Net price calculators - accurate? Which year data to use?

Paying for College
1

Hi - I’m beginning to look at NPC for a range of schools. Many ask for 2019 tax year data, some even 2018. We have a HS junior, so by the time we’re looking to begin paying, our most accurate tax data will be 2021, and this tax year will be pretty different than our 2019 tax year. What do most do in this situation? Just enter in 2021 estimated numbers instead?

For those who have used the NPC, then had a child accepted, then began to pay - How accurate are these calculators to reality?

2

Accuracy of NPCs depends on:

  1. Complexity of income and assets. Simple stuff like mostly W-2 with minor amounts of interest and investment income is more likely to be well handled. Self employment, small business, rental income, complex finances, etc. may be less well handled by NPCs – if the NPC does not ask about such income or assets, but the college uses CSS Profile in addition to FAFSA, it may not be too accurate.
  2. Divorced parents. Some colleges require both divorced parents’ finances. In this case, the person doing the NPC needs to include that, but often does not have complete information about both divorced parents’ finances, which can lead to inaccuracy. Some students and parents are not aware of some colleges’ requirement for both divorced parents’ finances and incorrectly do the NPC with only the custodial parent finances, generating a result almost guaranteed to be way too optimistic.
  3. Some colleges’ NPCs are just low quality and do not give good results that match the actual financial aid offers. You can usually tell by them asking very few questions, especially for colleges that use CSS Profile in addition to FAFSA.
  4. Some colleges change their financial aid policies significantly, so if they do not update their NPCs, or you used an old NPC result from before the change, the NPC result may not reflect their current financial aid policies.

Regarding which tax year, the prior-prior tax year is used. So FAFSA for the 2021-2022 school year will be based on the 2019 tax year. CSS Profile is the same. If the student will enter college in the 2022-2023 school year, the 2020 tax year will be used for FAFSA and CSS Profile. The student’s next year in 2023-2024 will use the 2021 tax year for financial aid.

3

The net price calculators are currently set up for students starting college in fall 2021. If you decide to run one, I would suggest you use the data for the 2020 tax year if your student is starting college in the 2022-2023 academic year.

BUT keep in mind…this should be viewed as an estimate only. The net price calculator will be updated in the late summer before your child’s high school senior year. So…anything now would be a very estimated net cost as the cost of attendance will change, and colleges do change their aid awarding policies.

4

We started looking at schools and running NPCs in the spring of D20’s junior year. We used which ever tax year they asked for just to get a ball park number. She decided to apply ED to her first choice and we had 2 years of NPCs that we printed out, amounts within a couple hundred dollars. The FA award was right in line with the NPCs and our bill was actually $100 less than the NPC. We have pretty straightforward finances - no divorce, we own a home, have some assets, do not own a business - and the school meets 100% of demonstrated need. I was impressed with the accuracy and consistency of their specific calculator but don’t have any others to compare it to, since she had to withdraw other apps.

5

Please make sure you understand clearly what assets belong to what category. One example: a financially savvy friend argued that 529 money is protected from FA consideration, just like 401k. His estimate was off by $30k.

6

A quick look at the FAFSA instructions would have shown the fallacy in your financially savvy friend’s argument.

7

Ouch!