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Calculating the Cost of a College Education

Calculating the Cost of a College Education

October 28, 2014

Net Price CalculatorThe Net Price Calculator (NPC) is a fairly new feature added to financial aid office websites in 2011. Mandated by the federal government, this new online tool is available on every university website in the country, including Cedarville University's.

Net price is defined as the price you actually pay after subtracting financial aid from a school's sticker price:

Net Price = Sticker Price – Financial Aid

The NPC is a tool of the financial aid office with the intended goal to make it easier for students and their parents to estimate their net price of attending a college. Who wouldn't like that? Up to this point, determining a college's net price has been mildly confusing at best and nearly impossible at its worst.

The idea of using a calculator to quickly and easily determine your actual cost sounds like the perfect solution. The NPC offers some great benefits and is a helpful step in the right direction, but it may not be the complete answer that parents are looking for.

There are limitations to this new tool, and -- according to financial aid offices -- it is important that you use the NPC with caution.

Limitation #1 – The sticker price used in the NPC may be out of date.

One positive outcome of the NPC is that schools are required to present a complete list of costs including, tuition and fees, room, and board. The problem is that these costs might be out of date by as much as three years. (Read a Sun Sentinel article on this topic.)

Limitation #2 – NPC applies only to new freshmen.

Transfer students may find that the NPC does not provide accurate results. This will be especially true for schools whose transfer financial aid awards are different from the freshmen grants and scholarships.

Limitation #3 – GIGO
"Garbage in, garbage out" means that if you enter inaccurate data, you will get inaccurate results. This is definitely true of the NPCs.

Limitation #4 – Average results may not apply to you.

Most NPCs will use average results as an estimate of what you are likely to receive in your package from the financial aid office. By definition, the actual results will be higher than average for some students and lower than average for others.

Limitations #5 – Outside aid is not taken into account.

Many students qualify for outside sources of aid, like awards from employers, veteran's benefits, ROTC, local civic organizations, foundations, etc. This outside aid will reduce your net price, but it won’t be reflected in a university's NPC.

The net price calculator is a tool that can be helpful to students and their parents, but caution should be exercised. The results are an estimate at best and should be used as such. Final decisions should be based on accurate results that can only be determined by submitting the Free Application for Federal Student Aid (FAFSA) to the universities you choose. The financial aid office at these schools will then produce an award package that is personalized for your student and will be accurate and reliable.

Have you used a NPC? Post your thoughts here and let us know what you think.

More NPC Resources:

P.S. October is nearing an end...and so is our early application fee waiver. Please encourage students to submit their application by Friday, October 31, and Cedarville will waive the application fee. 

Posted in Admissions Affordability Financial Aid