Families Rely on 'Net Price Calculators' to Estimate the Actual Cost of College. A New Study Shows How Misleading They Can Be

Figuring out the true price of college before you enroll can be confusing—and one of the best tools to help you do so could be flawed, according to a new study.

Net price calculators are supposed to provide students and their families with a true picture of how much they'll pay for a given school: taking the full cost of attendance, including related expenses such as housing and supplies, and subtracting grants and scholarships. The resulting net price can vary widely based on family income and academic performance.

Colleges have been required to offer these calculators on their websites since 2011, and they are often cited by financial experts as an essential tool in planning for college.

But about half of the calculators reviewed for the study, from the University of Pennsylvania Graduate School of Education, reported prices based on data that was at least two years old. Some colleges listed loans—which must be repaid—as “aid,” alongside grants and scholarships. Others calculated a cost estimate using only tuition, fees, and room and board, even though the federal definition also requires adding up living costs and supplies such as books.

“Students are trying to compare information across institutions and that’s hard when they’re all putting out different things,” says Laura Perna, co-author and executive director of the Alliance for Higher Education and Democracy (AHEAD) at the University of Pennsylvania

What's Wrong with the Calculators?

The researchers looked at 80 colleges, a mix of private and public institutions, where at least 25% of students are Pell Grant recipients and with a selectivity classified as “competitive” on the Barron’s Admissions Index.

One of the most common issues the AHEAD team found was the reliance on old price data. When the team collected information in the spring of 2018, 24 of the 78 colleges with calculators were using data that was 3 years old, and seven colleges were using 4-year old data. In that time, average net prices of attendance increase by roughly 8%, equivalent to $1,200 at public colleges and $2,000 at private colleges, according to the College Board.

Some of the more egregious mistakes were less common: One college, for example, included Parent PLUS loans in the output. With PLUS loans, you can borrow up to the full cost of attendance, so including them in the aid calculation drops the amount the student is told remains to $0. Another college said students could lower their costs by “spending conservatively” on food.

Perna says her team was also surprised to find there often weren’t differences in the price estimates when they filled out the calculators posing as a dependent student, who by definition may have access to parental financial support, or an independent student, who would not.

It suggests “these estimates may not be as individualized as you’d hope,” she says.

This isn’t the first time researchers have questioned the reliability of some calculator estimates. In 2016, for example, a team of researchers at the University of Pittsburgh compared net price calculator estimates with the actual financial aid letters of low-income students at seven colleges. More than half of the colleges had a grant aid award range of more than $4,000—meaning the calculator projections could be thousands of dollars too small or too generous.

Even with their flaws, no one is calling for the removal of the calculators.

“It’s not perfect,” says Bob Freund, director of the Pennsylvania College Advising Corps. “But it’s so much better than when we had nothing.”

Before colleges were required to offer net price calculators, families had little more than word of mouth to figure out what a college may wind up costing before applying.

The program Freund runs places counselors in underserved high schools with the sole purpose of focusing on college advising. The counselors work with students from the college exploration stage, through the application stage, to the decision period. And when counselors talk about best fit, the net price is almost always the driving factor—especially for students from low or moderate-income families, Freund says.

That’s why net price calculators are so important. If students have no early, reliable insight into which colleges are most affordable, they can’t apply to the right set of schools.

Janice Sann, from Middletown, N.J, learned about net price calculators late in the game. Her son, currently a senior in high school, had already started applying when she heard about them in a Facebook group hosted by Road2College. While she found the estimates reliable—the estimate from Washington's Whitman College was just $40 off the financial aid package her son received—others in the group didn’t have such rosy experiences. They’ve been frustrated with large discrepancies in their merit aid projections or issues because of more complicated income tax situations, such as being a small business owner.

As long as a significant number of colleges’ calculators don’t work, that weakens the overall power of even the colleges that do have a strong tool. Students can’t take reliable, apples-to-apples estimates from one college to another.

What Can We Do?

Noelle Markle works as a college counselor at two high schools in Huntingdon County as part of the Pennsylvania College Advising Corps.

She recommends her students and parents use the calculators, and she’s seen them work as intended, like when one of her high-achieving students was excited to learn that, thanks to generous need-based aid, Franklin & Marshall College would run him about $10,000, despite it's $50,000 sticker price.

But Markle says she’s seen calculators that lag a couple years and fields questions from students who don’t understand why some of the calculators ask about their GPA or test scores while others don’t. She’d also like to see the source of grants explained better, so families can understand what’s contributing to their bottom line and students have an idea of the criteria needed to actually receive estimated grants.

Much of that overlaps with the policy suggestions Perna’s team recommend in their paper. They’re advocating for the free calculator template from the U.S. Department of Education to be updated to disaggregate the cost of attendance by major and to separate grants by source. Outside of federal action, the authors say colleges should do better by, for example, explaining that loans are optional and must be repaid, and by ensuring that the calculation for the out-of-pocket cost is based on current data.

And one of Perna’s major recommendations—that colleges ought to clearly and prominently state the net price on the calculator results page—was included in legislation introduced in the U.S. Senate this week.

In the meantime, if you’re a student or parent of a student heading to college soon, take away this advice: Use the calculators early and often, Sann says. When you do, be sure you’re using up-to-date income, taxes, and assets. The results can’t be right if the information used isn’t.

If you’re comparing between colleges, pay attention to non-billable expenses such as supplies and transportation. Those are estimates, and some colleges will give generous ones, while other colleges will low-ball it, Freund says.

And finally, when you do get results, make sure the estimate you’re quoted includes tuition, room and board, fees, personal expenses, books, and travel. That total minus grants and scholarships is your net price—no loans.

“(They) are a stride in the right direction,” Freund says. “Before the net price calculators, parents were totally blind to what the cost might be.”