New report finds Net Price Calculators lack usability and usefulness for estimating the price of college

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March 28, 2019, Philadelphia — Today, the Alliance for Higher Education and Democracy at the University of Pennsylvania’s Graduate School of Education (Penn AHEAD) released a new research brief, Questioning the Calculations: Are Colleges Complying with Federal and Ethical Mandates for Providing Students with Estimated Costs?, that looks at how useable and useful Net Price Calculators (NPCs) are, finding that:

• Some universities are not following the law of having a findable, working NPC on their website.
• A notable percentage of universities are providing cost information that is confusing at best, misleading at worst, including not clearly differentiating loans from grants, omitting categories of costs, and showing multiple “net price” estimates.

“These misleading and confusing practices have important implications for students: Students who underestimate costs may drop out of college for financial reasons before attaining a degree, while students who overestimate costs may not apply to schools they can actually afford,” said Laura Perna, Executive Director of Penn AHEAD.

Among 80 universities studied—all public or private, four-year institutions that serve high numbers of Pell Grant recipients—the researchers found:

• 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 NPC outputs that included a line item for loans, 12 did not clearly differentiate loans from grants and scholarships.

The research brief provides recommendations and best practices for colleges and universities, and federal  policymakers, to ensure prospective students have accurate, transparent information on the cost of college:

• Make the NPC available: The NPC is easily found on an institution’s website and is consistently working.

• Provide useable and useful information about the net price.
  • The NPC output presents only one net price and it is prominently displayed.  
  • The calculated net price meets the federal definition: cost of attendance less grants.
  • The calculation uses data from the current or previous academic year.  
  • All components of the cost of attendance are identified and estimated (e.g., “indirect costs,” like books and supplies, are not omitted).
  • Students are not asked to provide their own estimates of how much they will spend.
  • The output states the potential for variations in costs based on course load, residence hall, meal plan, and major of study, but not based on “spending conservatively” on food or clothes.

• Provides useable and useful information about mechanisms for paying costs.
  • Grants are disaggregated by source (federal, state, and institutional).
  • Criteria for receiving and renewing each grant are disclosed.
  • Student loans are presented separately from grants, identified as optional, and defined as requiring repayment.
  • Direct Parent PLUS loans are not included in the NPC output. 

• Estimates reflect a prospective student’s circumstances.
  • The populations to whom the estimates apply (e.g., first-time, full-time students) are specified.
  • The NPC can provide estimates for other populations (e.g., financially independent students, non-US citizens, part-time students, and transfer students).

• The NPC and related websites encourage next steps.
  • Students are informed of requirements and deadlines for receiving each specific form of aid.
  • Contact information for the institution’s financial aid office (email and phone number) is included in the NPC output. 

“Institutions can make simple, integral improvements to NPCs so prospective students have more accurate and easy-to-understand information on the costs of college,” said Perna. “The US Department of Education can alter the free NPC template to encourage institutions to provide more useful and usable information.”

To learn more, download:

• Questioning the Calculations: Are Colleges Complying with Federal and Ethical Mandates for Providing Students with Estimated Costs?
• Improving Net Price Calculators: Recommendations for Federal Policy
• Improving Net Price Calculators: Recommendations for Colleges and Universities
• Using Net Price Calculators to Determine Your Cost of Attending a Particular College
• Usability and Usefulness of Net Price Calculators

This research was supported by a grant from Lumina Foundation. Findings and opinions are those of the authors and may not reflect the views of the funder.

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