College Net Price Calculators: Are They Accurate?

As the cost of college continues to rise faster than inflation, students and parents are searching for any advantage to lower their cost of education.  The first logical step in how do you save for college would be to go to each college’s net price calculator (NPC) and input your information.

Families will find a net price calculator on any college or university website that receives federal funds.  It is a Department of Education requirement since 2011.  Net price calculators allow prospective students to enter their financial information. It then estimates the amount that a student will pay to attend that institution in a single academic year after subtracting scholarships and grants.  Many families use a net price calculator during their initial college search especially when they are trying to determine college affordability.

How accurate are the college net price calculators?  Recent studies, including one from the University of Pennsylvania, show there is a problem with some net price calculators and that families do not get all the transparent answers they need to make an informed decision.

Laura Perna and the University of Pennsylvania Study

University of Pennsylvania professor, Laura Perna, just completed a study on college net price calculators titled, “Questioning the Calculations:  Are Colleges Complying with Federal and Ethical Mandates for Providing Students with Estimated Costs?”  She examined the usability and usefulness of net price calculators during a study that included both public and private, not-for-profit, and four-year institutions. 

Her study found that net price calculators are not providing transparency and accuracy to parents and students to make good decisions on the cost of college.  Some of the findings of the study included:

  • Some net price calculators could not be located by navigating from their main webpage. (Goes against the requirement by the Higher Education Act)
  • Some Net price calculators used data that was either out of date or didn’t specify the academic year.
  • Incomplete or misleading cost of attendance expenses such as books and supplies, transportation, and living expenses

The study results show the misleading facts found within some net price calculators.  It is a call to action for college institutions to review whether their individual NPC is providing accurate cost-related information for families to make informed decisions.  Changes need to be made to provide the transparency that families need in the college process.

Introduction of Bills

As stated above, interesting objectives are being addressed by the government in the area of understanding the true cost of college. Recently, Senator Chuck Grassley of Iowa, Senator Tina Smith of Minnesota, and Senator Joni Ernst of Iowa introduced three bills to help students and families get better information about the cost of college beginning with the initial college search, then continuing through the application process, to accepting the financial aid award.  They also address problems with the current college net price calculator.  Their proposals expanded the current college issues to include the format of the financial aid award and the loan-counseling students receive with their federal loans.

The three bills introduced are as follows:

  • Net Price Calculator (NPC) Improvement Act 

The act would make the NPC more user-friendly and accessible so that families and students would understand the “net price” of going to different colleges before they apply to the school.  Included with this act is a proposal for a “universal calculator” to be developed by the Department of Education.  The universal NPC would allow students to enter their financial & academic information once and then the NPC would generate a list of comparable net price estimates for multiple institutions of higher education.

  • Understanding the True Cost of College Act

This legislation would require the Department of Education to develop standard definitions that would be used in the award letters by requiring institutions of higher education to use a uniform financial aid offer form.

  • Know Before You Owe Federal Student Loan Act

This legislation would strengthen student loan counseling by making loan counseling an annual requirement before new loans are disbursed rather than just for the first time.  The loan counseling would include debt-to-income warnings, alternative options for borrowing, and the importance of graduating on time.  The bill would also require a student to enter the extra dollar amount of federal direct loan funding that the student desires to borrow each year.


From the above examples, it is apparent that families do not have the right information available to find out the “net price” when comparing different colleges or the correct information to calculate the four-year cost of college.  Projecting the net college cost until graduation allows a family to identify what they will pay for college and help indicate how much debt a student will acquire during their journey of attaining a college degree.  The current one-year award letter falls short of providing the what-if scenario analysis families need to explore and understand this funding problem.  It is a major reason that the current student loan debt is over 1.7 trillion dollars.

PayForED has focused on this problem through our recent series of award letter blogs and webinars.  The lack of transparency and accuracy of college costs is one reason PayForED developed the College Cost Analyzer software. Families can get a customized four-year projection of college costs during the initial college search process and once the acceptance letters are issued, families can utilize the built-in award letter calculator. We standardize the award letter terminology and allow families to compare college total net cost and graduation debt side by side.  This approach provides the knowledge families need to make informed decisions and help with the conversation about college affordability.  We feel students should know before they owe any student debt and this conversation should start at the beginning when students are comparing their award letters.  PayForED is here to help you during your college journey.

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