In the Right Ballpark? Assessing the Accuracy of Net Price Calculators

Abstract

Large differences often exist between a college's sticker price and net price after accounting for financial aid. Net price calculators (NPCs) were designed to help students more accurately estimate their actual costs to attend a given college. This study assesses the accuracy of information provided by net price calculators. Specifically, we compare NPC estimates of financial aid to actual aid packages for a sample of low-income, first-time college students at seven postsecondary institutions which all utilize the federal template NPC. We find that NPC estimates of grant aid correlate highly with actual grant aid on average, but variation in individual financial aid packages among socioeconomically similar students can be substantial. We offer four recommendations. First, NPC aid estimates should include information on variability, and potentially, on sources of that variability. Second, a basic metric of academic merit such as SAT/ACT scores and GPA should be an optional addition to the federal template NPC. Third, institutions should update the data underlying their NPCs annually. Finally, we recommend that institutions use the "Explanations and Caveats" options on the federal NPC template to include additional information that may be helpful for students and families in anticipating their likely college aid and expenses. Our findings have implications for federal policy related to NPCs.

Improving college access in the United States: Barriers and policy responses

“…5 While substantial amounts of financial aid are available, determining the net price a student is going to face requires a more individualized answer than ever before. Within a given institution, net tuition and fees can vary widely across students, even among those with similar socioeconomic profiles (Anthony, Page & Seldin, 2015). Moreover, accessing available financial aid is typically not automatic: students (and often their parents) need to be aware of what programs exist and must submit a Free Application for Federal Student Aid (FAFSA), the complexity of which is well documented (Dynarski & Scott-Clayton 2006;Dynarski, Scott-Clayton & Wiederspan, 2013;Bill & Melinda Gates Foundation, 2015).…”

Money Matters: Understanding How Colleges and Universities Use Their Websites to Communicate Information About How to Pay College Costs

“…NPCs allow prospective students to receive individualized estimates of the costs they will pay if they attend the institution, without first needing to apply for admission, complete the FAFSA, and actually enroll (Anthony, Page, & Seldin, 2016; Cheng, Asher, Abernathy, Cochrane, & Thompson, 2012; Levine, 2014). Early awareness may help students and families better determine, early in the college-going process, which institutions they can afford to attend, information that can inform their decision of the institutions to which they should apply for admission (Cheng et al, 2012).…”

“…Nonetheless, researchers (Anthony et al, 2016; Cheng et al, 2012; Levine, 2014) have identified important concerns about some institutional NPCs. Based on an examination of the NPCs of 50 institutions, Cheng et al offered five recommendations to make it easier for students to find the NPC, five recommendations to make NPCs easier to complete, and six recommendations to make it easier to understand and compare NPC output across institutions.…”

“…For instance, in an examination of one institutionally developed NPC, Levine (2014) stressed the advantages of an NPC that has few questions, reporting that a six-question NPC required, on average, just 3 minutes to complete and was completed by 80% of users who started it (Levine, 2014). Anthony et al (2016), however, raised questions about the accuracy of NPCs with few questions, speculating that, for low-income students, NPCs that use the (seven to nine questions) federal template overestimate the actual grant award for some students (e.g., students with lower academic achievement) and underestimate it for others (e.g., students with higher academic achievement).…”

How Big is the Ballpark? Assessing Variation in Grant Aid Awards within Net Price Calculator Student Profiles

“…A pilot study of NPC performance found that, on average, NPCs provide better estimates of out-of-pocket prices than sticker prices, yet actual grant aid awards may vary substantially from NPC predictions (Anthony, Page, and Seldin 2016). Especially for low-income families, even small disparities between predicted and actual aid may impact college decisions (Castleman and Page 2016;Pallais 2009).…”