How to Calculate and Compare College Net Prices

Going to college is expensive, and when it comes to choosing a college, price is top of mind for many students and families. At Edmit, we’re strong proponents of comparing prices among universities and colleges to ensure you’re getting the best financial fit and value for your education budget. When evaluating a given college, it’s important to take the whole picture into account–college tuition, room and board, activities, fees, and extracurriculars–estimated over four years. It’s determining what you’ll pay as a full-time student–which is often different from what a college lists as its sticker price.

So, how do you know the real cost of the colleges that interest you? It all starts with knowing what you’ll pay for college–in other words, understanding college net price.

What’s the Difference Between Sticker Price and Net Price?

NPR’s Planet Money notes you’ll see two prices at any college: the sticker price and the net price. Sticker price, also sometimes called list price or published price, shows what colleges charge before financial aid (grants, scholarships, need-based aid, merit aid) is factored in.

If you’ve been to any big box store or supermarket and looked at price tags, college sticker price is essentially the equivalent of the suggested retail price that’s listed in tinier typeface. For colleges and universities, it’s the full price value of their higher education “product” (for lack of a better term). And just like in a retail environment, most students don’t pay full price to go to college. They pay a net price.

What is the Meaning of Net Price?

When it comes to college, the net price is the college’s sticker price minus the given student’s financial aid award. It’s the price the student actually pays, once scholarships, grants, and other discounts are taken into account. The net price refers to the price minus any financial aid that the student does not have to pay back.

When financial aid packages are being awarded–and the net price is being determined–colleges will look at the family household income, spouse income (if the parents/guardians are divorced), number of dependents, and how many dependents are enrolled in college, all in relation to the cost of attendance, then make their final determinations for specific net price. This determines how each student’s net price is calculated.

Because each family’s financial situation is different, it’s likely that each student may pay a different net price based on their unique financial aid package. Additionally, because a family’s finances may change from year to year, and tuition may go up each year a student is enrolled, expect the net price to be different each year as well.

Will I Have to Pay the Sticker Price?

If you’re like most higher ed students in the U.S., probably not. There are many ways to chip away at the sticker price, and colleges don’t expect most of their students to pay in full. If you think you’ll qualify for financial assistance, there’s a good chance you’ll receive some need-based financial aid.

The National Association of College and University Business Officers surveyed more than 400 private nonprofit colleges and universities, and the results showed more than 78 percent of all undergraduates received grants during the 2016-17 academic year. These grants covered more than half of college tuition and fees.

If you have stellar academic performance and/or athletic and extracurricular achievements, you may also qualify for merit-based financial aid awards. These types of scholarships can be awarded from a specific school, as well as from local institutions such as religious organizations, nonprofits, trade associations, civic groups, and businesses.

In short: Don’t take a college’s sticker price as set in stone. Start crunching the numbers to get a better sense of the net price–what you should expect to pay.

How to Calculate the Cost of College

Before looking at any schools, get a sense of what your budget for college will be. Look at any savings, earnings, and other expected areas of contribution. If you start the college search already knowing which schools you can afford, you’ll be better informed in determining which schools you’ll want to visit and to which schools you’ll apply.

When you know your budget, visit the websites of the colleges and universities that interest you and check out their net price calculators. (The U.S. Department of Education also has a centralized college net price calculator where you can search specific schools directly.) US News and World Report notes that some colleges may use a different term, such as personal cost estimator or student financial aid estimator. It’s essentially the same thing as a net price calculator.

Note that these calculators only provide estimates to start, and specific award levels will vary by student need. Additionally, many net price calculators only take financial need into account, and won’t necessarily factor in merit aid. (It varies on a case-by-case basis by calculator; check with the college or university financial aid office if you’re not sure.) So treat net price calculators as a starting point: These estimates will give you baselines you can use to start your specific, personalized research. Based on your college net price research, you should get an early sense, based on the averages, of which schools are a financial fit with your budget–and you can narrow your list for the ones you’ll apply to.

[Here’s why net price calculators are just part of the picture, and where to go for more information]

Once you know which schools you’ll apply to, fill out the Free Application for Federal Student Aid (FAFSA) online and complete your family’s financial profile. Check to see if any of the schools you’re applying to also require a CSS/PROFILE application; if so, complete and submit it. And it goes without saying–Make sure you’re complying with all college application and financial aid deadlines. If you turn any financial aid applications in late, you’re cutting yourself out of the potential aid pool.

Once your college acceptance and financial aid award letters start coming in, you’re ready to compare your offers and determine what your specific net prices will be.

How to Compare Costs Among Several Colleges

Northeastern University student Wesley Cannon devised a handy system for evaluating college net price and comparing which school makes sense for your budget and goals, which he recently shared with Edmit.

To start, collect all the cost information for each school, including list price, award letters, and any supplementary information. Using a spreadsheet or even an old-fashioned notebook, note your top schools, creating a separate column for each school. For line items, you’ll list out:

Cost of attendance, covering tuition, fees, room and board, transportation. Add an item for each year you’ll be at school.
Award package, covering all forms of financial aid. If any fees apply, factor those in so you’ll get the true amount of the award disbursed.

The goal is to get a total estimated cost, covering billed costs, ancillary expenses, and all financial aid, for each school you’re considering. Once your calculations are complete, check your work, then compare the estimated costs across your potential schools.

When making your college comparisons, Cannon recommends zeroing in on how much you’ll have to borrow, based on your calculations. This also includes being realistic with your expectations: If you’re planning on taking advantage of work-study programs, how many hours will you need to work–and is that feasible given your expected course load? Make revisions based on what you anticipate, and err on the side of caution.

Finally, consider the estimated family responsibility across all four years of college. Estimated family responsibility covers the difference between the estimated costs and your financial aid award.

In your spreadsheet or workbook, go column by column to see which college net price is most attractive to you. Discuss the options with your family. Follow up with the financial aid offices–if your first-choice school isn’t offering as much as your second-choice school, can they revise their offer and match it? When it comes to net price and financial aid awards, don’t be afraid to ask. Nothing ventured, nothing gained–and you just may get more money for college!