Net-Price Calculators: A Good First Step

As of October 2011, most postsecondary institutions whose students participate in Title IV federal student-aid programs will be required to post a net price calculator on their Web sites. These calculators will combine institutional data with student information to provide estimated personalized net price information to current and prospective students and their families. At a minimum, the calculators must use data from the institution on price of attendance (broken down into tuition and other components) and median grant amounts from all sources combined, distributed in the most recent year possible, to first-time, full-time students across income ranges.

The intent of Congress in instituting this requirement was to make it easier for students and families to predict in advance how much they will have to pay to enroll at particular institutions. As the deadline approaches, more Web sites are including calculators, and a growing number of vendors are providing colleges and universities with alternatives to the basic federal template for designing those calculators. How well are they likely to serve their purpose?

The success of the calculators will depend to some extent on their design. As a recent report from The Institute for College Access and Success (TICAS) pointed out, there is considerable variation in how easy it is to find the calculators on the Web sites, how much information about the student they request, the precision of the output, and the clarity of the results.

But no matter how well constructed they are, there is a limit to how effective the net price calculators can be. We should be careful not to expect too much of this welcome innovation, and should continue to focus our attention as well on other methods of assuring that potential students—particularly those with limited knowledge and experience—have as much information as possible about how much it will actually cost them to enroll in different colleges and universities. That information must be made readily accessible and easy for all students and families to understand.

Better informed choices and better guidance toward available opportunities would likely dramatically improve the educational experiences of many students. The idea of net price calculators on the Web sites of all colleges and universities is a reasonable component of efforts to address this problem. But calculators will not solve the problem even if they are implemented in the best way possible.

Many parents of young children already on the fast track to college will certainly go to the Web sites of individual colleges to take advantage of these calculators. But it’s far from clear that the calculators will be so useful for families with little experience of the college admissions game. The difficulty of choosing appropriate sites to visit, entering data accurately, and making meaningful comparisons across institutions will make the calculators more useful for those simply interested in comparing their anticipated awards at colleges already on their well thought-out lists than for those most in need of basic information about college prices.

Tables showing the average net price paid by students broken down by income are already on the Department of Education’s College Navigator site. There are some problems with these tables as they now exist. For example, they show average net price only for students in the income bracket who received Title IV aid, without any information about how many students in the group actually received that aid. But an improved version of these tables—and simple methods for comparing tables across institutions—can have significant value.

Most of the current generation of calculators will not tell the student anything about the sources of the grant aid they will receive. For many students who attend public institutions, most or all of the grants they get will come from federal or state government sources, and typically will not vary depending on where they attend within the state. Distinguishing institutional aid from aid “passed through” the institution would be more informative.

For institutions awarding aid from their own resources, a crucial variable is often the “merit” of the student in the eyes of the institution, and many calculators will not let a student know that her grant may vary depending on her SAT score or rank in class. That information is critically important to the relatively small group of “high-need, high-merit” students who often aim too low in deciding which colleges to consider. Including information like this not only in calculators, but also when possible in the tables the Department provides through the College Navigator, would give families a more accurate idea of what they face.

Net price calculators should be viewed as a supplement to simple information in a table—not a replacement. It might be helpful to ask institutions to include informative tables on their Web sites, in addition to the calculators. Even better would be a tool that easily compares the tables for multiple institutions. Will a first-generation student from an inner-city high school really go to the calculator of a selective private college to learn that there is a lot of institutional aid available to students like her? The calculators cannot stand on their own. They must be accompanied by continuing efforts to provide clear and reliable information to the students who need it most.

It’s easy to imagine that third parties will draw on the information embedded in the calculators to create Web services that aggregate data from a range of relevant colleges in a user-friendly form for families. Profit opportunities in this potential market would probably accrue to those who serve affluent families. But urban school districts and nonprofit organizations that work with those districts might do a real service by aggregating information relevant to the disadvantaged students they serve. Developments on this line should be encouraged.

It is encouraging to see the effort so many institutions are putting into trying to construct strong calculators, and there is every reason to believe that they will improve over time. But these calculators simply do not have the potential to provide the information—and particularly the early information—that the students most at risk in the college decision process need. Their greatest potential is for easing the deliberations of students applying to multiple colleges with significant institutional resources. In other words, in the language of one of our earlier posts, the requirement will help with the “little sort,” helping students to decide which selective college to attend. That’s certainly a good thing, but we need to think harder about “the big sort.” We must provide, in an accessible and easy to understand form, the information necessary for the more fundamental decisions so many potential students are making. Will they continue their education after high school? Is a four-year college within reach? We should all work to make the new net price calculators an integral part of an improved information system. Both institutions and the government will have to make energetic proactive efforts with counselors and others if they are going to make these calculators useful to populations that are not already familiar with the college admissions game.

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