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What is Net Price Calculator?

Updated: Oct 1, 2020

Parents do not try to estimate college costs merely by comparing sticker prices. You will also need to estimate both the impact of your family’s finances and the likelihood of your student receiving merit aid.

In 2011 the Federal Government passed a law requiring institutions of higher education to post a “Net Price Calculator” on their university website. The goal was to make the real cost of tuition very clear to parents, as many institutions obfuscate by using terms like “fees” in additions to base tuition. So, a college may have “fees” that are many times greater than what they call “tuition’. A Net Price Calculator will use your tax returns, and information about your assets, to give you an estimated cost of attendance (COA).

I tried out Penn State’s Net Price Calculator to determine how much financial insight the tool provides to prospective students. My takeaway is Net Price Calculators are not much help without further exploring your student’s potential for Merit Awards.

My net price calculator experience

I googled Penn State’s Net Price Calculator and was immediately directed back to the College Board site to determine Expected Family Contribution (EFC). I used the following assumptions for my mock family: 2 working, married parents, combined income of $100K, a $250K house, $10K in savings and $100K in 401K’s, 2 children-none yet in college.

The result produced 2 quite different EFC’s, the first was the Federal Methodology (FM) - $8,571 the second was the Institutional Methodology (IM) - $17,484. I did a little researching and determined that Penn State uses the Federal Methodology for EFC.

I went back to the Penn State Net Price Calculator and plugged in my EFC of $8,571. My big question was, will Penn State cover the rest? The answer was NO. Bottom line, the total Cost of Attendance (COA- colleges love acronyms), is $35,068 minus my Expected Family Contribution of $8,571, so my student’s total additional need is now$26,497.

How does Penn State anticipate this need being covered?  A potential but not guaranteed grant of $3,970, the balance will be covered by loans – a Student Loan maximum of $5,500 and a Parent Plus loan of $22,098 per year.

So Expected Family Contribution is a very misleading term?

Yes! As a college consultant I often have to educate parents on this frustrating topic. It sounds great to hear that a family is only expected to contribute $8, 571 per year out of pocket, until you learn the family must also come up with $29,000 from loans they are required to both guarantee and repay.

We work with our parents to understand their realistic financial constraints and find colleges that will offer their student offer Merit Awards. Merit Awards are not loans but grants to attract top scholars to the college. We impress on our students that just having the numbers to get in may not be enough. To be considered for merit awards a student must stand out academically against his peers and have a rich resume of activities, awards and community service.

If you have read our previous blogs you know we stress the Building Blocks of College to maximize a student’s potential to receive Merit Awards.

How do parents find merit-based opportunities?

The majority of Net Price Calculators do not offer insight into Merit Awards, instead only providing information about federal aid eligibility, something that will be of little use to middle class families.

If your prospective institution does indeed offer this feature on their Net Price Calculator, we advise that you experiment in this section by altering certain variables to see how they affect your Net Tuition Price. For example, running the numbers for both a 1270 and a 1340 SAT score may give you two very different estimates. The 1270  might be more than enough to ensure acceptance at your top-choice school, but if the NPC on your school’s site tells you that an extra 70 points will cut $5,000 off your tuition, it’s probably time to register for another SAT test and get back to your study guides.

A rule of thumb is that the quality of a net price calculator can, in part, be measured by how long it takes you to complete it. Have information related to family income, assets, and investments as well as your student’s grades and test scores ready before you begin—if a NPC is going to tell you anything accurate, this information will all be required and it should take at least 20 minutes to complete.

If you do not find the Merit Aid information you are looking for, please contact The Essential College Coaches and we will help define your student’s Merit Award opportunities.

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