How Accurate Are Net Price Calculators?
College pricing is complicated. Schools post their estimated cost of attendance, or sticker price, on their website. But, as many students and families know, this sticker price is often much higher than what they will actually pay.
Think of it like a hotel’s rack rate. A rack rate is the highest price a hotel will charge for a room, which is based on the room’s perceived value within the hotel. (Does it have an incredible window view? Is it located on the top floor?) In reality, guests will pay less than the room’s rack rate thanks to discounts and premiums.
A college’s sticker price is its rack rate. Students see an estimate that is based on a program’s total perceived value. However, they won’t pay that full amount thanks to factors like financial aid, institutional grants, and other granular financial considerations.
So, how do students know what they owe?
They rely on tools called net price calculators (NPCs). To provide students with a more accurate and transparent price, the US government adjusted its Higher Education Act of 1965. As of 2011, an amendment to Section 132 of the HEA mandates that all higher education institutions offer an NPC on their website. These calculators take in into consideration the student’s ability to pay, a school’s grant and scholarship aid, and much more to provide a personalized estimate of actual college costs for each student.
At least, in theory. Even though providing prospective students with accurate college cost estimates is vital for student success and school enrollment, NPCs haven’t fulfilled this promise. Standard NPCs today offer only a basic estimate, which can be off by as much as $5,700 a year.
Here’s how average NPCs fall short:
- They don’t calculate merit aid and scholarships
- They only work for first-year, full-time students
- They don’t personalize estimates based on academic programs or living situations
- They aren't updated with the latest information
- They don't calculate each individual source of aid separately
This begs the question... how accurate are net price calculators? Well, that depends on which one you’re using.
In October 2021, a study from the University of Pittsburgh found that the federal NPC struggled to accurately predict aid awards for prospective students. In fact, the estimated aid from the federal NPC accounted for 70 percent of the variation in what students actually received that year.
Meanwhile, a study from Michigan’s Institution for College Access & Success found that the demographic that was most likely to receive an inaccurate breakdown was lower-income students. This is particularly problematic because many low-income prospects are first-generation college students who already face a tough decision in investing in their higher education.
That’s where Meadow comes in.
We tackle the issue of inaccurate college cost estimates from every angle—for students and higher education institutions.
From a student perspective, the Meadow NPC dives deep into each student’s outlook, including parent income, need-based and merit-based aid, indirect costs like housing, loan estimates, military benefits, personal expenses, and more… all in under five minutes.
From an institutional perspective, Meadow’s NPC is even more robust. Our NPC is highly accurate, tailored, and already revolutionizing admissions at over a dozen US-based higher education institutions.
As highlighted above, our NPC covers a student’s financial profile from every angle. On top of that, universities can also tailor Meadow's NPC to fit their exact financial specifics. Even better, it can be used within their application flow to encourage students to take specific actions. This boosts enrollment outcomes while also providing students with a superior college cost breakdown.
But don’t take our word for it.
Here’s how Meadow’s NPC solves some of the biggest issues students face with non-accurate NPCs, as highlighted by our clients.
1. Students can’t commit to a college or university until they know what they’ll owe… but they also don’t know which aid they qualify for until they receive an offer letter.
Once again, this spells trouble for students—especially those in a lower income bracket. To address this issue, the Swedish Institute partnered with Meadow to create a fully customized NPC for their school.
Here’s what the Swedish Institute had to say about Meadow’s NPC:
“Prospective students couldn’t get a realistic idea as to what their education with us would cost and whether or not they could afford it. That’s so important for us at Swedish because the majority of our students are low-income. Now any student can use it and know pretty much what they will end up paying, and how much they will get in financial aid which makes everything a lot easier for them.”
2. The average NPC isn’t user-friendly.
It’s also difficult to navigate. This creates several challenges for students and families. They might not be sure where to input financial information or find that the process is incredibly time-consuming thanks to the NPC’s clunky design and unintuitive layout.
Worst of all, the average NPC might also be running on inaccurate data if a school’s admissions office hasn’t updated its latest costs and aid opportunities. On top of that, most NPCs are configured to address first-year students. This makes them inaccurate for transfer students, upperclassmen, and students not entering college for the first time.
Here’s what Wayland Baptist University had to say about Meadow’s NPC:
“Meadow designed the net price calculator to be truly useful and consumer-friendly. It’s easy to navigate and the estimates are clear and accurate for every student (not just first-time, first-years), so since switching to Meadow the usage of our net price calculator has skyrocketed and whenever prospective students call with questions about costs, I have a reliable resource that I can always point them to.”
Let’s dive a bit deeper into Wayland Baptist University’s case study. Along with providing students with an accurate price breakdown, Meadow’s NPC also helped WBU track student interest through other data. On the WBU website, 40% of students who generated an estimate navigated to a resource linked by the school. Of the 642 students who received an estimate, 200 clicked on the school’s scholarship page or the FAFSA site. Another 64 provided their contact information or clicked on WBU’s application form.
3. The average NPC is not tailored to each institution, which limits how accurate they can be for most students.
Not only does this provide students with skewed estimates, but it also does a disservice to colleges and universities that go above and beyond to serve their students.
Here’s what GVSU had to say about Meadow’s NPC:
“And on top of that you were able to configure it to our specific methodology, which has made it incredibly accurate for any student who uses it.”
Ready to get started?
Get in touch with our team today.