Some Universities Could Be Hurt By Net Price Calculators

Who could be negatively impacted by the use of the template created by the federal government?

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It's been a long time coming, but the Congressional mandate that colleges and universities make their pricing transparent finally arrived. All schools had to install their net price calculators on their websites by October 29.

This is the second part of my examination of net price calculators; here's the first part on how the calculators may be too simple to use.

I decided to write another post on net price calculators after talking with Jim Day, a principal at Hardwick Day, a higher-ed consulting firm, which has created net price calculators for such schools as Carleton College and California Institute of Technology. Developing net price calculators is a smaller part of its business, which is advising private colleges on enrollment issues.

I was particularly interested in getting Day's thoughts on who would be potentially hurt by the use of the calculator template created by the federal government. At I noted in my last post, the calculator has been criticized by many as being too simplistic.

[See why schools are turning to custom calculators.]

What's ironic about the use of simple calculators by many schools is that it is going to hurt some of the very people that the federal government has been so eager to help: those least able to navigate the college process and most intimidated by published college sticker prices.

Day provided his take from the perspective of private schools, which represents his client base. "Since private colleges attempt to help first generation and underrepresented students, or students with special talents and backgrounds, the simplication groups (advocates), in their quest to help those less sophisticated students, will end up depriving them of early evidence that they could afford to attend certain colleges."

I can't help wondering if this is one of the concerns that some advocates of simple calculators might have: Many low-income families won't understand how to use the more complex calculators, which will unfairly give an advantage to wealthier families.

[Learn about other tools to aid in the college admissions process.]

I'm wondering if less precise calculators could help level the playing field by making them less valuable to college-educated parents who are definitely going to be using net price calculators. I don't believe, by the way, that only sophisticated families can use these calculators.

What also fascinates me is who will be the biggest losers when families begin using these calculators. I personally think it will be colleges and universities that offer mediocre financial aid.

[Find out how to get the best financial aid package.]

In the past, schools could hide behind poor financial aid policies because college prices have traditionally been hard to determine until aid packages were sent out in the spring. With the calculators, families will receive a personalized estimate of the price of any school long before their teenagers apply. This will allow families to develop a more intelligent list of schools and avoid those that don't offer competitive prices.

In the era of cost transparency, schools with subpar financial aid should suffer. These would include those that made the federal list of the schools with the highest net prices in the nation. Prominent schools that made this dubious list include expensive East Coast universities such as New York University, Drexel University, and Northeastern University. Also on the list are many mid-sized Catholic universities, such as Santa Clara University, St. Joseph's University, Fordham University, and Catholic University.

[Get more tips on how to pay for college.]

Art and music schools could be another casualty of greater cost transparency. According to the federal list, seven of the 10 schools with the most expensive net prices are in that category. The most expensive is the Art Center College of Design in California.

You can find the list of the schools with the most expensive net prices at the U.S. Department of Education's College Affordability and Transparency Center.

It will be fascinating to see how cost calculators will change the dynamics of shopping for colleges.