March 28, 2019

Perna: Many colleges are misleading potential students about true costs with Net Price Calculators

Many colleges are misleading potential students about the true cost of attendance with problematic Net Price Calculators, according to a new report from Penn GSE’s Laura Perna and Penn AHEAD

Among the findings in Questioning the Calculations: Are Colleges Complying with Federal and Ethical Mandates for Providing Students with Estimated Costs?:

  • 40 percent of institutions used data that were three or four years old and 8 percent did not specify the year of data used.
  • Of the 44 institutional Net Price Calculator (NPC) outputs that included a line item for loans, 12 did not clearly differentiate loans from grants and scholarships.

“One of the many advantages that students with wealthy parents have is they don’t have to worry about the cost to attend college,” Perna told Inside Higher Ed. “For most other people, the cost really does matter. And there are few ways to get an estimate of how much the out-of-pocket costs will be early in the process.”

Perna’s study was released the day after a bipartisan group of legislators introduced a series of bills that would require institutions to improve their NPCs. Every college that receives federal student aid has been required to post an NPC on its website since 2011.

"Lawmakers are right to strengthen rules governing NPCs,” Perna said. “But institutions shouldn't wait on new laws to make price information transparent."

Writing in The Conversation, Perna and Penn GSE Ph.D. student Jeremy Wright-Kim laid out a basic test all NPCs should pass:

“To be useful to all students, net price calculators should provide estimates that reflect a student’s circumstances and choices. The estimates should be dynamic so that they can show the costs and aid for all kinds of students, such as those who are financially independent and are not U.S. citizens. The calculators should also tell students if costs vary based on major, residence hall or meal plan. Schools should also make it easy for students to get answers to their questions.”

Read the full Conversation piece here.

Read the Inside Higher Ed piece here.