The alchemy of college price calculations

Parents of future college students have a new planning tool in their arsenal. As of Saturday, colleges are required to have a "net price calculator" on their websites. The calculator, required as part of the 2008 Higher Education Opportunity Act, is designed to help high schoolers shopping for college to estimate how much it will cost to attend a certain school after factoring in average grants and scholarships.

Transparency is key when it comes to making major financial decisions. And it's good that colleges are being required to inform families about the true cost of college -- from tuition and textbooks to transportation and room and board.

But the calculators aren't perfect.

That's right -- calculators, plural. While the Department of Education came up with a net price calculator for colleges to use, many chose to build their own, making it pretty hard to make accurate comparisons between college A and college B. Some calculators are easy enough for a high school student to fill out in five minutes. Others need dozens of inputs, telling families to have their W-2 and tax forms at the ready.

"Requiring all that kind of information can be daunting for students," said Diane Cheng, a researcher with the Institute for College Access and Success, who has written a report on the flaws she is seeing with early net price calculators. "If they are confronted with a large number of required, detailed financial questions, they many never get to the end."

For colleges, the calculators are a balancing act. How much accuracy do they trade for simplicity? Do they err on the conservative side, estimating a net price on the high side and risking some families deciding they can't afford the school? Do they estimate on the low side, and risk upsetting families who don't realize that the calculator is an estimate, not the final bill? And what do they program the calculators to spit out at the end?

Compare the University of Minnesota and Gustavus Adolphus College, a private college in St. Peter, Minn. Both require roughly two dozen questions to be answered. But the University's calculator does not show merit aid, said Kris Wright, director of the Office of Student Finance. Gustavus Adolphus' calculator shows families an estimate of both merit and need-based aid. Both calculators first list net price, then estimate available work study and some student loans. But while they look similar, they are not apples-to-apples comparisons.

Todd Johnson, a consultant who runs College Admission Partners in Minnetonka, likes the idea of these calculators in theory. "The problem with them is you're trying to put everybody in the same box and college financial aid isn't quite that neat," he explained. In addition to grade point average and test scores, college admissions officers make subjective calls about offering aid to students with particular talents or experiences. You can't know for sure if you'll walk away with more or less merit aid than average. Another drawback? Calculators only estimate freshman year costs, so it's possible your cost of college in subsequent years will vary greatly.

"We have a lot of disclaimers on our site," said Doug Minter, dean of financial aid at Gustavus Adolphus. The private college has had its net price calculator on its financial aid web page since December. So far, the feedback has ranged from parents pleasantly surprised at the estimated net price to parents wide-eyed at the high cost. Officials say the estimates so far are pretty accurate.

Calculators may be a boon for private colleges by helping families dig deeper than a college's so-called sticker price. Some families look at the $50,000 sticker price of a private liberal arts college and don't realize that, like cars, some pay a lot less. In fact, students who graduated from some of Minnesota's most prestigious and expensive private colleges actually leave with less debt than some of the state's public universities, according to the Education Department. "It's a good recruiting tool," Minter said.

Bottom line: The more families can estimate the cost of college, the better. Just beware of the calculators' quirks and limitations.

Kara McGuire • 612-673-7293 or kmcguire@startribune.com. Twitter: @Kara_McGuire