The U.S. Department of Education’s Higher Education Opportunity Act of 2008 (HEOA) requires that institutions participating in Title IV federal student aid programs to include a Net Price Calculator on their websites by October 29, 2011. The overall goal of this endeavor is to make it easier for students and families to estimate the costs associated with going to college.
How NPCs Work
NPCs work like this: You go to the school’s website and answer a series of questions about your financial situation (see the detailed list below). The NPC compares your answers against historical FAFSA data and calculates a median expected family contribution (EFC) based on your financial details From there, the NPC determines how much grant and scholarship aid the university typically provides to applicants in that EFC range. The resulting “net price” is the difference between the total cost of attendance (tuition, fees, room and board, books and supplies, etc.) and the amount of aid awarded by the institution.
In other words, the “net price” is the amount that you and your family will have to cover for one year of education; you can do this by paying in cash, taking out loans, or earning other scholarships or grants.
Take a look at an example net price calculation. Note: These are actual questions asked by the NPC; however, results vary based on individual responses.
1. Do you plan to apply for financial aid? Yes
2. How old are you? 18
3. Where do you plan to live while attending this institution? On campus
4. Are you married? No
5. Are you the primary source of financial support for any children? No
6. How many people are in your family’s household? Four
7. Of the number in your family above, how many will be in college next year? Two children
8. What is your household income? $60,000–$69,999
Based on the information provided, the following calculations represent the average cost of attendance that students similar to this user paid in the given year:
Estimated total cost of attendance: $24,719
a. Estimated tuition and fees: $9,504
b. Estimated room and board: $8,361
c. Estimated books and supplies: $900
d. Estimated other expenses (personal expenses, transportation, etc.): $5,954
Estimated total grant aid (includes both merit and need based): $4,848
Estimated net price (cost of attendance minus grant aid): $19,871
Where Do NPCs Come From?
The Department of Education provides a template for the calculator that colleges and universities are free to use. Institutions can also design a calculator of their own as long as it includes, at minimum, the same basic components.