For those of you with a son or daughter who has already been through the financial aid process, you may have wondered why the award packages that accompanied your child’s acceptance letters differed so dramatically from school to school. Afterall, you filled out the FAFSA form which provided your Expected Family Contribution, or EFC. How is it possible that the colleges each assessed your need so differently and how might you have anticipated what the true cost of a particular school would be?
I am a strong advocate for knowing what you are getting yourself in for in terms of college cost and what you can afford before your son or daughter’s heart is set on a school and the application is sent. Here is the good news. Come August 2011, some of the guess work will be eliminated from the cost estimate part of this process. One of the provisions of the Higher Education Opportunity Act of 2008 requires that all colleges and universities which receive Title IV federal funds offer a net price calculator on their website within the next two years. The purpose of these college specific calculators is to provide a closer approximation of what the true “net” cost of a particular college will be for an individual student, given the school's own financial aid practices and history.
While the difference in aid packages is the result of multiple factors (one of which is a college’s own limited financial resources and how it chooses to allocate them), a major contributor to the discrepancies is that schools often use their own criteria when it comes to packaging their financial aid awards, separate and distinct from that asked on the FAFSA. This is especially true for colleges that require students to also submit the school's own proprietary form or the CSS/Profile. Additionally, colleges exercise something called “Professional Judgment” which is their way of deciding how and when they will deviate from the hard numbers on the financial aid forms. So while online calculators found on multiple college source websites are a nice idea, they are far too generic to provide any real utility.
Colleges will have the option to develop their own templates or adapt one that is being developed by the Department of Education’s (DOE) National Center for Education Statistics (NCES) and which will be available to them in August of this year. Several schools have gotten a jump on the task and have already posted school-specific net price calculators to their websites. Among them are Amherst, Williams, MIT and Purdue. While these calculators still have limitations and cannot replace the thinking and ultimate judgment of the financial aid officer, they should provide a much closer “estimate” of the net cost of attending a specific institution. Each college’s model will draw from its own database, enabling it to match as closely as possible a family’s financial profile to its historical aid packages, which is also expected to include merit-based aid.
The implementation of net price calculators and other provisions such as the required annual reporting to the DOE of Cost of Attendance (COA) and financial aid awards will hopefully achieve the intended objective of improving the transparency on the cost of attending college. If done right, this should take much of the guesswork out of the cost side of the college equation.