How accurate are financial aid calculators?

Answered

Hi @halleparker,

You are asking about NPC Net Price Calculators not net worth tuition costs correct?

The Higher Education Opportunity Act of 2008 mandated that all college include a NPC on their websites by 2011 in order to give families a realistic expected price for their child wanting to attend that university. Prior to that, it was a guessing game and lots of students wasted time applying to colleges that had no money or policies to award substantial grants or financial aid to these students.

Like anything else, the more information you input into a pricing model, the more accurate the results are going to be. So the best way to use these free NPCs is to come fully prepared to input all the vital information into the model. This will include your parents income, their assets including liquid (cash, savings, 503c plans) and less-liquid assets like (trusts, real estate investments, pensions, 401K plans) and plus any relative information like your family home value, it's current debt and the value of all business under your families control. Plus you have to include all your assets and investments.

If you don't include everything, your NPC result will be inaccurate. Therefore, it's important to include your family if you don't have all that information at your disposal. Some wealthy parents may not wish to share the value of their assets and holdings and even want to keep their income private from their kids. So what is the most important thing is to have an honest conversation about financial aid with your parents and ask them to review and approve the list of schools you are wishing to apply to if they are not going to divulge this information to you or permit you access to such info required to complete the task yourself.

The rule of thumb is the following:

-The best private colleges like Ivys, Elites, and Top Liberal Arts colleges offer the best financial aid. But you typically have to be top 10% student and meet the high standard of GPA, ECs, and test scores to get accepted into these schools.

-Then after these schools, the 2nd and 3rd tier privates, say schools from #51-150 offer very good financial aid. Some of it still driven by your ability to pay and need for aid, while a good chunk is based on merit aid, which is money you don't have to repay back because you are smarter than the average applicant to these schools relative to the typical applicants. Some colleges have a standardized test score cut off for merit aid like you need a 1450 or 1500 SAT test score or 3.## GPA.

-The biggest group of college do not provide much financial aid relative to the Ivys and they are the State Colleges across all 50 states. So for instance the University Of Washington is a very good college that is a state school. For WA in state residents the tuition/room/board is $20,000. And if you are low income you will qualify for Pell Grant of $6895. And you may get additional aid like work/study, some institutional grants so you might get another $8000 knocked off the price. So your NPC as an in-state applicants might b3 $5105. But if you live next door in Oregon and want to go to UWash, then the tuition/room/board jumps to $60,000. If you are low income you might get the same $15000 off your bill but you are still $45000 on the hook for this state college. The same paradigm exists if you are applying to UCLA, UCB, UMich and UVA as an out of state applicant. Therefore, most college consultants and advisors would conclude that unless you are applying as an in-state applicant to a large state public college, it's probably more cost effective to apply to a private college that has more financial aid resources. For really smart kids, it makes absolutely no sense to apply to in-state honors colleges or out of state publics because they will most likely get a better financial aid package from a private top 150 college that is not a public.

In other countries, college is free and the best colleges are the public ones. In the US, only a handful of public undergraduate colleges are in the Top 50. Most of the best colleges are private. These colleges have amassed huge endowments and they have more aid money available to spend in their coffers than public universities.

Good luck.