It’s Coming – the Net Price Calculator: What Counselors Want to Know

1. It’s Coming – the Net Price Calculator: What Counselors Want to Know Marc Geslani, Higher Education Manager, MRO MOACAC 2011 – St. Louis April 11, 2011

2. Agenda Provide background on the law requiring NPC Introduction to Net Price Calculators (NPC) Look at a couple of NPCs Discuss the potential roles of NPC in college counseling

3. Background • NAICU Consumer Information Research – 2008 • The cost of a college education was the most frequently mentioned and most top-of-mind issue in higher education among parents surveyed; • Parents want institution-specific information that increases their understanding of college costs; • Helping students and parents navigate the admissions and financial aid maze and better understand what they will end up paying was a common comment from among parents surveyed. • College Board and Art & Science Group – 2009/2010 • Survey results suggest that many families make college choices without accurate or sufficient information • 59% of students said they looked only at sticker prices; 28% said they had considered the net tuition price of a college after determining what they might get in financial aid

4. Higher Education Opportunity Act • HEOA was signed into law August 14, 2008 • HEOA mandated that within one year of enactment, the federal government would develop a net price calculator • National Center for Education Statistics (NCES) and the Office of Postsecondary Education (OPE) at the U.S. Department of Education developed a net price calculator template that schools can use and released it on October 29, 2009 • HEOA also mandated that, within two years the federal calculator release, institutions must have a net price calculator publicly available on their website for first-time, full-time degree/certificate seeking undergraduate students. • Therefore, schools must have a net price calculator available on their websites by October 29, 2011.

5. Higher Education Opportunity Act • Schools can use a net price calculator that is: • Designed by NCES and the ED – called the “Federal Template” • By a third party organization • Created by the institution itself • All calculators must include “at a minimum the same data elements” found in the Department’s template: • Estimated total price of attendance • Estimated tuition and fees • Estimated room and board • Estimated books and supplies • Estimated other expenses (including personal & transportation) • Total estimated merit- and need-based grant aid • Estimated net price (price of attendance minus grant aid)

6. Purpose of Net Price Calculator “To help current and prospective students, families, and other consumers estimate the individual net price of an institution of higher education for a student. The calculator shall be developed in a manner that enables current and prospective students, families and consumers to determine an estimate of a current or prospective student’s individual net price at a particular institution.” P.L. 110-315, sec.132 (h) (1)

7. What is Net Price? Cost of attendance -Minus Grant and Scholarship Aid =Equals Net Price

8. From EFC to NPC – a cultural shift? EFC • Measures the family’s financial strength. • Will be the same at each school. • EFC is used to determine which aid programs and for how much a student may be eligible. • Application: Total Cost of Attendance (-) EFC = Financial Need. • Do all schools meet 100% need? • Does EFC = how much a family will pay? • Net Price • Difference between total cost of attendance and the amount of gift aid offered. • A more accurate calculation for families looking for the true out-of-pocket cost.

9. Two Approaches to Calculators VSA Calculator Federal Calculator • NPCs that use Income Ranges and Average Awards • Examples include the Federal NPC or the Voluntary System of Accountability (VSA) • Many Community Colleges and Public 4-Year colleges are choosing these options. • These options are free to the colleges • Easier to complete • Lesser degree of accuracy due to use of averaging by income/EFC group

10. Two Approaches to Calculators • NPCs that Simulate Applying for Aid and Award Packaging • The College Board and other third-party vendors take this approach • Calculators built in-house may also take this approach • Most Private 4-Year schools are choosing this option • Merit Scholarships are being incorporated • Many schools utilizing the CSS/PROFILE and Institutional Methodology are taking this approach • The College Board provides a special version of our NPC for PROFILE schools

11. Goals of the College Board’s NPC • Create more transparency • Provide better financial information, particularly to underserved populations, and demonstrate how a combination of resources (grants, scholarships, loans, work) can make college affordable • Create more choice • Expand students’ range of institutional choices beyond a set of institutions they think they can afford • Create greater access • Facilitate deeper admissions/financial aid relationships with prospective students – for proactive follow-up, clear communications, and meaningful connections

12. View from the Financial Aid Office • NPCs can serve many institutional purposes: • Mythbuster, Transparency, Elimination and Reality Check • Not all Net Price Calculators are created equal • Raising the Bar of Conversation from Price to Value • Unintended Consequences? • Preparing to compare

13. View from the College Counseling Office How and when should we counsel our families to use Net Price Calculators? Will Net Price Calculators help demystify financial aid or cause more confusion and questions? How will we know which colleges have reliable and comprehensive Net Price Calculators? How will we educate our families about the differences? Direct communication with financial aid officers remains important for counselors, students, and families. Privacy and confidentiality concerns are emerging (TICAS report).

14. Recent NPC Articles • Adding It All Up: An Early Look at Net Price Calculators • Published March 2011 • The Institute for College Access & Success - ticas.org