Net Price Calculator

The Why and What

Dilemma“Colleges thought they were dealing with a

compliance issue, but what they are really dealing with is the second wave of transparency about value. The very fact that net price estimates will be available before prospective students show their hand as applicants will really change the game”

Kathy Dawley, President

Maguire Associates

WHY?

Higher Education Opportunity Act

Transparency in College Tuition for Consumers

Passed on August 14, 20084 Key elements related to net price of

attendance and tuition and required fees.This provision requires the U.S. Department

of Education to……..

Key elements1. Report on the College Navigator website

average institutional net price of attendance for first-time, full-time students who receive financial aid.

2. Report on the College Navigator website the institutional net price of attendance for Title IV aid recipients by income categories

Key elements3. Develop a multiyear tuition and required

fees calculator for undergraduate programs that will be added to the College Navigator website by August 14, 2009.

Purpose: To provide consumers with a way to “estimate the amount of tuition an individual may pay to attend an institution of higher education in future years.”

Key elements4. Develop a template for a net price

calculator to assist institution in meeting the requirements to post a calculator that allows prospective students to calculate their estimated net price at the institution.

WHAT

As of October 29, 2011 all institutions participating in the Federal

Title IV Financial Aid Programs must have a Net Price Calculator on their website.

Net Price defined• The average yearly price actually charged

to full-time, first-year undergraduate students receiving student aid at an institution of higher education and is calculated by subtracting the average need-based and merit-based aid from the institutions cost of attendance.

• As much as practicable, net price shall be based on the individual student.

Net Price disclaimers• The individual net price estimates must be

accompanied by a prominent disclaimer noting that the estimate is not final, is not binding and may change.

• Additionally the disclaimer must note the student must complete the FAFSA to be eligible for and receive federal student aid funds.

• A link to FAFSA.gov must be included.

Output from a NPCStep 1.Published Cost of Attendance or Total Cost- Expected Family Contribution (EFC)=Total NeedStep 2.-Estimated Grants and Scholarships (free money) from all sources Federal, State and Institutional=Estimate Net Price

Depending on the calculator – there may be additional Steps

Output continuedStep 3Estimated Net Price-Eligibility for other aid programs (student loans)Estimated Remaining Cost after Financial Aid

Step 4Outline other types of assistance like campus work or parent loans.

Considerations/Concerns• Not all Net Price Calculators are the same

A family may not get a true apples to apples comparison between school A & B Institutions have the choice to use the federal

template or to customize. Inputs may vary

Trade-off is accuracy or simplicity Is the institution using the prior year’s awarding

formula or projecting future year’s awards? When was the calculator last updated?

Family may eliminate an option based only on the bottom-line

What does NPC mean for you as college counselors?

Changes to Financial Aid2012-2013

OverviewChanges to Verification ProcessChanges to the Federal Loan Program

What is VerificationFederally mandated quality assurance

program to ensure FAFSA are completed correctly

Student are selected for verification by FSA or by the school

Who will be VerifiedElimination of the 30% ruleAssumption that large number of Pell

eligible students will be verifiedOther data that would trigger the

verificationUsing the IRS DATA Retrieval will reduce

your chances of being selected

Customized VerificationStarts in the 2012-2013 school year

Although in 2012-2013 more data is needed and it is not being fully implemented

Possible in 2013-2014, students will have specific data items selected for verification and not their entire application

IRS DATA RetrievalOption a FAFSA filler may chose to have data

retrieved directly from the IRS to complete FAFSA form

Student can use this if they file jointly and do not amend their taxes

A student cannot adjust the tax information once it is populated on the FAFSA to have to meet the FAFSA Verification requirements

It takes about 2 weeks from the time of electronically filing your taxes for this feature to be available or 6 weeks with paper filing

The same would be true for parents of dependent students

IRS transcriptsA student who is selected for verification

that is either ineligible for the IRS data retrieval or chooses not to complete it must obtain a tax transcript

A tax transcript can be requested from the IRS website or via phone request

It takes about two weeks to get this via mail, sign it and send to the Financial Aid Office

Verification WorksheetsSchools will still have a worksheet that

needs to be completed in addition to the tax information

New items include: Verification of food stampsW-2 for earnings statements for non tax filersStatement of income for jobs with no W-2s

Changes to loan programsInterest rate

Undergraduate Sub loans from 3.4% to 6.8%Origination fees

Net of .5% to 1% (Sub/Unsub) 2.5% to 4% (PLUS)

Deferment of interest during 6 month grace period for sub loans for loan created July 2012 to July 2014

No sub loan for graduate students after July 1st 2012