Net price (n.) The full cost of attendance for a particular college, minus scholarships and grants awarded to a student. Cost of attendance includes tuition and fees, room and board, books, transportation, and other miscellaneous expenses. The net price for a college will be specific to each family because it is based both on a family’s financial situation and the financial aid policies of the college.
Why is Net Price Important?
As high school sophomores and juniors begin the college search and start to look at how much college can cost, some families might experience sticker shock. Many private four-year colleges have a listed price of over $40,000 yearly, and the cost of public state university increased a record 8.3% last year alone. Families may even find themselves saying, “Let’s cross this potential college off the list right now. There’s no point in even considering colleges we can’t afford.” However, it’s important to consider the difference between sticker price, the amount published on the university website, and net price.
Don’t Get Sticker Shock
While college is certainly an investment for most families, the costs published on a college’s website is not necessarily the amount a family will pay for a student to attend that college. Why? When a student applies for college, the student and family will also apply for financial aid using the Free Application for Federal Student Aid (FAFSA), the CSS College PROFILE, and/or other financial aid forms required by the college. A student may also apply for merit-based scholarships. For many families, theses financial aid awards will greatly reduce the cost of college. This is the difference between sticker price and net price. In fact, the College Board reports that while the average sticker price for public colleges is $8,660 annually, the average net price is only $2,910. For private colleges, the average sticker price is $29,060, but the average net price is less than half of that, at $13,380. For families making less than $30,000 per year, it can be much lower. An American Enterprise Institute study notes that a family in this category paid only $4,496 to attend Stanford University in California, which had a sticker price of $55,918 in 2011.
It is necessary to have an honest family conversation about what is affordable when it comes to financing college. But as students begin to build a list of prospective colleges, don’t eliminate schools because they look expensive. Depending on the financial situation of the family and the resources of the school, a college with a higher sticker price may actually end up being less expensive than a college with a lower published cost. More expensive colleges often have higher endowments, with more money to spend on student financial aid.
Since 2011, all colleges and universities that receive money from the federal government must display a net price calculator on their website. Students and parents enter their financial situation (family information, income, assets, etc.) in the calculator. The data is used to calculate the grants and scholarships that will be offered to the family. Depending on the calculator, it may also include loans that are available as part of a financial aid package. Finally the calculator displays an estimated net price based on the information entered. While it is only an estimate and not a promise of financial aid, the net price calculator can be a useful tool to understand the amount of aid a college may award to a family. Make sure to put in the most accurate information possible when using a net price calculator—the information you receive is only as good as the information you enter. The net price calculator is usually located on the financial aid webpage of a college or university. See below for examples of net price calculators.
Examples of Net Price Calculators
Davidson College, Davidson, NC
Georgetown University, Washington, DC
Princeton University, Princeton, NJ
University of District of Columbia, Washington, DC
University of Wisconsin, Madison, WI
University of Virginia, Charlottesville, VA
Wellesley College, Wellesley, MA
Xavier University, New Orleans, LA
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