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What Parents Actually Pay – The “Net Price”

By February 22, 2019College Planning

The vast majority of families do not, in fact, pay the full sticker price for their children’s college education.  Two-thirds receive some form of financial aid. And two-thirds of that aid is in the form of “free money” – grants and scholarships that don’t need to be repaid. What parents actually pay is, in the parlance of financial aid officers, the “net price.”

Here’s how it works.

The college calculates the total “cost of attendance” or “COA” at their school. Sometimes it differs by program or major. For public universities, whether a student is a state resident or not will impact the cost of tuition and fees. Then they calculate a family’s “Expected Family Contribution” or “EFC.” You probably won’t be surprised to find that what the college expects you to contribute, from your income and savings, is far greater than what you would expect you should contribute! But I digress….

The college subtracts your EFC from their COA to determine a student’s “financial need.” The financial aid officers then figure out what mix of grants, scholarships, and work study they will offer you to meet that need. What’s left is the “net price.” A family is left to pay that “net price” from savings or loans (some subsidized by the government).

So how does a college determine your Expected Family Contribution? I’ll discuss that in more detail in my next post. One thing to know now is that each college will calculate your family’s EFC every year and that each college will use its own criteria when determining what mix of grants, scholarships and federally-guaranteed loans to offer. That said, each college will have a “Net Price Calculator” on its website to help you get an idea of what they might expect you to pay, given the income and asset figures you input. More broadly, the College Board has an “Expected Family Contribution” calculator on its website ( that can give you a good idea of what you might be expected to contribute towards college costs.

Eileen McPeake

Author Eileen McPeake

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