This weekend, the true price of college will be revealed.
That, at least, was the Obama administration’s aim when it ordered all colleges receiving federal aid to post a net-price calculator on their websites by Saturday.
For prospective students and parents, the arrival of the calculator marks a significant change in college admissions. For the first time, applicants can peek behind the opaque curtain of college pricing and divine the “real” expense for an actual student. In the rarefied world of $50,000-a-year residential colleges, that is a big deal.
“I think it’s the first time parents and students are going to be able to go to a college’s website and get a good estimate of what they’re going to be expected to contribute to college,” said Mark Lindenmeyer, financial aid director at Loyola University Maryland.
For most students, the sticker price of college is fiction, as inflated as the rack rates on hotel-room doors.
The full price of tuition, fees and living expenses averaged $38,590 at private colleges in the 2011-12 academic year, according to a new report from the College Board. The amount students actually paid, counting scholarships and grants, averaged $23,060. Student aid lowered the average cost of public colleges from $17,130 to $11,380.
Sticker price is rising fast. Net price is rising slowly. In private institutions, it’s barely rising at all. Because of rampant tuition discounting and an expansive definition of “aid,” sticker price is no longer a reliable measure of what the average student will pay.
The federal government has seized on net price in a campaign to make colleges more transparent and accountable. Last summer, the Education Department launched a website that ranks colleges by net price, based on the agency’s own calculations. In recent years, federal officials have gathered and published data on admission rates, SAT scores, graduation rates and other metrics.
With the new calculators, officials hope to demystify pricing. Colleges dispense aid mostly by two factors: financial need and academic merit. To some extent, a college can predict how much aid it will award through such factors as family income, bank balances and test scores.
Calculators vary in length and depth. A typical example, at George Washington University, walks families through several pages of questions, delving deep into Mom and Dad’s tax form to ferret out details about investment income and business losses. Filling it out accurately requires significant time and a stack of financial data.
A trial run of the calculator, for a mythical student with $100,000 in household income, one sibling and essentially no other assets, yielded the following: A GW education might cost that family $29,888 a year, about half off the full price of $58,538.
Barry Simmons, financial aid director at Virginia Tech, expects the calculators will be “heavily used” at most residential universities. Virginia Tech has published its own aid “estimator” for six years.
But four-year residential schools make up only a fraction of the vast higher education universe. By some estimates, as many as three-quarters of students are “non-traditional,” living at home, studying part-time, raising children or doing all of those things. No calculator can measure every life variable.
“I cannot imagine that most students, of the millions who go to college each year, are going to pay it one bit of attention,” said Patricia McGuire, president of Trinity Washington University, which focuses on educating disadvantaged women.
She views the calculator and the movement behind it as a phenomenon “driven by the upper middle class, well-educated parents who think that they’re missing out on a bargain somewhere.”
Indeed, some college leaders note a trend toward well-heeled parents shopping for value and pressing for discounts, as if they were collecting bids on a roofing job.
For an industry generally leery of regulation, the calculator mandate has met little public resistance. Amid talk of collegiate “sticker shock” and the $55,000-a-year school, net price discussions could cast higher education in a better light.
Nonetheless, some college officials worry the calculator will drive applicants away. Colleges seldom advertise their sticker price. Even the lower net price of an elite residential school is a hefty sum.
“The biggest fear that I have is turning off students,” said Jim Kaster, financial aid director at Washington and Lee University.
Some schools at the top of the pecking order dispense aid solely by need, through fairly predictable formulas. At most others, aid is more fluid. Colleges award aid for need, for merit and for various combinations of the two, in a process about as predictable as the pricing of airplane seats.
Many schools have already quietly posted calculators on Web pages brimming with disclaimers: It is just one tool in the admissions process. It yields estimates. Students shouldn’t take them to heart.
“It’s going to be a human being, not an online tool, who determines whether a student gets an aid award,” said Sally Rubenstone of the website College Confidential.