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, Key elements related to net price of attendance and tuition and required fees. This provision requires the U.S. Department of Education to……..

Key elements 1. 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 elements 3. Develop a multiyear tuition and required fees calculator for undergraduate programs that will be added to the College Navigator website by August 14, 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 elements 4. 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 NPC Step 1. Published Cost of Attendance or Total Cost - Expected Family Contribution (EFC) =Total Need Step 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 continued Step 3 Estimated Net Price -Eligibility for other aid programs (student loans) Estimated Remaining Cost after Financial Aid Step 4 Outline 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 years awarding formula or projecting future years 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 Aid

Overview Changes to Verification Process Changes to the Federal Loan Program

What is Verification Federally mandated quality assurance program to ensure FAFSA are completed correctly Student are selected for verification by FSA or by the school

Who will be Verified Elimination of the 30% rule Assumption that large number of Pell eligible students will be verified Other data that would trigger the verification Using the IRS DATA Retrieval will reduce your chances of being selected

Customized Verification Starts in the school year Although in more data is needed and it is not being fully implemented Possible in , students will have specific data items selected for verification and not their entire application

IRS DATA Retrieval Option 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 transcripts A 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 Worksheets Schools will still have a worksheet that needs to be completed in addition to the tax information New items include: Verification of food stamps W-2 for earnings statements for non tax filers Statement of income for jobs with no W-2s

Changes to loan programs Interest 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 1 st 2012