220.Unstack the Odds--Cost, Part 2

Unstack the Odds: Help All Kids Access College—and Graduate!

by

Joe Rottenborn
Executive Director, Mahoning Valley College Access Program (MVCAP)

11. Cost, Part 2

Often, students and parents are dissuaded from applying to a particular college or university because it seems high-priced. As Lynn O'Shaughnessy said in her post on this issue, “For lots of families that’s nonsense. Published college costs are meaningless. Most families face college expenses that are much lower than a school’s sticker price.” Per O’Shaughnessy, “A new study of recent college applicants illustrates just how widespread the sticker price myth is. Fifty nine percent of students said they only looked at college price tags when deciding which schools they should send applications. According to the Student Poll, which was produced by the College Board and Art & Science Group, a higher-ed consulting firm, only 28% of applicants considered the net cost of college. That’s the actual cost that families pay after they receive grants and other financial aid.” (Lynn O’Shaughnessy, “Biggest Financial Aid Myth: I Can’t Afford This College,” CBS MoneyWatch, May 25, 2010.) http://moneywatch.bnet.com/saving-money/blog/college-solution/biggest-financial-aid-myth-i-cant-afford-this-college/2143/?tag=col1;blog-river

Therefore, instead of focusing on the stated "sticker price," a prospective applicant needs to determine his or her own "net cost"--that is, what they would have to pay after all financial aid for which they are eligible has been deducted from the published cost of attendance. Indeed, the only line that should matter to students regarding college is the bottom line (i.e., net price): how much they’ll have to pay after all financial aid (need-based and merit) is subtracted from a school’s total cost of attendance.

By October 29, 2011, the federal government requires that all colleges and universities which participate in its financial-aid program have posted a net-price calculator on their school’s website. A requirement of the Higher Education Opportunity Act of 2008, these calculators will need two parts, according to the U.S. Department of Education website:
“The Department’s template is made up of two components: (1) the institutional data maintenance application and (2) the user application. In the first component, institutions input the following data:
· Price of attendance
· Median amounts of grant and scholarship aid awarded to, and accepted by, first-time, full-time degree/certificate-seeking students by EFC range

In the second component, users are asked nine questions to establish the following:
· Their dependency status
· Their estimated cost of attendance
· Approximated EFC.”

The website explained that “The template uses a “look-up” table populated with data from the FAFSA applications database to identify a median EFC. Median EFC is then matched with the median grant and scholarship aid amount entered by the institution for the corresponding EFC range to determine the student's estimated amount of total grant aid. Estimated net price is calculated by subtracting estimated total grant aid from the estimated total price of attendance.” (“Net Price Calculator Requirement,” National Center for Education Statistics—Integrated Postsecondary Data System website.) http://nces.ed.gov/ipeds/resource/net_price_calculator.asp

An early examination of these calculators, done in the spring of 2011, noted the following:

“By providing estimates for cost of attendance, grant aid, and net price (defined as cost of attendance minus grant aid), those calculators are intended to ‘help current and prospective students, families, and other consumers estimate the individual net price of an institution of higher education for a student.’ Net price calculators will provide individualized results, based on the student’s family, financial, and other circumstances.” (Adding It All Up: An Early Look at Net Price Calculators," The Institute for College Access & Success, March 2011, p. 4.) http://ticas.org/files/pub/adding_it_all_up.pdf

Interestingly, the University of California schools have offered calculators on their websites since 2008. These devices, called “financial aid estimators,” ask 11 questions of applicants and satisfy the federal mandate. (Kathleen Pender, “College websites adding net price calculators,” SFGate, March 24, 2011.) http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/03/23/BU9P1IHVFV.DTL