What's the new student-consumer financial aid tool coming out?

I’m here at the University of Minnesota to hear about a new tool coming out by the Consumer Financial Protection Bureau, the agency created by last year’s Dodd-Frank Wall Street Reform and Consumer Protection Act.

From what I’ve heard from speaking to several folks is that it’s a “financial aid shopping sheet.” In other words, it’s a standardized financial-aid reporting system that will allow families to compare financial aid (both grants/scholarships and loans) from various colleges on an apples-to-apples basis.

So how does that differ from the Net Price Calculator. the federally mandated tool — due on every college Web site by the end of this month — that also compares financial aid?

The calculator is supposed to give students a preliminary rough estimate of what they’d pay in tuition, with any free money (grants, scholarships) factored in.

This is supposed to give folks a much more precise estimate of price with both grants and loans factored in.

Also, student leaders are supposed to urge the bureau to “stop unfair and abusive financial products that target students,” which include private student loans, credit cards and debit cards.

We’ll see what they all have to say in a bit, and whether my initial understanding is correct. I’ll try to post what I find, and you’ll be able to hear some news cuts on the radio later today.

  • NPCs vary in accuracy. About 5,800 college built theirs using the free federal calculator template, which is error prone largely because it is based on two-year-old data, doesn’t follow the federal rules for estimating need based aid, and uses need questions to estimate merit aid.  However, an estimated 1,100 to 1,500 colleges and career schools chose to either build their own or use a custom-built NPC based on current or future aid award and cost formulas. Those schools – and they range from The Beauty Institute in West Palm Beach, FL to Yale University – chose ‘predictive’ technology rather than go the ‘reflective’ (and inaccurate) route of the federal calculator template. Some of these schools like Pace, Fordham, Indiana State University, Albright College, Arcadia University, the College of Western Idaho, Murray State U, and others go way beyond the federal NPC mandate and show potential students their total four-year cost including monthly loan payments after graduation. These institutions are leading the way in providing true cost transparency and useful information  to help families make informed decisions about how to pay for college.