College costs – sticker price vs. net price

by Grace

Although college “sticker prices” have soared over the last few years, net prices have experienced a more modest increase. 

… For the average full-time student, net tuition – which subtracts grants and tax-based aid – is less than half of the published price at private nonprofit four-year schools and less than a third of the published price at the typical public four-year institution.

Moreover, trends in sticker prices and net prices have diverged over the past several years, such that many students are actually paying less now to attend college than they would have five years ago.

This divergence is the result of a 40 percent increase in grant aid and a 78 percent increase in tax-based aid since 2005-6. The average full-time undergraduate now receives about $6,500 annually in grant aid and nearly $1,000 in tax-based aid to help defray tuition and fees (these figures, also from the College Board, are averaged across all students, including those who received no aid)…

Some students are bearing the brunt of high sticker prices

That’s all well and good, but for the one-third of students who are paying full price, the positive news about net prices is small comfort.  And for the two-thirds of the class of 2010 who graduated with an all-time average high of $25,250 in loans, the grants and tax benefits are not shielding them from reality of rising college costs.

Net Price Calculators can help

Many students and their families consider only published prices when comparing colleges, without taking financial aid into account.

It’s not surprising that the complexity of the financial aid formulas confuses many families, leading them to assume the worst when considering college costs.  While it’s still too early to know, we can hope that the recent introduction of Net Price Calculators on all college websites will enable families to get a more realistic estimate of their net college costs.

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2 Responses to “College costs – sticker price vs. net price”

  1. Not all net price calculators are as accurate as others. Be aware of how many questions a net price calculator asks, those that ask 30 to 40 questions, which takes about 10 minutes to answer, are the most reliable and accurate because they are built using predictive algorithms based on the college’s current aid formula and the student’s personalized financial and academic information. Many of these NPCs detail not only free grant aid and net price but also work-study, federal education loans, and military aid. Some even generate an accurate estimate of a prospective student’s total cost of an education at a particular college. About 1,500 colleges posted highly accurate NPCs. The majority of colleges settled for using the free federal NPC template to create a basic NPC that only asks fewer than 15 questions and is based on two-year-old aid formula info – making them ‘reflective’ NPCs. They do not provide students with as reliable and accurate personalized aid eligibility, net price, and out-of-pocket cost information as the ones that ask more questions and deliver better information for students’ college planning.

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