How to Zero In on the True Cost Of College

Mark Kantrowitz publishes the Web site FinAid.org, which provides information about college scholarships and financial aid.

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Colleges are now required to post net-price calculators that estimate financial aid, based on each family’s circumstances, on their Web site. What’s the goal? The idea is to help families make informed decisions about college affordability. Net-price calculators are useful for including colleges you might not have otherwise considered, such as high-priced colleges with generous financial-aid packages. The ideal would be for families to know exactly how much the college will cost them for all four years. This is a start.

Any glitches so far? A few. Net price is defined as the difference between the cost of attendance and the average grant. Only about two-thirds of students receive grants, so net-price calculators potentially understate actual costs by thousands of dollars. Also, the average is based only on the awards made to first-year, full-time students. That means that any college that awards more grants to freshmen than to sophomores, juniors and seniors is going to look cheaper than it really is. Finally, public schools are obligated to list in-state cost only. If an out-of-state family uses a calculator that doesn’t list out-of-state costs, that would lead to a net-price difference, on average, of $11,000.

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What else should families know about the calculators? Some colleges are following a government template that has nine questions. Other colleges are creating calculators with as many as 40 or 50 questions. You may be comparing a simple calculator with one that’s much more detailed and more accurate. Also, some colleges are presenting not just net price but also net cost, which is what you get when you subtract the entire financial-aid package -- grants, loans and student employment -- from the cost of attendance. The net cost is usually zero because loans are factored in. I’ve had students come to me saying, “I just got a free ride from this college,” when they actually have a $20,000 loan. Families need to be careful when making comparisons.

Your overall advice? The calculators are helpful for ballpark estimates, but families should use them with caution.

The late Jane Bennett Clark, who passed away in March 2017, covered all facets of retirement and wrote a bimonthly column that took a fresh, sometimes provocative look at ways to approach life after a career. She also oversaw the annual Kiplinger rankings for best values in public and private colleges and universities and spearheaded the annual "Best Cities" feature. Clark graduated from Northwestern University.