University Business - October 2009 - (Page 24)

FINANCIAL AID Avoid potential pitfalls by taking these steps today Preparing for the Net Price Calculator By Haley Chitty N ROUGHLY TWO YEARS, higher education institutions will be required to post a net price calculator on their websites to help students and parents determine how much they will likely pay to attend diﬀerent colleges. While the regulation does not kick in until 2011, those familiar with the net price calculator say campuses should be taking steps today to avoid the many potential pitfalls that institutions could encounter when implementing it. THE LAW e net price calculator disclosure requirement is part of the Higher Education and Opportunity Act (HEOA), which reauthorizes the Higher Education Act. “ e calculator shall be developed in a manner that enables current and prospective students, families, and consumers to determine an estimate of a current or prospective student’s individual net price at a particular institution,” the law states. e law requires the U.S. Department of Education’s National Center for Education Statistics (NCES) to have developed a calculator template by August, but the department missed that deadline. As of press time in mid-September, department oﬃcials said they planned to release the template at the end of the month. Institutions will have two years after NCES posts the template calculator to implement their own calculators. e HEOA speciﬁcally deﬁnes how a net price is determined. First, an institution must determine the cost of attendance (COA), deﬁned as the average annual cost of tuition and fees, room and 24 | October 2009 I The Department of Education wanted to keep the template simple and usable for all Title IV institutions. board, books, supplies, and transportation for ﬁrst-time, full-time (FTFT) students. e institution must then determine the total need- and merit-based federal, state, and institutional grant aid awarded to FTFT students. is number is divided by the number of FTFT students receiving such aid to determine the average aid award. Subtracting the average aid award from the COA gives you the net price as deﬁned by law. THE CALCULATOR TEMPLATE At the National Association of Student Financial Aid Administrators’ 2009 National Conference in San Antonio, NCES oﬃcials, oﬃcials from the Association for Institutional Research (AIR), and NASFAA members discussed the calculator template and the issues and challenges institutions will likely face when creating their own calculators. Elise Miller, program director for the Department of Education’s Integrated Postsecondary Education Data System (IPEDS), outlined the data elements that are required for the calculator template being developed by NCES. e template has eight data elements for students to enter: age, marital status, children, family size, number of family members in college, parent income for dependents (or household income for independents), living status (on campus, oﬀ campus, or with parents), and residency status (instate or out-of-state). e ﬁrst three questions are designed to estimate a student’s dependency status, which is used to determine the student’s Expected Family Contribution (EFC). e next three questions are also designed to determine the student’s EFC. Approximating the EFC is crucial to estimating how much need-based ﬁnancial aid the student is likely to receive. e ﬁnal two questions are used to approximate the student’s COA. Miller says that Education Department oﬃcials tried to keep the template simple because they didn’t want to discourage students by asking for too much information. She adds that they also wanted to keep it usable for all Title IV institutions—from the smallest cosmetology college to the largest research university. e goal is not to provide every student with a speciﬁc net price that he or she will pay, because that would Haley Chitty is director of communications at NASFAA, www.nasfaa.org. universitybusiness.com http://www.nasfaa.org http://www.universitybusiness.com

Table of Contents for the Digital Edition of University Business - October 2009

University Business - October 2009
Contents
Editor's Note
College Index
Company Index
Advisory Board
Behind the News
Viewpoint
Financial Aid
Lessons in Video
Dining Halls of Distinction
Lost in Space
Independent Outlook
Internet Tech
End Note

University Business - October 2009