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Obfuscating Net Price

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Inside Higher Ed

By Andrew Kreighbaum

When it last overhauled the Higher Education Act in 2008, Congress required that colleges make disclosures on their websites about the actual net price students would pay if they enrolled on campus.

Colleges were supposed to clearly display tools called net price calculators that would show students total costs after subtracting grants and scholarships and factoring in students’ family incomes. The idea behind the requirement was that many would-be students see only college sticker prices and don’t realize how much aid they may be able to obtain.

But many four-year institutions are failing to meet federal standards for their disclosures more than a decade later, according to a study released today by the University of Pennsylvania Graduate School of Education.

“One of the many advantages that students with wealthy parents have is they don’t have to worry about the cost to attend college,” said Laura Perna, the University of Pennsylvania professor who produced the study. “For most other people, the cost really does matter. And there are few ways to get an estimate of how much the out-of-pocket costs will be early in the process.”

The findings reflect earlier attempts to study net price calculators. They also add to other recent research on college cost transparency showing that financial aid award letters from colleges are often confusing and misleading, making it more difficult for families to determine the true cost of college.

While those award letters are sent to admitted students, the net price calculator was conceived to help prospective students’ families estimate the cost of a college before they apply for admission or submit an application for federal student aid.

The study also puts a new spotlight on transparency as lawmakers reintroduce bipartisan legislation this week aimed at informing students about college costs.

Advocates for better information on college prices say students are less likely to pursue a degree if they don’t think they can afford it. And they may be less likely to prepare for college by taking advanced courses in high school.

On the other hand, misleading prices that don’t include the full cost of attendance can make a college look more affordable than it actually is, meaning many students may end up taking out loans to bridge the gap.

Perna found that some colleges did not have price calculators that could be located by navigating from their main webpage, as required by the Higher Education Act.

More commonly, information from colleges was incomplete or misleading. A third of colleges did not prominently display the correct net price. Some left costs of attendance like textbooks out of the net price estimate. Two-thirds of colleges used data that was either out… (continue reading)

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