Estimating college costs is about to get easier. Starting this October, a federal mandate requires colleges to offer a "net price calculator" on their websites. Also known as "financial aid estimators," these tools will give families a better idea of what they might pay at a particular institution.

"It's forcing a level of transparency about financial aid that we haven't had before," said Eric Berg, vice president of enrollment at The College of St. Scholastica in Duluth. To use one of the tools, a family enters information about the household, such as income, size and savings — as well as basic academic information about the student's GPA and ACT score. The tool estimates financial aid, then subtracts it from a college's listed price to show the "net price" a student would pay each year.

Colleges currently have three options: they can use the free version from the Department of Education, develop their own tool (in line with federal requirements), or use a third party product. Tools vary in the amount of information they require and the level of accuracy of the results. "There will be lots of different looks and a wide range of functionality," Berg said.

One of St. Scholastica's goals is to show families that a healthy combination of need and merit aid is available from the institution. "It may change how they look at us; we may not be quite as inexpensive as a public institution, but it shows we're still in a very reasonable range," Berg said. He hopes that these tools will help students do an initial vetting of the colleges they're interested in, but that they'll follow up by visiting campus and meeting with financial aid staff.

St. Scholastica will begin using a new estimator in October that will incorporate more interactive features so people can ask questions and get more information. Staff will also be able to better track usage, including who clicked for more information or left before finishing filling it out, Berg said.

An early adopter
Carleton College launched its financial aid calculator in early 2010. "We had been thinking about it for years and the mandate helped push us to do it," said Rod Oto, director of student financial services at the college. He sees it as an opportunity to show that Carleton can be affordable. In fact, he would like to see people start using it as early as sixth grade. He said that would give families more time to prepare.

The college makes its calculator very visible on its website and it gets used 400 to 500 times per month. "We don't have anything to hide; we've had a positive response so far," Oto said.

Carleton uses a calculator developed by Minneapolis-based Hardwick-Day. It requires more information than some tools, but gives a fairly accurate estimate, Oto said. For example, since Carleton looks at the equity a family has in its home when calculating need, that information is included.

These tools should give a close estimate if the information is entered correctly, said Dave Busse, a managing director at Hardwick-Day. "They can reassure low- and middle-income families that private college is a possibility so that they can make a decision based on the net price rather than the sticker price," he said.

Hardwick-Day's president Jim Day believes that we won't have a clear view of what colleges and universities have done with their net price calculators until the dust settles in November. "We expect that there will be great variation in where institutions place the calculators on their websites, and how accurate the results are," he said. Day notes that the Department of Education and policy groups are already anticipating additional regulation.

For private colleges, Day thinks the opportunity lies in whether middle-income families with capable students, who might have written off private colleges for reasons of cost, will find they are more affordable than they had thought. He sees an opening for more families to realize that this is an investment they can afford, especially in contrast with the diminished educational experience that typifies larger research universities in the public sector.

Keeping it simple
Bethel University built its own calculator that went online last fall. "Our tool uses the building blocks we've used for years in our financial aid packages," said Jay Fedje, director of admissions. A decision was made to keep things simple, so the form requires a limited amount of information. Fedje stresses that it bases its estimates on averages; it isn't used to build actual financial aid packages. "It's a good tool if used correctly though," he said.

Fedje thinks calculators will be a boon for families. "In the past, students had to finish the financial aid process before they knew what their awards would be — going on faith that they would be able to afford Bethel. This gives them a ballpark cost much earlier on," he said.

Still, Fedje notes that the net cost is just a piece of the greater process. When making a college decision, he urges families to also consider what they'll be getting for their money. "Both affordability and value are important," he said.

Tips for families
Although calculators will vary by institution, Berg, Oto and Fedje all agree that they will help people with their planning. They also had some specific advice for families on using the tools:

1. Inputs should be as accurate as possible. For example, if the GPA plugged into the calculator is different from what the transcript will show, the final award package could be different.
2. Calculators work best if a family's finances are fairly stable. If annual income fluctuates widely or if there's a one-time income increase, that will change the estimate.
3. Recognize that setting financial aid awards is both an art and a science. How institutions make awards is tied to their enrollment goals.
4. It's okay to play around with different numbers for the "what-ifs." If an income increase is anticipated or if a job layoff is a possibility, try entering numbers for both scenarios.
5. These tools can be valuable for families who are tempted to rule out an institution because of the perceived cost. Try the tools at public and private institutions to compare the estimated aid and net price.

View all calculators at Minnesota's Private Colleges.