The College Net Cost Calculator Trap

The Net Cost Calculator is a tool mandated by the Department of Education that allows families to determine the real cost of sending their student to a particular college or university. All colleges and universities receiving federal aid will need to provide this information by October of 2011. While this program has a good intent the actual implementation of these calculators gives families a bewildering sort of numbers in ranges that are hard to understand and, even worse, very misleading.

Most calculators are designed to ask you a few questions about income and family to determine what you might have to pay for your student's education. In essence these few questions are supposed to determine your Expected Family Contribution (EFC) and eligibility for federally subsidized aid. Unfortunately these questions replace the over 100 questions required on the FAFSA, the result being highly inaccurate information.

In order to test some of these calculators I used my own information based on my FAFSA for the 2011-2012 school year. My EFC determined by the real FAFSA was approximately $16,000 and I was not eligible for any subsidized federal aid. Surprisingly many of the calculators were telling me that I would pay anywhere from zero dollars (not possible given my real EFC) up to the full amount of the cost of attending. This was especially true at colleges that are not known for their financial aid largesse. Colleges that tend to offer better financial aid packages offered a truer picture of what a family would pay. Although still not an entirely accurate picture.

I also paid close attention to the calculator being used by most public colleges and universities across the State of Texas. While this calculator was no worse or better than most, there is a built-in bias against the community colleges. The "other cost" category at these schools is inflated pushing the cost of attending to ridiculous heights. If you spend more than $5,000 on your student's education at a community college in Texas, you are doing something very wrong.

The net result is that except for determining the total sticker price of a college or university before receiving financial aid, these net cost calculators are very misleading. Except for the schools that tend to offer the best financial aid packages, these calculators will leave you with an array of net costs that really make you no more informed than when you first entered your information. Unfortunately you are still on your own for determining costs and estimated aid to get a real picture of the real net cost of attending. It takes a bit more time, but the results will be more accurate.

Timothy Wall is a partner in the group Independent Financial Aid Advisors (IFAA, LLC) which works with families to develop strategies for achieving the best financial aid packages for their students who want to attend college. The company provides a free resource guide at http://www.achievecollegeaid.com/our-services/. You may contact Tim directly at trwall @achievecollegeaid.com.