<p>I agree that ultimately what matters most to any given individual is the net price for that student at a small number of specific schools. I agree that this is best found by using the NPC for each school. However, it is not practical to run NPC estimates on hundreds of colleges in the national market. It is helpful to be able to limit the search space to the kinds of colleges that are likely to pan out for someone with a given set of qualifications and financial circumstances. </p>
<p>Colleges are not completely arbitrary in how they define “need”. Their formulas differ, but they do use formulas. They use standard forms to gather financial information. They use standard formats (the common data set) to expose the results to public view. A set of peer colleges (due to market competition perhaps) tends to share common policies and practices with respect to work and student loans. For example, among state flagships, it would not be uncommon to see large numbers for the loan and work study portion of the estimated contribution for OOS students. Among the so-called “full-need” schools, those numbers generally would be rather low (for all students).</p>