Walking out of an hour-long presentation by a college admissions officer, my 14-year old son — who had accompanied me and his older sister on this visit — had one comment: “Mom, they never told us how much it costs to go here.”
It was a poignant observation. The admissions officer provided lots of information about the curriculum and student life, and made references to financial aid, but never gave a price.
For my family, this omission wasn’t a problem. My husband and I had gone to college (and graduate school). We knew the benefits of a college degree, that financial aid is available, and that we would find a way to pay.
Not all families have this knowledge or confidence. Nearly all high school students report that cost is somewhat or very important to their choice of college. Concerns about college costs are understandable. The average net price — that is, the total cost of attendance less grant and scholarship aid — represented 94 percent of family income for dependent students in the lowest family income quartile in 2016.
Some high school students overestimate college costs, while others underestimate. Both errors can be problematic. Students who think they can’t pay may decide not to apply or enroll. Those who think the costs are less than they actually are may struggle to stay enrolled. Improving information about college costs may be especially important for students from low-income families, racial/ethnic minoritized groups, and others who continue to attain bachelor’s degrees at lower rates.
College admissions presentations typically do not specify the price tag because college costs are complicated. Most students do not pay the sticker price. In 2016, 63 percent of undergraduates received a grant — money that does not need to be repaid. Whether and how much grant aid a student receives depends on whether a student meets the eligibility criteria for different sources. The Federal Pell Grant is awarded to students based on financial need. States and institutions may provide grants based on financial need, academic achievement, and other criteria.
One of the only mechanisms that prospective students have to understand how much a particular college will cost them — given the institution’s costs and a student’s individual circumstances — is a net price calculator. Colleges that accept federal student aid have been required to have one on their websites since 2011. Net price calculators should allow prospective students to estimate their cost of attending a particular college without having to first apply for admission, complete a financial aid application, and be admitted.
But, as we showed in a recent study, net price calculators do not always serve this function. Some institutions do not have one that is working or easy to find. Others present information that is misleading, incomplete, or out of date. Other researchers have shown problems with the financial aid award letters that institutions issue to admitted students.
Congress recently introduced legislation that recognizes that prospective and admitted students need better cost-related information. The Net Price Calculator Improvement Act is intended to standardize the presentation of cost-related information for prospective students, while the Understanding the True Cost of College Act would include similar reforms to financial aid offer letters. The Student Loan Disclosure Modernization Act and the Know Before You Owe Federal Student Loan Act are intended to help students understand what it means to take on loans.
Students need to know what all the costs of attending a college will be. We found that some institutions include only some of the costs of attendance in their net price calculations. This approach may make an institution appear more affordable, but it is misleading: to fully engage in the college experience, students need to have books, supplies, food, and a place to live. When different institutions include different categories of costs in their estimates, students have difficulty making apples-to-apples cross-institution comparisons.
Students also need to know the types and terms of financial assistance they are receiving. We found that some institutions did not clearly differentiate between grants and loans. Students need to know what money is a gift and what money must be earned (through work study) or repaid (loans). Students need to know what to do to keep grant aid. For example, will they lose the grant if they do not meet minimum academic requirements?
Higher education is one of the most important purchases that students and their families can make. To make informed decisions — both before applying and after being admitted — students need accurate and complete information, and they need this information presented by all institutions in the same way. It’s time for higher education institutions to tell students how much a college education actually costs.
Laura W. Perna is Vice Provost for Faculty, GSE Centennial Presidential Professor of Education, and Executive Director of the Alliance for Higher Education and Democracy (Penn AHEAD) at the University of Pennsylvania.