Five Steps to Improve the Usefulness and Usability of Net Price Calculators and Financial Aid Offers

How colleges and universities can be more transparent on costs so students and families can make informed decisions about college attendance

There are two mechanisms that are key for helping students understand the price of a particular college or university that can have big implications for their college-going decisions:

• Net price calculators (NPCs) are one of the few mechanisms students can use to estimate how much they will have to pay to attend a particular college or university – without completing an application for admission or submitting the FAFSA.

• Financial aid communications (sometimes called ‘award letters’) are the primary way students learn about the financial aid offered by a college they’ve been admitted to, and are key to informing students about actual out-of-pocket expenses they’d face, including the amount of loans they might need to take to cover remaining costs at an institution where they’ve accepted an offer of admission.  

But research by Penn AHEAD on NPCs and TICAS and New America and uAspire on financial aid offers reveals that these tools often fall short of providing the information students need, are far from transparent, and are often misleading. Students and families need accurate and complete information about college costs and financial aid to compare cost and aid estimates across institutions, which is key to finding a college that is a good financial fit and avoiding surprise costs that can undermine their college success.

Here are five steps colleges and universities should take to improve cost transparency across all communications on college costs:

1. Disclose all costs of attendance: Both NPCs and financial aid offer communications should identify the total cost of attendance (as defined by the federal government), along with a clear breakdown of direct costs (tuition and fees, college sponsored housing and food) and indirect costs (books and supplies, transportation, personal expenses). 
2. Use standard language:  Inconsistent labels and unclear abbreviations make information in NPCs and financial aid offer communications confusing and hard to compare. Especially important is consistent labeling of types of costs (which students will have to pay at different times), grants (which students do not have to repay), and loans (which students will have to repay, often with interest).   
3. Clearly distinguish between grants, loans, and work study aid: Grants, loans, and work study have very different implications. Institutions should use NPCs and financial aid offer communications to help students understand the differences, including by providing links to additional information.  
4. Omit the use of Parent PLUS loans from the calculation of the remaining cost: Parent PLUS loan amounts should be excluded from both NPCs and financial aid offer communications. PLUS loans are available to parents, not students, and generally do not come with the same protections as those offered to students. 
5. Encourage students to take the next steps: NPCs and financial aid offers should encourage students to take necessary next steps, including by providing clear instructions for what students need to do – and by when - if they are to receive and retain different sources of financial aid. 

What the research found:

Penn AHEAD’s examination of the net price calculators (NPCs) across 80 public and private four-year colleges and universities found that some institutions presented estimates of costs and aid based on outdated information and/or prominently featured a price that did not meet the federal definition of net price. Some institutions also did not have working NPCs or an NPC that was not easily found on its website.

Only seven percent of the nearly 200 aid offers from public and private nonprofit colleges examined by TICAS met three criteria for being consumer friendly: providing the full cost of attendance, separating aid that needs to be repaid or earned from aid that doesn’t and calculating the net price. New America and uAspire found that many of the 515 financial aid offers they examined used inconsistent and confusing jargon and terminology. For example, 455 included Federal Direct Unsubsidized Loans – but these loans were described using 136 different terms. One third of the financial aid offers failed mention the full cost of attendance, and 70 percent did not differentiate types of aid. Less than half of the offers calculated the remaining cost after aid. 

For more information:

This summary was derived from the webinar, “Understanding Net Price Calculators and Financial Aid Offers,” sponsored by TICAS California Student Aid Workshop. A recording of the webinar is available  at: https://ticas.org/our-work/california/california-student-aid-workshop/understanding-net-price-calculators-and-financial-aid-offers/

Referenced research:

TICAS, Cost in Translation: How Financial Aid Award Letters Fall Short

Penn AHEAD’s Questioning the Calculations: Are Colleges Complying with Federal and Ethical Mandates for Providing Students with Estimated Costs?   

New America/uAspire's Decoding the Cost of College: The Case for Transparent Financial Aid Award Letters