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Study: Some Four-Year Institutions Provide Inaccurate, Confusing Cost Information

While bipartisan legislation is being introduced on how to improve net price calculators (NPCs) — a tool that shows prospective students total costs of an education after scholarships and federal grants — a newly released research brief found that many four-year institutions are providing misleading or confusing cost information and some universities are not following legislation that requires NPCs to be prominently presented on their website.

The brief, conducted by the Alliance for Higher Education and Democracy at the University of Pennsylvania’s Graduate School of Education (Penn AHEAD) studied 80 four-year colleges universities, including both private and public institutions that serve large percentages of Pell Grant recipients.

Prospective students and families have been, and still are concerned about how to pay for a student’s college education, said author of the brief Dr. Laura Perna who is the James S. Riepe Professor at the University of Pennsylvania and executive director of PennAHEAD.

“… Net price calculators are one of the few mechanisms available for the prospective students and their families to get some indication of what their own costs will be based on their personal circumstances,” Perna added. “It’s quite worrisome actually that these net price calculators aren’t working the way we’d like them to.”

Dr. Laura PernaDr. Laura Perna

Under the Higher Education Opportunity Act of 2008, U.S. colleges and universities are legally required to provide prospective students with accurate information about the cost of a college information. Having this information early in the college application process and without completing a FAFSA application, the brief said, is increasingly important for first-generation, low-income students and those who do not have access to college and financial aid counselors.

Twelve of the 44 institutional NPC outputs that provided a line item for loans did not clearly differentiate loans from grants and scholarships, the brief found.

The researchers also found that among the total institutions studied, 40 percent used data that were three or four years old, and 8 percent did not state what year the used data portrays.

A possible cause to this could be that the institutions are not paying attention to the information provided on their websites, Perna said, and they “don’t have systems in place to update the net price calculators appropriately.”

There could be other challenges that would cause an institution to provide prospective students with confusing or inaccurate cost information, such as the most prominently displayed net price only includes some of the cost of attending college, the brief found.

And for a small number of institutions studied, Perna said, “we could actually not find a net price calculator so that stops you right there obviously. If you can’t find a net price calculator or if the link’s not working, then you can’t get that type of information.”

“But essentially you’re asked to put some information about your background, financial situation and family characteristics. And then the institution uses that information to give you output that should show you what the costs are, how much grant aid you’ll get, and then the net price,” she said.

The brief offers several recommendations and best practices that colleges and universities in addition to federal policymakers should implement in order to ensure that prospective students have accurate and clear information about college costs. Some of those include:

  • Considering how to ensure that four-year institutions are fulfilling their responsibility to provide current and useful cost-related information;
  • The Department of Education should revise the free NPC template to increase the usefulness and usability of information provided;
  • Making the NPC more prominently displayed on an institution’s website and is consistently working with up-to-date information;
  • Ensuring that the NPC offers useful information about the total cost of attendance without federal aid or scholarships, the mechanisms for paying those costs;
  • The calculator’s estimates fairly reflect a prospective student’s circumstances; and
  • Information regarding college costs is correctly stated across all institutional websites.

Three bipartisan bills recently introduced  focus on establishing better information to prospective students about the cost of a college education. One of the proposed bills, the Net Price Calculator Improvement Act, would require the Department of Education establish a central website where prospective students could locate and compare the net prices of an education at several colleges.

Perna said that it’s good that the federal legislature is continuing to pay attention to this issue.

“The persistence of these problematic practices suggest that attention by federal policymakers continues to be really important,” Perna said. Also important to keep in mind, she said, “is that individual colleges and universities continue to really look at what they’re doing with what types of information they’re providing to students about college costs and whether they’re enabling students from getting the information they need.”

Monica Levitan can be reached at [email protected]. You can follow her on Twitter @monlevy_.

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