The Bottom Line: Ensuring That Students and Parents Understand the Net Price of College. A Report to the U.S. Congress and Secretary of Education
Author: Advisory Committee on Student Financial Assistance
Date: 2011-06-00
Type: Reports - Descriptive
Subjects: Higher Education,Paying for College,Computation,Decision Making,Guidance,Student Financial Aid,Educational Finance,Advisory Committees,Enrollment,Context Effect,Parent Student Relationship,Parent School Relationship,Career Guidance

In making decisions about college, it is essential that students and parents focus on net price, which is the dollar amount that must be paid after subtracting financial assistance from cost of attendance. A net price calculator is one of two financial aid tools designed to provide students and parents with accurate and timely information about the net price of a particular college, or type of college. A well-designed calculator can provide an early estimate of cost of attendance and financial aid long before application for admission. A second tool--a financial aid award letter--provides a list of the financial aid an admitted student will likely receive, once enrolled. While used at different points in the decision making process, these tools are often closely related from a student and parent perspective. The closer a net price calculator approximates the dollar amounts that are likely to appear in the financial aid award letter, issued once the student has been admitted, the more useful it is in the decision making process. In the &quot;Higher Education Opportunity Act&quot; of 2008, Congress included two new requirements aimed at ensuring students and parents are provided with the data they need to make sound decisions. To ensure broad availability of net price calculators, Congress directed the Department of Education to develop a template as guidance, and required each institution to make its own version available on its website by fall 2011. To encourage greater standardization of financial aid award letters, Congress also directed the Department to develop a model financial aid award letter as guidance for institutions. On March 17, 2011, the Advisory Committee held its spring hearing in Washington DC, and devoted two panels to a discussion of issues associated with net price calculators and financial aid award letters. The first panel included researchers and analysts; the second panel included practitioners. After providing background, this report presents a transcript of those two panels, highlighting notable passages. Overall, the following consensus emerged from the panel discussions: (1) Students and parents need accurate and timely information about both college expenses and financial aid from middle school through college enrollment and persistence; (2) The current status of financial aid award letters--in particular, the lack of comparability from institution to institution--provides a cautionary tale for the future of net price calculators; and (3) While net price calculators have the potential to be useful tools for students and parents, they are likely to suffer from several limitations that warrant further examination. Appended are: (1) March 17 Hearing Panelists; (2) ACSFA (Advisory Committee on Student Financial Assistance) Members; (3) ACSFA Staff; and (4) ACSFA Authorizing Legislation. A list of resources is included.