What's harder than college

Net price calculators were believed to make it easier to understand college costs - instead, many make it harder

Ever since 2011, universities have required net price calculators on their websites for postings to receive government grants. These calculators are designed to help potential students understand how much it will cost to attend a particular school before they apply.

But in a new study, we found that not all colleges and universities have a net price calculator that is easy to find or that works consistently. We were able to navigate from the homepage of an institute to the net price calculator for 88 percent of the 80 institutes in our study. Despite repeated efforts, we could not find a net price calculator on the websites of two institutes. The link to the calculator did not work consistently at five other institutions.

Perhaps more worryingly, we also found that at least a third of the colleges and universities in our study presented information in a way that could mislead students and families about what to expect when attending a particular school.

One of us is a scholar who studies How Do Students Choose College, while the other on issues of college funding.

For this study, we examined the websites of 80 public and private four-year nonprofit institutions where at least one in four students receives a Pell Grant, which are scholarships for students with exceptional financial needs. The schools in our study are all rated "competitive" by Barron's - they are not the "most," "high," or "very" most competitive "in the nation." Competitive "institutions accept and include many, but not all, applicants major state universities as well as private liberal arts colleges.

Cost distortion

Our study shows the persistence of problematic findings that are documented in an earlier study. For example, despite repeated efforts, we could not find a net price calculator on the websites of two institutes. The connection to the calculator did not work consistently at five other institutions.

Among the net price calculators we could find that worked, our study found no shortage of examples of misleading representations of the expected cost of attendance. About 40 percent of the schools in our study made estimates using data that was three or four years old. It ignored the fact that tuition and other costs tend to increase every year. Some schools placed special emphasis on expenses, which only include the cost of tuition and fees, and room and board, although college attendance comes with other costs, including books. Other institutes have shown that both grants and out-of-pocket loans can be reduced without making it clear that unlike grants, loans must be repaid.

The US Department invites institutions to monitor their own compliance with the law. Failure to comply with legal requirements and the use of other misleading and confusing practices can have important ramifications. Students who believe a school is too expensive or not receiving enough grants may come across schools they can afford. And students who underestimate the cost of attending a particular school may get distracted when they enroll but don't have the financial resources to cover the real costs.

We don't know whether colleges and universities use these misleading calculators intentionally or negligently. In any case, colleges can make some simple changes to the net price calculators that will help potential students better understand and compare cost estimates between colleges and universities.

Simple corrections

First, all colleges and universities should have a net price calculator that is easy to find and works consistently. The output of the net price calculator should only highlight a net price. The highlighted net price should correspond to the definition of the federal government, which is the participation costs minus scholarships. It should also include all attendance costs and use dates for the current or previous year. The net price calculator should state what types of scholarships students are allowed to receive - and tell students what they need to do to receive them. And it should be made clear that unlike grants, loans must be repaid with interest. The net price calculator is used to provide students with estimates of the amount of help they can expect.

To be of benefit to all students, net price calculators should provide estimates that reflect the students' circumstances and choices. The estimates should be dynamic so that costs and benefits can be shown for all types of students, such as students who are financially independent and not US citizens. The calculators should also tell students if the cost varies depending on their main, dorm, or meal plan. Schools should also make it easy for students to get answers to their questions.

Federal policymakers should also take steps to address these issues. Bipartisan legislation proposed March 27 by members of the US House of Representatives and Senate - formally known as the Net Pricing Improvement Act - to take steps to address the issues identified in this study.

The proposed law would, among other things, require colleges to place their calculators on websites "where students and families are likely to look for cost and admissions information." It would also authorize the US Department of Education to develop a "general purpose calculator" that would enable students to "answer a range of financial and academic questions" and get a list of net prices that can be easily compared. It also implies the importance of understanding the best ways to communicate information about college costs to students from low-income families. In particular, the Ministry of Education would have to provide a report on the steps the Ministry has taken to raise awareness of net price calculators.

Authors:Laura Perna, Professor of Higher Education, University of Pennsylvania and Jeremy Wright-Kim PhD Student, Higher Education, University of Pennsylvania

This article is republished in The Conversation under a Creative Commons license. Read the original article.