How much is college going to cost your clients with teenagers? Unfortunately, most of the time the cost is shrouded in mystery.
If you listen to the ever cheerful people in college admission offices, they will tell you not to worry about price. They will rattle off the range of scholarships that their colleges offer and assure families that financial aid is available.
They are right in one respect. There is a lot of money available, but the only important question is how much of it, if any, will end up in your teenager's award letter. Traditionally, however, it's been nearly impossible for families to pin down this critical information before applying.
Here's an example of how frustrating this lack of financial knowledge can be: Two of my dearest friends, who are both single moms, are sending their smart children to schools that cost more than $50,000 a year: Macalester College in Minnesota and Mount Holyoke College in Massachusetts.
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One of my friends was thrilled when her son got a need-based grant of $27,500 to Macalester College for the coming school year. My other friend, who is better off financially, was disappointed when Mount Holyoke didn't award her daughter anything.
What makes these financial aid verdicts even more frustrating is this: When you finally learn the price after your child has applied to a college, you often have just a month or so to decide whether to accept that school's offer.
I can't think of another high-priced ticket item where you must go through a cumbersome process before the purchase price is revealed. Can you imagine selecting a high def TV, getting it loaded into your car and only then being told what the price you must pay? Nuts, right?
College Cost Calculators
Luckily, however, some relief from this insane process is nearly here. The federal government has mandated that colleges and universities must install net price calculators on their websites by the end of October. These calculators are supposed to provide personalized information to a family on what the estimated cost of attendence will be for their child. Higher-ed insiders predict that these cost calculators will be as revolutionary as US News & World Report's college rankings.
Thanks to the calculators, a mom and dad can learn before applications are sent how much an individual school should cost their family. That should dramatically cut down on the number of spring surprises when financial aid packages are mailed out. With this advance knowledge, students may end up dropping some schools from their wish lists and adding others.
Many families, by the way, won't have to wait until late October to take advantage of the calculators. Lots of schools already have already installed them.
Comparing College Costs
What's even more exciting is the prospect of families comparing college prices just as they do now when they are looking for a mortgage, purchasing a vehicle or booking an airline ticket. There is no doubt that companies are going to move into this space and begin offering the college-cost equivalent of Lending Tree, Zillow, Expedia, Travelocity and Carfax.
Cost Calculator Design
There's been a lot of chatter in the higher-ed world about the design of these calculators. Clearly some calculators are going to be more helpful than others.
The Institute for College Access & Success released a report in March about the helpfulness of the net price calculators after examining more than a dozen of them. Colleges with the best calculators, the nonprofit suggested, had them posted prominently on their websites, asked questions that parents could answer easily and clearly, and conveyed what the "net price" was. The net price, by the way, is determined by subtracting grants and scholarships from the official cost of attendence.
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Here is what Diane Cheng, the study's author, had to say about the findings:
"We found a lot of variation: some calculators were on web pages clearly aimed at prospective students, while others took much more digging to find. Some highlighted the required 'net price" figure while others played it down. And some asked as few as 10 questions, while others required answers to more than 40."
The think tank discovered that some schools were stretching the truth by providing a net price that included loans. Parents, however, need to know what the price tag will be after subtracting "free" money. It's highly misleading to generate a price by including loans in the calculations.
College cost calculators aren't going to be perfect - particularly at the beginning. But these new tools should be of tremendous value to your clients. And, with any luck, will reduce some of the stress that just thinking about college generates.