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Journal of Student Financial Aid

Journal of Student Financial Aid

Short Title

Assessing the Accuracy of Net Price Calculators

Abstract

Large differences often exist between a college’s sticker price and net price after accounting for financial aid. Net price calculators (NPCs) were designed to help students more accurately estimate their actual costs to attend a given college. This study assesses the accuracy of information provided by net price calculators. Specifically, we compare NPC estimates of financial aid to actual aid packages for a sample of low-income, first-time college students at seven postsecondary institutions which all utilize the federal template NPC. We find that NPC estimates of grant aid correlate highly with actual grant aid on average, but variation in individual financial aid packages among socioeconomically similar students can be substantial. We offer four recommendations. First, NPC aid estimates should include information on variability, and potentially, on sources of that variability. Second, a basic metric of academic merit such as SAT/ACT scores and GPA should be an optional addition to the federal template NPC. Third, institutions should update the data underlying their NPCs annually. Finally, we recommend that institutions use the “Explanations and Caveats” options on the federal NPC template to include additional information that may be helpful for students and families in anticipating their likely college aid and expenses. Our findings have implications for federal policy related to NPCs.

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