New tools to calculate the real cost of college
Michael O'Leary (L), vice president for enrollment management at Goucher College, checks out a template for the college's new net price calculator with Barbara Smith, assistant director of financial aid. Colleges are required to post the calculators on their websites by October 29.
Tess Vigeland: It is college application season for high school seniors. Unlike shopping for, say, a computer or a dress, it's almost impossible to know how much college will really cost you until late in the game. As in next spring. That's because most students don't actually pay the advertised price. Starting next week (deadline is Oct. 29) they'll have a better idea of what they can expect to pay. By the end of this month colleges will be required to have a "net-price calculator" on their websites.
From the Marketplace Education Desk at WYPR in Baltimore, Amy Scott explains.
Amy Scott: In a basement room at Goucher College outside Baltimore, staffers gather around a projector. On the screen in front of them is the template for the college's new net-price calculator. It'll run on the school's website.
Michael O'Leary, vice president for enrollment management, is overseeing the project.
Michael O'Leary: This is what the product will look like to the user, OK?
They type in some information for a hypothetical student -- marital status, family income, SAT scores -- and the calculator spits out a number, what that student can expect to pay to attend the private liberal arts school -- tuition and fees, books and room and board -- after you subtract grants and scholarships.
They're struggling to get that number right.
O'Leary: In this example, we've got a family income of $50,000 and an expected contribution of $13,000. That doesn't sound totally realistic to me, in terms of that family's ability...
A lot of prospective students might look at Goucher's sticker price of $49,000 a year and assume they can't afford it. But O'Leary says the average freshman gets thousands of dollars in financial aid from the school.
O'Leary: Ideally, we don't want any student to be turned away by a sticker price, because we might be the ideal place for that student.
Sandy Baum: It's terrifically important that people understand net price versus sticker price.
That's higher education policy analyst Sandy Baum. I talked to her recently at an event on the cost of college. She says the new net-price calculators are meant to expand access to college.
Baum: People are very discouraged from applying to schools that have high sticker prices. And we do have to get them to understand that that's not the price they pay.
Some calculators will get closer to the real price than others.
Lauren Asher is president of the nonprofit Institute for College Access and Success. She says colleges have a lot of leeway in how they set up their calculators. Some will require just a few basic details. For others, you'll need to dig up bank and tax records.
Lauren Asher: We did find some calculators that require more than 40 pieces of information, including detailed financial records.
That may get you a pretty accurate estimate. But Asher says a lot of people might give up before they get there. They're more likely to stick with a simple calculator.
Asher: A rough estimate at least tells you whether you're in the right ballpark -- and that's a crucial starting point.
At Goucher, officials opted for a more detailed version. They're worried about students getting one number from the calculator before they apply and a very different number when they actually get in.
Goucher's Michael O'Leary says a lot can change from, say, junior year when you start shopping around to spring of senior year -- grades, your family finances.
O'leary: The bottom line, however, won't come typically until April, when the student has the offer of admission and the offer of financial assistance in hand. That's when the true comparison can take place, April of their senior year.
Which sort of leaves us right back where we started. All the net-price calculators will come with a big disclaimer -- all they give you is an estimate. O'Leary says the more thorough the information students and parents provide, the better the estimate will be.
In Baltimore, I'm Amy Scott for Marketplace Money.
Vigeland: On our Makin' Money blog, Mark Kantrowitz, publisher of two financial aid websites weighs in on the value of these net-price calculators.