Government debuts new online tool.
Colleges often make themselves appear less expensive — and more attractive to cash-poor families — through promotional materials and financial aid letters that hide the true costs.
Last month the federal government unveiled an online college scorecard that can help families cut through some of the confusion. It gives students a reasonable idea of what they could owe once they graduate and allows clear cost comparisons among schools.
For a given college, the new calculator shows the average net cost (what the student pays once grants and scholarships are taken into account); graduation rates; loan default rates; the median amount that the average student borrows, and the monthly loan payment that the debt would likely entail.
Very often, the sticker price can be misleading. Some schools that have extremely high tuition are actually affordable because they offer significant financial aid.
The scorecard could be improved by including different debt data. For example, schools where many students drop out — and carry less debt as a result — should not look more affordable than comparable schools where more people complete a degree.
The federal Department of Education is still working out a section of the scorecard that would give information about the earnings of a school’s graduates, which is crucial information for judging the value of the degree. But this will not be an easy task.
To make the information meaningful and fair, the department will need to break out data by degrees — bachelor’s, master’s and so on — and differentiate among disciplines that typically result in higher and lower incomes. Still, the new scorecard is an important tool that helps demystify college costs.