What Is Net Price For College?

Photography by Getty Images; Illustration by Bankrate

Colleges publish their total cost of attendance – which includes tuition, books and housing – to help prospective students prepare for the upcoming year. However, the amount you actually wind up paying for could be less if you’re eligible for grants and scholarships. This reduced out-of-pocket expense is known as the net price.

When making your college decision, you should focus on the net price rather than the published cost of attendance. Here’s what you should know about the net price of college, including how to calculate yours.

Sticker price vs. net price: What’s the difference?

You’ll usually see the sticker price or the cost of attending the school on a prospective school’s financial aid website. It includes all the expenses like tuition, housing and books that you’ll have to pay for a single academic year.

It’s different from the net price, which subtracts your scholarships, grants and other financial aid to arrive at the amount you’ll pay out of pocket. While the sticker price is the same for all students of a particular profile, like four-year in-state undergrad students, the net price will vary based on each student’s unique financial aid package.

Calculating net price

The net price is computed using this formula:

Total cost of attendance – grants and scholarships + transferable credits counted towards a degree program

Once you know the net price, you can decide how you’ll pay for it. For instance, you might use savings, take out student loans or get a summer job.

To calculate your net price at a particular school, head to the school’s financial aid website or use the U.S. Department of Education’s search tool to find the school’s net price calculator. These calculators can help you get a personalized estimate so you can easily compare costs at multiple colleges.

Gathering your documents and entering the information takes about 20 minutes. Here’s what you can expect:

1. Gather your documents: You’ll get through the process quicker — and get more accurate results — if you have everything on hand before you start. The school should let you know what you need, such as your parents’ most recent tax return, W-2 form and bank statement.
2. Enter the information: The school will ask for your personal information, such as name, address and birthdate, along with details about your intended major and start date. It may also ask about your academic record from high school, such as GPA, class rank, ACT scores and SAT scores, if available.
3. Read the report: Based on the details you provide, the school estimates scholarships, federal student loans and grants you might be eligible for. It’ll subtract that amount from the school’s cost of attendance to arrive at your net price.
4. Save the information: Download the report and save it for your records, and use the information to compare prices and financial aid across multiple schools. If the schools you’re comparing use the College Board’s Net Price Calculator, you can create an account and save your information there.

Limitations of net price calculators

Although colleges are required to provide a net price calculator for prospective students, they may not provide a completely accurate price tag. Be aware of these limitations:

• Typically geared toward first-year undergraduates: These calculators usually estimate what a first-year undergraduate student might pay for their first year. Continuing, graduate, transfer, international and part-time students may need to contact the school’s financial aid office for a customized estimate.
• Ignores talent-based aid: The net price calculator may not account for certain financial aid, such as an athletic or arts-based scholarship.
• No standardization: Every school uses different information and formulas to calculate net price, and some use outdated cost of attendance figures.
• Aid isn’t guaranteed: The calculator estimates your aid but doesn’t guarantee it. You’ll still need to apply to the school, fill out the FAFSA and receive your award letter to find out the exact amounts.

How much should you expect to pay for college?

Your expected tuition and fees will depend on your school – whether it’s in-state or out-of-state, public or private, two-year or four-year. The average price of tuition and fees for full-time undergraduates are the following:

Of course, tuition and fees aren’t the only expenses you’ll need to think about. Room and board, books and supplies, transportation and other expenses will increase your cost of attendance. Factor in these costs when researching schools. Your financial aid letter should spell out whether you’ll get a break on certain costs.

How to pay for college if the net price is too high

If you can’t afford the net costs of going to college, you’re not completely out of luck. Here are some viable alternatives to consider. 

• Apply for need-based financial aid
  

  You may be able to apply for need-based financial aid. In the 2023-24 school year, College Board found the average grant aid for full-time equivalent undergraduate students was $11,610, with grants making up 67 percent of total financial aid.

• Look into Pell Grants
  

  You may qualify for a Pell Grant, which the federal government offers to undergraduate students with substantial financial needs. Currently, you can receive up to $7,395 per school year; in most cases, these grants don’t need to be paid back.

• Consider work-study opportunities
  

  You can also look into getting a part-time job through your school’s work-study program, which you can only qualify for based on financial need. This typically involves working on campus (for instance, in the library or as a tour guide) but can also apply to certain off-campus jobs. You’ll make at least the federal minimum wage, but your total award will depend on your particular need and the availability of funds at your school.

• Search for scholarships
  

  Browse the financial aid website for the school you plan to attend to find scholarship opportunities. Also, refer to this guide to learn more about applying for scholarships to help cover higher education costs.

• Explore state and institutional aid
  

  Visit NASFAA.org to learn more about student aid programs available through state agencies. Some colleges also offer supplemental funding to help cover higher education costs. Visit the school’s financial aid website to learn more.

• Use educational savings plans
  

  If your parents established a prepaid college plan when you were younger, now’s the time to put it to good use. Prepaid college plans fall under the 529 plan umbrella, and parents can prepay tuition at a set rate that won’t rise in the future. You can use the funds to help lower out-of-pocket costs for in-state public college.

• Take out federal loans
  

  Federal loans offer unique features and borrower protections that you won’t get with private loans. Plus, there’s no credit check or minimum income requirement to qualify, and funds are easily accessible. Simply complete a FAFSA to determine your eligibility for these loan products.

Bottom line

Higher education can be expensive, depending on the school you attend and whether you’re an in-state resident. But thanks to financial aid, many students pay less than their college’s sticker price. When you’re comparing the cost of schools, use the sticker price only as a starting point.

You can use a net price calculator to estimate your potential net price and then check your financial aid award letter for final details. From there, you can determine if you need to explore other options to finance school, which may include federal or private student loans or a part-time job.