Calculating the Cost of College

By Joe Messinger, CFP®

May 21, 2021

3 min READ

Can you imagine going to the grocery store and not being able to tell how much a gallon of milk will cost until after the cashier scans it and tells you the price? Unfortunately, this is often the case when high school juniors apply for college.

The cost of college is never really clear until the end of the shopping process. Students typically have to apply, be accepted, and wait for their financial aid letter before they know how much it will cost them. However, by leveraging tools like net price calculators, or our College Money Report™, you can get a sense of what you can expect to pay out of pocket for the colleges on your student’s application list.  Let’s dive into what these different tools can help you accomplish.

Net Price Calculators

What Does “Net Price” Mean?

The net price is the amount a student pays each year after subtracting scholarships and grant aid. Federal loans that have to be paid back are not included in the “net price” figure.

The “net cost” figure does include federal loans that have to be paid back. This is affectionately called “self-help” aid.

Knowing the net price allows families to start to compare colleges side-by-side. Families can use this price as a guide to help develop a strong list of potential colleges that would be a good financial fit.

The Calculators

In the interest of transparency and to encourage students to attend college who might be thrown off by the sticker price, the federal government requires every college and university to have a net price calculator on their website. This requirement was included in the 2008 reauthorization of the Higher Education Act of 1965.

The idea sounds great–a tool to show parents that a $50,000 list price college will actually cost them $30,000. However, the federal minimum calculator template does not provide enough detail to give an accurate estimate for most families. Plus, colleges are not required to adhere to a specific calculator formula. Luckily, many colleges have built upon the minimum calculator to create a more useful tool to incorporate things like household size, assets, or student merit in their factoring.

The most helpful calculators ask for financial information in addition to questions that would estimate merit aid, numbers like GPA and ACT/SAT scores. Students can fill out these calculators anonymously and see what similar students paid at that university.

Where Can You Find Net Price Calculators?

You would think a useful tool like this would be boldly featured on a college’s website. Unfortunately, you often have to do a bit of searching to find it. If the college has a search bar on their website, type “net price calculator” in the field to find it. Or simply Google “XYZ University net price calculator.” Another option is to visit collegecost.ed.gov or bigfuture.collegeboard.org/pay-for-college/tools-calculators and enter your college in their search bar to be taken to the correct page.

Pay Attention to the Fine Print

Most calculators are intended for new undergraduates applying to be full-time students for the first time. They also may use an average tuition number if different colleges/majors within the university have different price tags.

Make sure the calculator is using the most recent sticker price as the starting point, and remember this is probably last year’s price. The best a net price calculator can do is provide you with an estimate.

College Money Report™

While net price calculators can be valuable, they often lack specific information that’s tailored to your student’s specific needs or your family’s unique financial situation. The College Money Report™ that we use can address these concerns. As a parent, or a student, you can input data about:

• Your household
• Graduation year
• Top three colleges you plan to apply to
• GPA and test scores
• Household financial information

Once data is entered, you’ll receive a customized College Money Report™ that outlines the net cost, or the cost you can expect to pay, for each of your top three colleges, what type of merit and need-based aid you might expect to receive, and alternate colleges to consider when looking at affordability.

Having this type of report in your toolkit can help to inform conversations around where it makes sense to apply, and how you and your family plan to fund the cost of a college education.

Originally published 5/2018
Updated 5/2021