Updated September 26, 2022 With the cost of college-going through the roof and college debt growing at an alarming rate, Net Price is rapidly becoming the most important factor to consider when deciding on which college to attend. You won’t learn exactly what your Net Price is at a given college until after you are accepted and receive your financial aid package. This often arrives late in the senior year, long after you’ve spent time, money, and stress on the college’s application, a campus visit, and an interview. But, is it possible to get a realistic idea of what a college will cost you before you go through the hassle and expense of applying to that college? The answer is YES you can by understanding what Net Price is and how it’s determined.

What Is Net Price?

Net Price is the actual amount of money you are responsible for paying to attend a college. Your Net Price at any school is determined with this simple equation: Net Price = COA – Free Money The Cost of Attendance, or COA, at any college or university is its “sticker price,” and is posted on each college’s website. COA includes tuition and fees, room and board, and an average cost of books, supplies, and personal expenses. Free money is money given to you for college that does not have to be paid back. Free money includes federal, state, and college GRANTS (based on your financial NEED), and SCHOLARSHIPS, (based on your academic, artistic, or athletic achievements). Federal and state grants are straightforward and you can find out what you qualify for by submitting the FAFSA (Free Application for Federal Student Aid) or getting a quick estimate immediately with the government’s free online calculator, Federal Student Aid Estimator. Scholarship money is more difficult to predict and may not reduce your net price anyway because many colleges apply scholarships to your need (see below). The real wild card is the size of the college grant you will receive, which depends both on the college’s financial aid policies regarding your financial need and how much that college wants you to attend.

There Are Three Components to Your Net Price

• Your EFC (Expected Family Contribution)
• Need-based self-help aid (federal and state education loans and work-study)
• The GAP (the dollar amount of unmet financial need, which you are responsible for covering)

Learn Your EFC and Your Financial NEED at Each School

The first step in determining your Net Price is to establish your financial NEED. Colleges use the simple equation: NEED = COA – EFC Your EFC is the minimum amount of money your family is responsible for paying each year toward the COA unless you receive a scholarship that is greater than your need or your EFC is greater than the COA. Since every college has a different COA, your need will be different at each college. Your EFC is determined by an analysis of your and your parents’ income and assets on the FAFSA. Like learning your eligibility for federal and state aid, you can learn your EFC by submitting your completed FAFSA or get a quick estimate immediately using the government’s Federal Student Aid Estimator. Learn more about: Your EFC, What It Is, How It’s Calculated, and Why It Matters

Learn How Colleges Build Financial Aid Packages

The first step most colleges take in building your financial aid package is to reduce your financial need by any scholarship money you either bring with you from an outside source or get from the college itself. This is a startling revelation to most families. Because most colleges use scholarships to reduce financial need, any scholarship you are awarded will only reduce your EFC if it is larger than your need. Second, colleges apply federal and state need-based financial aid to your remaining need in this order:

1. Federal and State Grants you qualify for
2. Federal Direct Student Loans ($5,500 max for first-year students)
3. State Higher Education Loans (if available)
4. Federal Work-Study (college-sponsored on-campus student employment)

If you have any financial need left after these have been applied, most colleges will award you a need-based grant from their own funds that will cover all or some part of your remaining need. It often comes as a huge shock to families to discover that more than 96% of all US colleges and universities do not give you a large enough grant to meet your full remaining need. Instead, they leave you with a GAP in financial aid—costs you are expected to cover. Every school meets a different percentage of a student’s need in its financial aid policies. The bottom line of what you’ll actually pay at each school is summed up in this equation: Net Price = EFC + Federal and State loans + Work-Study* + GAP

Learn How to Minimize Your College Costs

The size of the GAP (unmet need) a college leaves you with can have a big influence on the size your Net Price. To help you find colleges where you will get better financial aid (more college grant money and a smaller GAP), watch our mini-courses, How Colleges Build Financial Aid Packages and What Do Reach, Match, and Safety Really Mean? and read our many blog articles on different aspects of the college financial aid system and the college application process. *Because Work-Study wages must be earned during the school year, the costs the award covers are included in your bill at the beginning of each semester.

---

Learn More!

Paying for college shouldn’t be harder than going to college!

This no-nonsense, user-friendly book by College Admissions HQ reveals a host of strategies that empower families to significantly reduce college costs.

The 2023 Edition is fully updated for the 2023-24 school year and includes a chapter that prepares you for the big changes coming to the FAFSA and college financial aid in the 2024-25 school year.

---

---

College Admissions HQ provides critical insights, essential information summaries, and useful worksheets to help you take thoughtful and deliberate action throughout the college application process. Armed with the correct information and the proper tools, you will be able to chart your own individual path and achieve the best college admissions results academically, socially, and financially. Learn more at www.collegeadmissionshq.org.