Why the college application process isn't adding up for students – and how to help them

Every year, I help several hundred high school seniors navigate the college admissions process. Our students are not typically wealthy. About 20% are considered low-income and eligible for Pell Grants, and about 80% have expressed concern about college affordability.

For this reason, we specialize in a “cost-conscious” college search, meaning we help students discover schools that are a good fit and are also within their budget. This is becoming increasingly difficult given the lack of transparency around the true cost of college.

Last August, I gave a student the same advice we give to all high school seniors: Run the net price calculator to ensure that the schools you choose to apply to are financially feasible. The net price calculator is a tool that, in theory, will tell the family what their out-of-pocket costs may be for each institution based on the financial information the calculator requests.

I wasn’t surprised he discovered that the University of Delaware’s calculator was “being updated and will be available again soon.” I assumed that meant the institution was updating it to reflect the changes in the Free Application for Federal Student Aid (FAFSA) and the updated tuition rates for the 2023-24 school year. 

However, it’s now April and the calculator is still “being updated.” With the delays in processing FAFSA, like most families who are concerned about the cost of college, my client can’t make his final college decision without more information. 

When college net price calculator and financial aid don't add up

By federal law, every college and university in America is required to provide a net price calculator, but there is a key piece missing from the legislation:

Because the Department of Education doesn’t have an approval process to determine whether each school’s calculator is in compliance, institutions are left to police themselves. Essentially, this means that nobody is checking to see if the calculator at each institution is an accurate depiction of the family’s expected costs (or if the calculator exists, or if it’s in working order). Families are finding more frequently that the calculator results from across the country don’t actually align with the financial aid offer they receive from those institutions.

Under the law, colleges are allowed to provide a link to an external calculator. When another student client ran the calculator for American University, its website linked to MyinTuition. It should also be noted that there are several other calculators on American’s website, including for 2020-21, so if a family isn’t paying close attention, they may wind up completing the wrong one.

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The link to MyinTuition has since been removed from American’s website and replaced with a link to another external vendor called Meadow, but that change happened after my client's family determined that the school could be a good financial fit and after she had submitted her application.

When she recently received her financial aid offer letter, the cost came in over $15,000 higher than what was indicated by MyinTuition.

If calculators aren’t accurate and available, or can change throughout the cycle, how can families make informed financial decisions throughout the college application process? As the cost of college continues to soar, it is critical that families can better predict the financial feasibility of institutions before their student spends hundreds of dollars applying. 

College financial aid letters can also be misleading

However, these calculators aren’t the only problem in the world of cost transparency. Financial aid letters are also incredibly misleading. Fortunately, Congress is aware of this issue.

In fact, I just returned from a second trip to Washington, D.C., where I was lobbying for sponsorship of the Understanding the True Cost of College Act. This bill attempts to streamline and improve transparency in the financial aid process by requiring that all colleges and universities in America provide a standardized and uniform financial aid offer letter with consistent standardized language.

It also would require that schools stop calling financial aid offers financial aid awards (because $60,000 in loans isn’t an “award” by any standard). 

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This requirement would better enable families to compare financial aid offers because the line items will match up and it will be clear what money will require repayment. This is particularly critical following the discovery of astounding data from a 2022 Government Accountability Office report: 

• Many schools fail to utilize the word “loan,” even when the vast majority of the financial aid being awarded is indeed a loan and does require repayment. 
• Up to 31% of schools don't differentiate between gift aid (which doesn't require repayment) and loans (which do require repayment). Because the type of aid isn't clearly labeled, when families see the bottom line cost after aid is applied, they are unaware that most of that aid actually requires repayment, and that the out-of-pocket expense is significantly higher than what it appears to be in the financial aid offers.
• 65% of colleges leave out important information (like if the scholarship is renewable for subsequent years) that can impact whether or not a family can afford the school for more than one year.
• 91% of colleges understate the net price or fail to include it at all.

College acceptance season is always stressful for families, but this year has been especially fraught due to government delays in processing FAFSA. Hundreds of institutions are now delaying their enrollment deadlines to give families more time to make educated and fiscally sound decisions.

When I talk to families, however, I know that colleges can do more to help prospective students understand the costs. It is imperative that the Department of Education hold institutions to higher standards if we want to avoid exacerbating the student debt crisis.

Clarity should come at the start of the college application process – not the very end.

Jessica Chermak is a certified educational planner and licensed professional counselor. Contact her at jessica@virtualcollegecounselors.com