Looking for our new site?

Ed Money Watch

A Blog from New America's Federal Education Budget Project

< Back to the Education Policy Program

College Net Price Information Not Exactly What it Seems

Published:  July 12, 2012

Earlier this week, the Federal Education Budget Project (FEBP, Ed Money Watch’s parent initiative) released an update to the higher education data displayed in its database. The FEBP database, which includes federal funding, demographic, and outcomes data for over 7,500 institutions of higher education and nearly 14,000 school districts, also now includes a few new variables – notably, the average net price institutions charge undergraduate students from low-income families.

Net price by income level can be a valuable tool for potential students because it estimates what potential students might actually pay to attend a particular school.  Rather than simply the listed price of attendance, net price accounts for the average federal, state, local, and institutional scholarships and grant aid students at the school receive by income bracket. Those subsidies reduce the price of attendance and provide a more realistic estimate of students’ likely costs.

The Federal Education Budget Project now includes the average net price that undergraduates from families with annual incomes of $30,000 or less paid at each institution of higher education in the country, in both the 2009 and 2010 academic years. It reflects the total amount these students paid for in-state tuition, fees, books and supplies, and room and board after deducting federal, local, state and institutional grant or scholarship aid. Schools report the data to the U.S. Department of Education.

With this information at hand, we can now see what one year’s worth of a higher education really costs the most financially needy students, compared to what it costs everyone else.  We can finally see how progressive our higher education system is. Or can we?

Not exactly. It turns out that the net price information for low-income students cannot be directly compared to average net price for all students. When schools report net price by income level, it only includes those students who receive federal Title IV grants or loans. Meanwhile, institutions report overall net price for students who receive grants or scholarships from any source. Both measures exclude students who pay full price – but income-linked net price also excludes students who receive institutional, state, or local aid, and no federal aid. As a result, the net price by income figure only includes a subset of the students captured in overall net price.

Similarly, average net price for low-income students cannot be compared directly to the school’s listed tuition and fees. Net price factors in average room and board and costs of books and supplies, in addition to tuition. Net price, then, is based on a figure that is typically much higher than tuition and fees alone. And it can’t be compared to in-state cost of attendance, either. Those data are sketchy at best and can’t offer a complete picture – more than 5,500 institutions did not report in-district, in-state, or out-of-state price in 2010.

In spite of these caveats, the data are interesting and important to both low-income students and to policymakers.  They offer a measure of how well individual schools have managed to lower the cost of attendance for their neediest students; how well schools with high proportions of Pell Grant recipients (a proxy for low-income students) keep prices low for those students; and how private, for-profit, and public institutions address the needs of students from different income backgrounds.

Even so, the net price data aren’t exactly as they seem. The distinctions the Department of Education uses in the Integrated Postsecondary Education Data System (IPEDS, the source of the data discussed here) are nuanced, and education stakeholders should take care in how they interpret them. What’s more, the Department of Education should consider how it can best address the inconsistent definitions of net price and make the IPEDS data more usable and comparable.

Join the Conversation

Please log in below through Disqus, Twitter or Facebook to participate in the conversation. Your email address, which is required for a Disqus account, will not be publicly displayed. If you sign in with Twitter or Facebook, you have the option of publishing your comments in those streams as well.