New tool will give clearer picture on college cost

It sounds like a simple question: How much is a college actually going to cost?

In fact, it’s a slippery one. But thanks to a federal mandate, a new tool to help students and families pin down an answer is finally arriving this month: a fairly simple online calculator to estimate what you can expect to pay to attend any college in the United States.

The new “net price calculators” — many already up and running on college websites ahead of the Oct. 29 legal deadline — are designed to provide the non-binding cost estimates based on a few relatively straightforward questions about family finances.

More broadly, they’re supposed to help students navigate one of the most confusing aspects of the college matchmaking process. While a school’s “list price” is usually easy enough to identify, students often don’t hear until long after they’ve applied and gotten acceptance letters what will be their “net price” — the sometimes substantially lower cost after scholarships and discounts are applied.

Now colleges are obliged to make the estimating calculators publicly available on their websites. Supporters predict two main effects, both positive. Some families may be surprised how much college will still cost them, but at least they’ll know more accurately which schools are affordable, and how much they need to save.

Other families, meanwhile, may be pleasantly surprised by the discounts, and won’t cross off potential matches for fear they’re unaffordable.

That could lead to more students considering high-priced private institutions where applicants are often scared off by sticker price shock.

“For those of us who are higher cost, we get ruled out right off the bat,” said Linda Parker, director of financial aid at Union College in New York, which has had its version of the net-price calculator running on its website since January. “When they find out we have pretty generous scholarships we offer, and we meet full demonstrated need for the students we admit, it’s not out of their reach.”

At private, nonprofit four-year colleges, the most recent College Board annual survey reported published tuition and fees averaged $27,293. That’s expensive, to be sure. But fewer people realize full-time students at those schools receive grant aid and tax breaks totaling on average $16,000. The average net cost of attending private colleges has actually declined over the last five years.

Take the example of a fictional Massachusetts family, the Medians, choosing between the University of Massachusetts at Amherst, the state’s public flagship institution, or to Amherst College, an elite private liberal arts school two miles down North Pleasant Street. Amherst College has much higher prices but also a 10-figure endowment and substantial financial aid to spread over its small student body.

At first, the state school looks like the obvious choice: the UMass-Amherst lists total yearly costs, including room, board, books and other expenses at $22,408 per year. Amherst College’s total costs are $57,348.

But then the AP went to the schools’ net-price calculators and entered some financial assumptions for the Medians befitting their surname: median Massachusetts family income (around $64,000), treading water on a house with the median state value, an older sibling already attending UMass-Amherst, a small amount of savings and a 5-percent retirement plan contribution.

The results may surprise. After aid is factored in, private Amherst College will be substantially cheaper, with a total bill of $5,798 at the private college compared to $12,614 at the state one.

Colleges may generally lean left politically, but when it comes to Washington mandates they quickly turn into anti-government zealots. So when Congress forced all institutions that receive federal dollars — including community colleges and for-profits — to start developing the calculators in 2008, most were opposed.

But since then, opposition has mellowed into grudging acceptance and even enthusiasm.

“It’s not too far reaching, and it does provide a good tool for parents and students of college-bound people to get a sense of what their bottom-line cost will be,” said Daniel Lugo, head of financial aid at Franklin and Marshall College in Pennsylvania.

The complexity will vary from school to school, but most calculators should take 10-20 minutes. And all will be plastered with lawyerly warnings that they’re just a planning tool, akin to a mortgage calculator, not a final number. That comes later after acceptance letters go out and financial aid offices collect and verify more detailed information.

Aid administrators predict the calculators will be very accurate for what they call “Ozzie and Harriet” families — with two parents and fairly straightforward finances. But most families aren’t Ozzie and Harriet, and the calculators won’t capture all the nuances that can affect an aid package.

In particular, the varying ways colleges treat assets from divorced parents is a big X-factor the calculators may not capture, as is merit aid. Some colleges will ask questions about grades and test-scores and include potential merit scholarship money when they give aid estimates. But calculators won’t likely reflect the full range of more focused merit scholarships that might be available — say, if there’s money set aside for jugglers or violin players.

Not all educators are supportive. Kent Barnds, vice president of enrollment, communication and planning at Augustana College in Illinois, fears the calculators will lead to the further “commodification” of a college education, pitting price-shopping families against schools and de-emphasizing whether a school’s cost reflects its value. But even he acknowledges some upside.

“Once upon a time, (colleges) were much more comfortable saying, ‘just apply and we’ll tell you what it costs in April,'” he said. “That’s no way to do business.” The net price calculator is “going to force us to be more careful in how we talk about our costs, and talk about it earlier.”

Colleges themselves will probably be regular users, trying to discern what competitors are offering. But that competition will ultimately benefit students, Lugo says.

The College Board, which operates the SAT exam, has helped some 300 colleges set up their price calculators. Students who enter their data for one such college can then use the price calculators on any school using the College Board system without having to re-enter it.

Myra Smith, executive director of financial aid services at the College Board, said there’s always a danger price will prove an unfortunately large factor in a college decision. But when the organization asked high school students on its advisory board whether the tool might be discouraging, the answer was clear.

“One of these students just kind of stopped, looked me in the eye, and said, ‘All we know now is the list price,'” Smith said. “They know the worst news. This has the benefit of telling them better news.”

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Image: Gan Golan, of Los Angeles, dressed as the “Master of Degree,” holds a ball and chain representing his college loan debt, as several groups including the Peoples Uprisings, October2011 Coalition, and Occupy DC, “occupy” Freedom Plaza in Washington, Thursday, Oct. 6, 2011. The groups held signs against war and “corporate greed.” (AP Photo/Jacquelyn Martin)