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We’ve come a Long Way! Or, Have We? (Taking another Look at the Net Price Calculator)

March 19, 2018
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It has been almost 10 years since the signing of the Higher Education Opportunity Act (HEOA) in 2008.  One of the provisions added in that Reauthorization of the Higher Education Act (HEA) of 1965 was the requirement for most institutions to have a Net Price Calculator (NPC) available on the institution’s Web site.  So, it would seem that everyone should know about the NPC requirement and what the law stipulates about it.  But, undoubtedly, there are numerous institutions that are lacking in a thorough understanding of the NPC provisions, or are remiss in fulfilling the mandate of the law.  With the recent release of the 2018 Net Price Calculator template, it is time to take another look at the NPC.

Net Price Calculator in Review

Purpose Explained

The purpose of the NPC is to assist interested parties such as prospective students and their parents in understanding the estimated “net price” of attendance at the institution of their choice before they actually enroll.[1]  It also serves as a tool in comparing the net price of any number of institutions before finally deciding which one they desire to attend.

Participants Impacted

Any institution that participates in the U.S. Department of Education’s (ED) Title IV Federal Student Aid Programs that enrolls full-time undergraduate students in a degree or certificate program must provide an NPC on their Web site.  Even newly eligible Title IV institutions must provide an NPC.  This is true even though they may not have a full award year’s worth of data to be able to use in the template in their first year.  Note that graduate/professional degree only institutions (those that only offer programs beyond the baccalaureate degree level) are not included in the NPC requirement.

Program Data to be Used

A point to keep in mind, as addressed in the NPC Question and Answers (Q&As) on the Net Price Calculator Information Center,[2] the NPC template is to be completed based upon your institution’s largest program.

Q: What if my largest program is not Title IV-eligible (Program-reporting institutions only)?
A: Institutions should use their largest program, regardless of whether it is Title IV eligible or not.

Institutions may utilize or incorporate more than one NPC on their Web site.  If an institution does choose to include more than one NPC on its Web site, the institution should specify which one meets the statutory/regulatory requirements in its caveats and explanation boxes in the template since institutions are required to post the NPC for comparison purposes with other institutions.  As stated in the NPC Q&As:

Q: Can I create and post more than one Net Price Calculator for my institution (e.g. for students other than full-time, first-time or for additional programs other than the largest)?
A: Once your institution has met the HEA requirement by posting a net price calculator applicable to full-time, first-time degree/certificate seeking students, you may create and post as many additional calculators to the institution’s Web site as desired. These additional calculators are optional, and as such, are not required in order to be in compliance with the HEA.

Price Defined

The “net price” determined by the NPC is the institution’s price of attendance for full time, first-time (FTFT) students, minus the total need- and merit-based federal, state, and institutional grant aid awarded to students divided by the FTFT students receiving such aid.

The price includes the estimated total cost to attend the institution, which includes estimated tuition and fees, estimated room and board, estimated books and supplies, and estimated other expenses (personal expenses, transportation, etc.).  Therefore, we see that these components of “price” for the NPC are consistent with an institution’s appropriately determined “cost of attendance” (COA) for Title IV purposes.  Likewise, these should also be the same as reported by your institution in the IPEDS Institutional Characteristics survey.

Particulars of Data Input

The NPC is designed to be simple to use.  Thus, the data elements required to be entered are basic and self-explanatory.

For example, the price components (COA) delineated above make up more than half of the required “output elements” of the institution’s “net price” determined by the NPC (detailed later in this article).  These components are entered by the institution in what the NPC Quick Start Guide calls the “Institution application”[3] section of the NPC template.  Additionally, the institution will have to enter the median amount of need and non-need grant and scholarship aid awarded to full-time, first-time degree/certificate-seeking undergraduate students, by living arrangement (e.g., on or off campus), and by various Expected Family Contribution (EFC) ranges.  The results of the institution’s section of the NPC template are what generate the next section of the template.

In order for the NPC to approximate an Expected Family Contribution (EFC) that is used “behind the scenes” in determining the estimated net price, certain data must be entered by the student.  The student enters various basic items in the “student application” portion of the NPC template.  These include 9 data points:

  • Whether the student anticipates applying for financial aid
  • Student’s age
  • Living arrangements (e.g., on- or off-campus)
  • In-state or out-of-state tuition (as applicable)
  • Marital status
  • Whether the student has dependents or not
  • Number in the student household
  • Number in college
  • Income range (as applicable, e.g., parent and/or student/spouse)

Once these student-entered items are entered, the template calculates an approximated EFC for the student based upon the data he or she provided in concert with the data your institution supplied in the template.  As a result, a student will be able to see the output elements that are prescribed by law.

Prescribed Output Elements

Above, we highlighted components of NPC output that are necessary in determining the net price for a student who will attend the institution.  In total, there are nine key elements of the NPC output prescribed by the law.  They are specified to be:

  • Estimated total cost of attendance;
  • Estimated tuition and fees;
  • Estimated room and board;
  • Estimated books and supplies;
  • Estimated other expenses (e.g., personal expenses, transportation, etc.);
  • Estimated total grant aid;
  • Estimated net price;
  • Percent of the cohort (full-time, first-time students) that received grant aid; and
  • Caveats and disclaimers, as allowed in the law, which your institution may choose to add.

Upon the institution having entered its appropriate data input, you are given the opportunity to review the data before saving it and extracting it onto your institution’s own Web site.  It is important to realize that the data the institution enters to create the NPC template is not stored by ED or NCES anywhere.  Therefore, it is crucial that the institution review and determine the accuracy of data in the template before extracting and saving the data to its own computer.  The NPC Quick Start Guide gives detailed steps related to downloading and saving the template.

Net Price Calculator Options

Possible Options in NPC Templates

Institutions may choose to use one of several different Net Price Calculators that are commercially available from numerous vendors, as long as the product meets the standards of the law.  However, many institutions do, in reality, choose to use ED’s NPC template due to its certainty of being a calculator that is in compliance with the requirements of the law and the fact that it is provided at no cost.  (Note:  FAME does not offer a commercially produced NPC template.  However, FAME clients who use one of FAME’s software products may find data available in FAME Connect under the “Consumer Information Disclosure Data” folder for use with the NPC template.)

Plan to Implement Now

ED has not formally indicated a deadline for updating an institution’s NPC information now that the new NPC template for 2016-2017 data is released.  However, all institutions should be aware that it is an annual requirement according to the law to update their NPC.  The NPC template is reportedly to be revised by ED in January each year to allow collection of the most recently completed award year data.  That is, currently the newly released template gives schools the option to select reporting data for 2015-2016 or 2016-2017.  Next January 2019, it should be allowing for the option of reporting data for 2016-2017 or 2017-2018.  As a general rule of thumb, an institution should provide data for the most recently completed award year for which data is available and that is listed as an option on the NPC template.

Also, informal guidance from ED indicates that it is reasonable to expect that schools should have the template updated within 30 days of when ED releases a new template.  The challenge for ED being able to enforce a hard and set 30-day time period is that, for at least the last two years, ED has not announced when they have posted the new template, even though their own information says they will notify the financial aid community when it is posted.

As a reminder, the 2018 template appears to have been released in late January of this year.  Therefore, schools should be working expeditiously to update their NPC with the 2016-2017 data.

Should you have any additional questions regarding this topic, please feel free to contact Customer Service through the Client Solution Center.

 

This article is presented for informational and educational purposes only and should not be considered to be giving legal advice.
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[1] Higher Education Opportunity Act (HEOA) of 2008.  Pub. L.110-315, §132(h)(1)

[2] NPC Question and Answers (Q&As) on NCES’ Net Price Calculator Information Center Web site.

[3] NCES’ Net Price Calculator Quick Start Guide (January 2018), page 2.

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