Issue Briefs
Net Price Calculators
A net price calculator can be an important tool in helping students and their families determine the true cost of a college education at a particular institution. Institutional flexibility in the creation of the net price calculator is critical to its usefulness to students and families—particularly for those who are considering a private, nonprofit college. This is because each institution has its own aid policies—depending on its resources, mission, and scholarship programs.
The higher education funding model employed by private, nonprofit colleges often produces significantly higher tuition sticker prices than the actual expected payment by a family. “Sticker shock” discourages many students from exploring all their options for higher education. Since many families do not fill out their Free Application for Federal Student Aid (FAFSA) until late in the college application cycle, quite often they do not know what their expected financial commitment will be when considering colleges.
Institutional net price calculators offer a hands-on experience for students to estimate the actual cost of going to a particular college. Net price calculators provide a snapshot of expected costs using real-time data. They offer students and their families the opportunity to properly plan and budget before visiting or applying to a particular institution. Although recent changes to the FAFSA application will help families better estimate their expected family contribution, the net price calculator will remain a vital tool to helping students find their best fit college. In fact, the new College Scorecard directly links to each institutional net price calculator.
About
Each institution that participates in federal student aid programs must post on its website a net price calculator that is designed to help current and prospective students, families, and other consumers estimate a student's individual net price.
This requirement, which was included in the 2008 reauthorization of the Higher Education Act (HEA), permits institutions to choose whether to develop their own net price calculator or use the template developed by the Department of Education.
Legislative Overview
Legislation has been introduced calling for a “Universal Net Price Calculator,” which would enable users to answer a short, single set of questions to receive net price information for every institution. Additionally, a bipartisan amendment offered and passed during the October, 2019 markup of the House Democrats' HEA reauthorization legislation (the College Affordability Act) also proposes the creation of a universal net price calculator.
Requiring a standardized net price calculator would undermine the very reason net price calculators were mandated in 2008—namely, to encourage families to consider colleges for which aid reduces price by providing them with a more accurate picture of an institution’s aid policies. While most colleges use the federal model that is already available, many private colleges that give out large amounts of aid have invested considerable resources to build their own models to ensure students have a better sense of what their actual net-price will be. A single national calculator simply won’t account for the many forms of aid available.
Further, many colleges and universities have spent considerable resources to develop enrollment strategies that will allow them to attract, enroll, and retain students from diverse backgrounds. A universal net price calculator simply cannot account for such institutional policies. By the very nature of providing information about as many schools as possible, a universal net price calculator can only ask the most fundamental questions in order to produce an estimated net price for large numbers of institutions. Questions that do not appear specifically within the law will likely be ignored. Such a policy could inflate a student’s net price if the questions left out of the equation are of particular importance to an institution when determining net price, and may well lead low-income students away from their “best-fit” institutions.
Changes to the current net price calculator provisions will be considered as part of the HEA reauthorization. Contact your Senators and Representatives to emphasize the factors that make net price calculators such a useful recruitment and enrollment tool. Specifically, let them know that:
- Net price calculators work because they are flexible.
- Net price calculators offer students the opportunity to estimate the true cost of a college education at a particular institution early in the college search process.
- Colleges and universities have diverse financial aid policies that cannot be captured by a universal net price calculator.
- Representatives Trahan and Guthrie Secure Inclusion of Bipartisan College Data Access Amendment in Higher Education Act Authorization – Press Release – Office of Rep. Lori Trahan (D-MA) (10/29/19)
- Grassley, Smith, Ernst Introduce Bipartisan Bills to Help Students Understand Cost of College, Make Cost Comparisons Easier – Press Release – Office of Sen. Chuck Grassley (R-IA) (3/27/19)
- Net Price Calculators: An Overview
- For information on policy related to Net Price Calculators, contact Justin Monk at
Justin@NAICU.edu. - For technical information on Net Price Calculators, contact Jason Ramirez at Jason@NAICU.edu.
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