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March 25, 2019

Why is College Net Price so Important?

Put sticker shock in check by understanding the net price.


Put sticker shock in check by understanding the net price.

Figure out the significance of net price to college costs

College costs have risen over 213% in the past forty years according to the College Board Trends in College Pricing. Even the last decade, in-state tuition and fees at public four-year institutions increased at an average of 3.1% per year beyond inflation. At one point, students could earn the amount of tuition at a public university over the summer. Now, this is almost impossible.

Don’t let that sticker shock of the cost of attendance (COA) make you run. Starting in 2011, the federal government required that all colleges and universities who award federal financial aid must show the average net price not only for all students. In fact, they make every college break down the net price by five tiers of income.

Why it matters:  Like automobile sticker prices, few families pay the sticker price at a college. Net price helps a family to understand the total costs after all the free money is applied.

Net price is not derived by just tuition but instead the COA, which is defined as tuition, required fees, room and board, books and supplies, travel and personal expenses. If a student or family is paying for a college health plan, COA may also include that expense.

Net price also includes all the free money sources. In other words, free money from merit scholarships, need-based federal, state, and institutional grants, and other awards. Although work-study and student loans are forms of financial aid, these are not included in net price because they are considered a form of self-help aid that requires effort or repayment.

The federal government mandated that every college have a net price calculator available to prospective families researching a college. For many schools, you can find the net price calculator simply by using their search. For other colleges, they may have branded the net price calculator with names like College Cost Calculator and Quick Cost Estimator. Some of the net price calculators are really sophisticated asking you as many questions as their financial aid applications and can give you a great estimate of the free money that the school, state, and federal government may offer you. Others may give just rough estimates. Consider checking the number the schools’ net price calculator vs. the most recent net price for your income band shown on the National Center for Education Statistics (NCES) College Navigator website.

Photograph of Colleen Krumwiede
Colleen Krumwiede
Co-Founder & Chief Revenue Officer

Colleen MacDonald Krumwiede is a financial aid expert with over a decade of financial aid experience at Stanford GSB, Caltech, and Pomona College and another decade at educational finance and technology companies servicing higher education.  She guides go-to-market strategy and product development at Pay4 to transform the way families afford college.


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