In just over a year, federal law will require all colleges to use a Net-Price Calculator (NPC), which will allow prospective students and families to punch in their basic income data and immediately discover their out-of-pocket cost to enroll. How nice. It seems like a consumer-friendly approach, like a cereal company telling you how many ounces of cereal are in the box, or grams of sugar in a serving. So why do I anticipate weighty discussion of the NPC at the gathering of the National Association of Student Financial Aid Administrators this month?
In 2008, the Higher Education Opportunity Act introduced the NPC as a way for colleges to be more transparent about pricing and cost of attendance. Certainly all who navigate the murky territory of college financing and comparison shopping deserve access to information that will clear the air. While the Department of Education has developed an NPC to be readily available and free for widespread use, colleges and countless vendors are leaping to create their own customized versions. My own institution, Augustana College, plans to begin using an NPC this fall. Yet I offer some observations to keep in mind as the NPC becomes commonplace, as I believe the end result of using a calculator includes flaws that could impact access to higher education in unintended ways.
What about value?
NPC focuses on price alone. While I certainly understand the desire for families to know price and net cost earlier in the college search, I have deep concerns about the emphasis on price truncating a thoughtful college search focused on worth and match. The NPC is sure to further the commodification of the college degree in ways that will make many uncomfortable. It also could perpetuate the phenomenon of qualified students “under-matching" — the latest term used to describe when students choose not enroll at the college that is their best match, academically and co-curricularly, and choose a college based on the lowest cost. Furthermore, focusing on price foremost clouds the idea that a “value gap” exists between colleges. We will communicate to prospective students and their families that putting price first — rather than discerning the personal and professional value of that college experience — is the best approach to finding the right place. This approach could force the premature end of a prospective student’s relationship with an ideal college. I fear the NPC will not allow students to reach the point where they can fall in love with their dream school and make a well-informed decision, but rather force them to just settle on a college.
Garbage in, garbage out
The NPC will not remedy the complexities of financial assistance and will never be as simple as bureaucrats and politicians would like. This year, my college’s financial assistance staff corrected an astonishing 80 percent of the FAFSAs submitted by students who also sent tax returns. These revisions are done to ensure accuracy and equitable distribution of resources, and can result in a greater offer of financial aid for the student. Regrettably, due to issues related to volume or timing, the NPC results are unlikely to receive the same attention from financial aid professionals. In many cases, users will enter incorrect information and then believe the corresponding results — and utterly wrong information — provided by the NPC.
Who are the real users of the NPC?
I understand many advocates of the NPC believe it will provide better financial information about higher education, particularly for traditionally underserved populations, by demonstrating how a combination of resources (grants, loans, scholarships, work study, etc.) can make college affordable. But the primary users of the NPC may be the “let’s make a deal” crowd, which also have been the primary users of early financial aid estimators. This group of families, who are typically upper-income and can afford to pay more for college, could use the results of the NPC to accelerate the financial aid “arms race” and advance negotiations to the applicant stage. I can already envision the call from the parent of a high school sophomore volleying off the results of the NPC from one of my competitors and asking me to guarantee a similar net price.
The latest, greatest marketing tool
While Congress had hoped it would provide truth in transparency, vendors are touting the NPC as the next great marketing tool. To compete in this new price-focused world, colleges will be moved to offer guaranteed aid to entice prospective students into the funnel earlier. The effort very likely will force colleges to expand merit scholarship programs and siphon an increasing amount of aid from need-based commitments. Individual scholarship amounts will then increase in order to reduce the net-price earlier, and a larger proportion of financial aid overall will be dedicated to merit-based aid. The end result? Students with the greatest financial need will be harmed by this further shift in policy and college options.
I doubt this was an outcome the feds envisioned, but because of vendor interest in the tool, I am preparing to see the results of many NPCs demonstrating a net price to attend college at zero dollars. We already see financial aid packages with PLUS loans of $20,000 to ensure the net price looks attractive, or, even better, free. I am quite sure we’ll see the same for NPC results. What will be the limits between real net price and marketed net price? The NPC is likely to be used at a much earlier stage and has the potential to create an obfuscated college search that students might not realize until it’s too late.
Will years five and six stand and be counted?
While there is discussion about a multi-year NPC, I find it difficult to believe any such tool will provide the necessary transparency to be helpful. The higher education industry continues to be scrutinized for its poor four-year graduation rates. How will this trend impact the NPC? Will a dialogue box pop up once data is submitted indicating “only one of two students graduate from X college in four years; therefore, we’ve automatically included a fifth year in our net-price calculation”? I doubt we will see this, which means the transparency we seek is still elusive.
I’d like to think I am wrong, and hope to see evidence of the NPC increasing access, creating transparency about the process, forcing college staff to be more sensitive to questions about price and cost, and improving the experience for students and parents. But I am skeptical.
Can the flaws be averted? Could we introduce methods for using the NPC that could impact the results in unexpected, positive ways? We could take steps toward more effective implementation:
Select the right one: A one-size-fits-all solution is highly unlikely, so take the time necessary to select the right NPC to fit your needs, and be wary of bells and whistles that will accompany it. Developing an NPC in-house may allow you the necessary customization to deliver accurate information. Or you might partner with your existing financial aid consultant, who is aware of your institution’s character, strategies and goals. With a year to implement, take the time to compare and contrast the calculators available and choose the best one for you.
Make completing the NPC an expectation of your prospects: A recent study conducted by the Arts & Science Group found low use of financial aid calculators despite the availability. This is troubling, and suggests an effective communication strategy is critical. For the greatest impact, colleges should include the NPC on a to-do list associated with the recruitment process. Think about how and when you will ask prospective students to complete the NPC. Admissions and financial assistance staff should discuss this action in the same way we do application, FAFSA, housing and enrollment deadlines.
Prepare and train your admissions staff: The NPC will require admissions staff to be far more articulate about value, price and cost. Rethink the content and timing of staff training on financial aid, to ensure they are equipped to discuss the NPC during fall recruitment. Have your admissions counselors complete your NPC using their own information as a test. Train them to be advocates for the process and to understand what a family undergoes when completing your calculator. And if you believe your NPC is different from other colleges — especially if those differences are valuable differentiators — make sure your admissions staff can clearly identify those differences and describe why the results are better. Your admissions staff and their knowledge about your NPC will make or break successful implementation.
Deliver useful information: Early estimates of financial assistance have been provided to prospective families as a service for years. But has it been useful? I am not sure it’s helpful when the estimate includes so many cautions and wide ranges of aid. As you think about what to deliver, think carefully about the pertinence of the information. Shades of gray among wide ranges of potential aid, and phrasing weakened by “may,” “could” or “might,” will cloud the transparency in unsettling ways.
Use the results to develop a deeper relationship: Admissions or financial assistance counseling is about conversations and building relationships. As you select and implement your NPC, think about how to engage prospects who complete it. How will you reach out to them? Will you have a procedure for contacting each student and clarifying results? How will completing the NPC be viewed in regard to demonstrating interest? What can you deliver (e.g. service, publications, etc.) to those who complete the NPC? Build your plan now — while selecting your NPC — for assertive follow-up, communication and connection.
I believe in the underlying objectives that have brought the NPC to the forefront: more transparency, more choice and greater access to higher education. But I don’t think this tool and the technology behind it can do it alone. To improve its chances for success — with students and the colleges they seek — our enrollment professionals will need to attend to the basics: build stronger relationships with prospective students and their families, communicate in a clearer manner about costs and value, and make the NPC work for the best college match.