Colleges Required To Post Online “Net Price Calculators”

The college industry has things backwards right now. Normally, when you want to buy something, you get the price of it upfront. The current college system doesn’t work that way.

In fact, the net price you’ll pay to send your child to college is one of the last things you’ll find out before they head off to college.

This is a problem for parents. And the Department of Education has aimed to do something about it. Starting October 31st, 2011 every college must include a “Net Price Calculator” on their website. The sole purpose of these calculators is to help parents and students to estimate the amount of financial aid they could potentially receive from an institution… therefore giving families a better indication of what the true “net price” of college will cost them.

I think these calculators are a good idea. But from the calculator’s I’ve seen so far (some colleges have already posted them) they’re not going to be very meaningful.

Here are the 3 main reasons why these Net Price Calculators may fall short…

  1. There are too few questions asked for input, which will produce the wrong numbers for many parents. In fact Jeff Whorley, president of a firm that creates custom calculators for 42+ colleges, agrees with critics. His company analyzed the federal calculator using 145,000 actual student profiles and found it inaccurate 65% of the time. In addition, each school has to follow minimum criteria but it’s up to them to determine how in depth they want to go. And the more in depth they go (allowing for merit based awards, asking every single question they truly look at when determining need-based and merit-based aid, asking for the answers to questions they ask that allow them to be subjective with who they give their aid to, etc…), the more “true” the calculated number will be. Otherwise, don’t put too much emphasis on the results of the calculator.
  2. They do not show parents how they can potentially lower their out-of-pocket costs (and candidly, why would a college want you to know strategies that could lower what you would pay to attend their institution?)
  3. Nor do they show parents how to pay for these costs without jeopardizing the rest of their overall financial planning goals. (The only option colleges typically give are loan programs, which often times can be an additional revenue source for the college.)

These calculators are a starting point. But they are a far cry from complete. There are a lot more steps that are necessary – but sorely overlooked by the majority of college-bound high school students.

In fact, a good many of these steps must be done in a child’s junior year of high school.

Truth is, the junior year is one of the most important (if not the most critical) in the entire college planning process. And getting the right things done at the right the time is a challenge every family is faced with in the pre-college process.

You will notice on this list, that some of the things need to be completed by parents. And some will obviously need to be done by children. I’ve always said, “the college planning process is a team effort.” And teams work best when everyone does their part. Let this report be your families guide throughout the junior year of high school.

With that said, here are the “5 Things You Must Do Before Your Junior Year Ends”….

  1. Start narrowing down a list of careers and majors.

One of the absolute best ways to accomplish this task is to have your child get a part-time job, apprenticeship, or internship; or job shadow in a profession that interests them. Getting some real world experience or at least an up close look at what a profession does on a daily basis is better than counseling can provide.

Don’t get me wrong, career counseling can certainly help and should be a part of every parent’s overall college planning strategy… but it shouldn’t be the only help a child relies on in narrowing down a list of careers and majors.

2. List, compare, and visit colleges.

In choosing a college, there are several factors that should be considered. Listed for you here are the four main factors you should use, followed by several other smaller factors that can be taken into consideration when selecting a college.

  1. Academics
  • What are the majors offered?
  • What percentage of graduates of that major get jobs and or go onto graduate studies?

2. Admission Requirements

  • What are the average test scores, GPA, class rank?
  • What tests are required?
  • Are there any special requirements?

3. Financial aid

  • What percentage of aid does each school meet?
  • What percentage of gift aid are loans or work-study?
  • What percentage of gift aid is gift aid?

4. Expenses

  • What is the estimated total cost? (including tuition, room and board, meal plans, lab fees, miscellaneous expenses, average travel costs, etc…)

Once these main questions are answered, your list of colleges can be even further narrowed by including these other factors:

  • Location (how far from home),
  • Environment (urban or rural, religious affiliation),
  • Size (enrollment),
  • Housing (types and sizes), and
  • Activities (clubs, greek system, athletics, intramurals)

Once you’ve narrowed your list using these criteria, schedule a visit. There is no better way to get a feel for what a school is like, than by getting a campus tour.

3. Register, Study, and Take the SAT or ACT.

Many colleges require or recommend that students submit test results as part of the admission application process. The ACT and the SAT are the two main national tests.

Step one is to register for one of the available test dates in the spring of the junior year. Both the ACT and SAT can easily be registered for online.

Test Preparation Tips:

  • Take a solid academic schedule throughout the junior year.
  • Becoming familiar with the test.
  • Review sample test questions.
  • Practice, practice, practice.

4. Research and implement all applicable financial aid planning strategies

December 31st of the Junior year is a very important date in the college planning process. The year before college is considered the “base planning year” for financial aid purposes. Everything (financially speaking) that happens that year will be counted in the financial aid formulas. Therefore, if you want to maximize any asset or income planning strategies, you should ideally have them done prior to January 1st of the Junior year.

Before you jump to conclusions about whether you will qualify for aid or not, keep this ‘myth’ in mind:

Most middle and upper-middle class parents assume they won’t be eligible for any form of financial aid because they own a home and make over $75,000 per year.

The reality is that many families with low six-figure incomes are eligible for some form of financial aid. There is over 150 billion dollars available each year from the Federal Government, states, colleges, universities, as well as private foundations and organizations. You just have to know how to get your “fair share”. 

Unfortunately, most parents give up before they even start and assume they won’t be eligible. This is exactly what the colleges hope you’ll do so they can keep more of these funds in their coffers. Don’t make this mistake. No matter how much money you make, you still should apply; you’ll probably be eligible for something.

And even if you’re not currently eligible, sometimes unforeseen things arise in our lives that affect our current income (job loss, medical expenses, etc…) Having FAFSA financial aid forms on file will expedite the process if financial aid appeal or special circumstances letter is needed.

5. Finalize and monitor your “college funding” plan.

If you’re not already aware, there is going to be a sizeable bill coming for college, even if your child gets a great financial aid package, or numerous scholarship awards. Plan accordingly.

One of the biggest mistakes parents make is waiting. Waiting to start saving for college. Waiting to planning for how and where to get loans for college. Waiting to go after financial aid.

“The best time to plant a tree is twenty years ago. The second best time is now.” —  African Proverb

The best time to start all this is when your child is born. Chances are, since you’re reading this report, this is not an option.

Don’t wait any longer. Get started now.

Take a look at your current situation, see if there are strategies you can implement to reorganize cash flow or increase your eligibility for need-based or merit-based financial aid. Get that proper college funding game plan in place. You do not want to ‘wing it’ and soon find out that you put yourself in a situation where your college loan payments are triple what your mortgage payments are!

The bottom line is this…be proactive. Don’t be passive in the college process. A little bit of planning ahead makes an ENORMOUS difference.

Sincerely,

scottsig
Scott Weingold
Co-Founder, College Planning Network, LLC
Publisher, College Made SimpleA Free Educational Resource of College Planning Network

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Scott Weingold is the co-founder and a principal of CollegeMadeSimple.com and the College Planning Network, LLC – the nation’s largest and most reputable college admissions and financial aid planning firm. CPN is a proud member of the Better Business Bureau, the National Association of College Funding Advisors, the National Association for College Admission Counseling, the National Association of Student Financial Aid Administrators and the Student Affairs Administrators in Higher Education.

Scott, along with his college funding advisory team, helps thousands of families throughout the country with their college planning needs, and offers a series of free educational webinars and workshops on “How To Pay For College Without Going Broke In The Process!”  Scott has been ranked the #1 “College Financial Aid Expert Worth Knowing About” in the entire country by CollegeStats.org. He has co-authored the book, “The Real Secret To Paying For College. The Insider’s Guide To Sending Your Child To College – Without Spending Your Life’s Savings.” Scott also publishes a popular free online newsletter, “College Funding Made Simple” which reveals insider’s tips, methods, and strategies for beating the high cost of college.

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