Net Price Calculators Failing in Mission of Helping Students

• By Dian Schaffhauser
• 05/02/19

Net Price Calculators, those little tools made available by colleges and universities to help students understand the annual costs of their potential post-secondary education, aren't doing the job they need to. In a new research brief published by the Alliance for Higher Education and Democracy (Penn AHEAD) at the University of Pennsylvania Graduate School of Education, researchers found that schools often tuck the calculators into corners of their websites that make them impossible to find or have links to the calculators that use outdated expense data, misinform on the use of loan funding to cover costs, or don't work consistently overall. The bottom line is that students make their college admissions decisions based on faulty or incomplete information, frequently with negative consequences.

The brief came out one day after federal lawmakers failed to move forward on a bipartisan bill intended to improve Net Price Calculators (NPCs) by making them easier to find and use.

NPCs were mandated by Congress through the Higher Education Opportunity Act of 2008 for institutions that participate in federal financial aid programs. The idea was to help college-goers understand how much particular schools would cost them out of pocket before they applied, in order to make comparisons among their options. As the brief explained, compliance was iffy.

For the study, the researchers chose 80 public and private not-for-profit four-year institutions where at least one out of every four students receives a Pell grant. As described in an article about the study, the schools chosen were all classified by Barron's as having "competitive" admissions; they admit "many but not all applicants" and span both large state universities and smaller private liberal arts colleges. In spring 2018, the research team sought cost estimates from those schools' net price calculators using profiles of four low-income students varying in academic achievement (with grade point averages of 2.5 and 3.5) and financial dependency status (dependent and independent).

Among the multiple findings:

• In 88 percent of cases, the NPC was locatable, but not always by navigating from the institution's home page; frequently, the term "net price calculator" had to be entered into an institution's search function. And the researchers couldn't find a calculator for two of the schools in the study;
• Twenty-two percent of the schools had "functioning NPCs" but they muddied the waters by also offering stand-alone scholarship or tuition calculators that used data from other academic years than the ones covered by the NPC;
• A third of the institutions failed to highlight a federally defined net price in their calculators;
• Many schools used data that was out of date; some 40 used information that was at least two years old;
• Several schools didn't distinguish between grant aid and loan aid; and
• Some colleges based their net price estimates on direct costs (tuition and fees plus room and board), leaving out expenses such as the cost of books.

The brief offered some remedies, several of which require federal involvement. For example, the U.S. Department of Education "should eliminate its own inconsistencies" in terminology and update the NPC template it makes available to schools "to bolster the usefulness and usability of information provided."

But the bulk of the work requires colleges and universities themselves to do a better job, first by making the NPC easy to find and easy to understand. The latter could be accomplished by having the NPC generate just a "bottom-line calculation of net price" that meshes with the federal definition — cost of attendance minus grants and scholarships — based on data from the current or previous academic year and including all costs of attendance.

The brief also strongly recommended that NPCs calculate estimates that reflect a given student's circumstances — such as those who are financially independent, non-citizens, part-time or transfers. And the calculator shouldn't ask students to provide estimates about how much they will spend.

As the researchers pointed out, "students and their families need accurate, individualized estimates of actual college costs" to make decisions about higher education. Without it, students who don't expect to be able to afford college "may be less likely to enroll," or they may be less likely to take the steps needed to be ready for college success, "such as taking college prep courses in high school." Those who "overestimate costs" may choose not to apply for schools "they can actually afford" and those who "underestimate costs" may end up dropping out of college before they earn their degrees "for financial reasons."

The brief is openly available on the Penn AHEAD website.