Megan McClean, managing director of policy and federal relations at the National Association of Student Financial Aid Administrators. “Sometimes students are surprised by what might be available to them.”
For example, say University A costs $50,000 per year and University B costs $35,000. At first glance, University B appears more affordable. But once you’ve completed both schools’ net price calculators, you might find that you qualify for $20,000 in aid from University A and no aid from University B. That brings University A’s net price to $30,000, or $5,000 less than University B’s.
2. Net price calculators aren’t completely accurate.
All colleges and universities are required to have a net price calculator, but they’re not all standardized. Institutions use different information and formulas to calculate net price, and some use out-of-date costs.
So while net price calculators are “better than nothing,” parents and students should understand that they provide rough estimates, says Jimmy Becker, chief executive officer and co-founder of Cost of Learning, a website that uses data visualizations to help parents and students understand the costs of various colleges.
“The level of precision is going to vary tremendously from school to school,” he says.
Additionally, net price calculators don’t include talent-based aid, such as scholarships for athletics or fine arts, and may not include merit-based aid. But if an institution has a clear-cut system for determining merit-based aid, such as certain test score or grade point average thresholds, then it might be included, says MorraLee Keller, director of technical assistance at the National College Access Network.
Finally, net price calculators don’t guarantee aid. You’ll have to wait for award letters from the schools at which you or your student is accepted to find out exact amounts.
3. Have your financial information ready before using a net price calculator.
Completing a net price calculator takes about 20 minutes and requires students or parents to answer questions about the parents’ income, taxes and assets.
It’s “almost like a mini FAFSA,” Becker says.
Before getting started, gather your most recent tax returns and bank statements. Providing the most accurate information is the best way to get the most accurate net price estimate, Keller says.
“The tool can only use the information you give it,” she adds.
If the schools you want to compare use the College Board’s Net Price Calculator, you can create a College Board account and save your information. Then you can compare the net prices of various schools without having to re-enter your personal and financial information.
The bottom line
Think of college as you would any other major financial decision, and compare prices before you commit to a school. For more information about how to pay for college, read everything you need to know about the 2016-2017 FAFSA application.
Teddy Nykiel is a staff writer at NerdWallet, a personal finance website. Email: teddy@nerdwallet.com. Twitter: @teddynykiel.
Image via iStock.
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