ERIC ED517536: Adding It All Up: An Early Look At Net Price Calculators - Info and Reading Options

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For students and their families, deciding whether and where to go to college is one of the most important financial decisions they will ever make. However, unlike buying a computer, house, or car, most prospective students do not know how much it will cost them to attend a particular school until many of their choices about college have already been made. While the "sticker price" for most colleges is relatively easy to find, students only receive individualized information about financial aid after they apply and are accepted. Having an early estimate of "net price"--the cost of attendance minus grants and scholarships--can help students and their families make more informed decisions at key points in this high-stakes process. Without clear and timely information about likely college costs and the availability of financial aid, students may inadvertently choose colleges that they cannot afford or price themselves out of higher education when it is actually within their reach. Net price calculators, which all colleges are required to post on their websites by October 2011, present a valuable opportunity for students and their families to receive early and individualized estimates of how much it will cost them to attend schools they are interested in. After entering information about finances, academics, or other factors, students and their families will be able to view the full cost of attendance, the amount of grants and scholarships they are likely to receive, and the "net price"--the remaining amount that they would be expected to cover with savings, work, and loans. To explore how net price calculators can best serve the needs of prospective college students and their families, the author and her colleagues took an early look at 16 colleges that had already posted calculators on their websites by January 2011. They found a great deal of variation in how easy these calculators would be for prospective college students and their families to find, use, and understand. Some calculators were prominently placed on their colleges' websites, made it simple for students and parents to get results, and clearly communicated likely costs, available financial aid, and net price. Meanwhile, many other calculators were difficult to locate, required detailed financial information that students and parents would have to look up, and presented results in ways that could lead users to believe that a particular college is more affordable than it likely would be for them. Their investigation also raised questions about the privacy and security of students' personal information. Based on their findings, they offer the following recommendations for colleges: (1) Make net price calculators easy for prospective students and their families to find; (2) Create net price calculators that allow prospective students and their families to easily get and view results; (3) Make the results from net price calculators easy for prospective students and their families to understand and compare; and (4) Protect prospective students' information and clearly communicate how that information will be used. They also recommend that the Department of Education strongly encourage colleges to create net price calculators that meet the criteria above. Although early adopters of net price calculators are not representative of all colleges, the author and her colleagues hope that insights from this early look will inform discussions and decisions while colleges still have time to modify their plans. (Contains 22 footnotes.) [This issue brief was researched and written with Matthew Reed. Geneva Sarcedo, Lauren Asher, and Seth Frotman also contributed to the research and writing.]

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