Net price calculators: Will they help with your college search?

How to pay for college is on everyone's mind right now. Last week, President Obama announced new, improved student loan rules. The same day, the College Board released its annual report on tuition pricing, indicating that the cost of college has gone way up. In-state public schools (still one of the best deals in town) spiked to $8,244 per year, up 8.3 percent from last year. And private schools jumped to $28,500 per year, up 4.5 percent from last year. This is the worst news I've heard since August, when The Atlantic reported that student loans have grown 511% since 1999.

So how can families deal with the crazy cost of higher education? Luckily, there's a new weapon in the arsenal: As of October 29, a federal mandate required all colleges and universities to post net price calculators on their websites.

The calculators allow prospective students to estimate the true cost of attending the school (the net price takes into account grants and scholarships, which can significantly chop away at the sticker price). This is a huge boon for families (understandably) confused about which institutions they can afford. By bringing colleges' endowment programs into focus, Time points out, the calculators might reveal that the fancy private school you thought was out of your league is actually cheaper for you than the more moderately-priced university you considered your backup plan.

Of course, the calculators have already earned critics. One is FinAid.org's Mark Kantrowitz, whose recent report reveals that, for a variety of reasons, the net price calculators can underestimate college cost by thousands of dollars. And the Star Tribune's Kara McGuire points out that there's no standard formula for the tools—some colleges require you to enter more detailed financial info than others, meaning you might not get an apples-to-apples comparison, and that some estimates are more accurate than others.

So, will these calculators help with your college search? Yes, when used with caution. My advice: Remember that estimates aren't exact, but they're at least more reliable than the old sticker prices. And when you're deciding what you can afford, always build in a cushion and assume there will be unforeseen costs. That way, enrolling in school won't bring your financial life anywhere near the brink.

Have you tried the net price calculators? How would you rate them?



Student loan borrowers: help is on the way

What a good week for borrowers: First, President Obama announced new rules to help homeowners with underwater mortgages. And now, new changes that can help roughly 5.8 million people who have federal student loans. Here's how:

• IBR (Income-Based Repayment). This program lets folks repay loans according to how much they make, rather than how much they owe—which can help lower monthly payments. I've been raving about it since it launched in 2009, but under the new "Pay As You Earn" proposal, IBR gets even better. Borrowers can cap their monthly payments at 10 percent of their discretionary income (down from 15 percent). And after 20 years of participating in IBR, your loans will be forgiven (down from 25 years). Plus, it goes into effect in 2012 (rather than waiting until July 1, 2014).

• Loan consolidation. Many people have a combination of Direct Loans or FFEL (Family Federal Education Loans). Consolidating FFEL loans into the Direct Loan program can help folks receive up to a 0.5 percent interest rate reduction, qualify for loan forgiveness programs like IBR, and cut the clutter and confusion of managing multiple payments. This offer also takes effect in 2012.

But a big drawback—pointed out by Mark Kantrowitz, the financial aid guru behind FinAid.org, and Ron Lieber, "Your Money" columnist at The New York Times, is that both plans exclude many borrowers.

While the new IBR is a great boon for current and future college students, it's not available to people who graduated in 2011 or earlier. To qualify, you must be a new borrower since 2008, and have at least one loan originating in 2012 or later (for example, someone who began college in 2009 and takes out loans each year until they graduate in 2013). So, the new IBR helps as many as 1.6 million people, but excludes the 36 million borrowers who are ineligible.

The new consolidation rules aren't much better. The program is only available to those who have both FFEL and Direct Loans, and it excludes anyone in default or who has previously consolidated into the Direct Loan program.

On a positive note, the administration is at least trying to save future generations from drowning in debt. The same day Obama made this announcement, the Consumer Financial Protection Bureau unveiled a new initiative called "Know Before You Owe," which proposes one-page financial aid shopping sheets that would make costs and loans clear to students before they enroll in college and allow them to compare offers side by side. (Yes, shopping around is a *must*—even for school!)

Plus, you can't help but think this is a direct response to the Occupy Wall Street protest, which is full of picket signs to "Cancel All Student Debt," or to the popular online petition "Forgive Student Loan Debt," which now bears more than 600,000 signatures.

Will you be able to take advantage of the new student loan programs? Any questions I can help answer? Post them in the comments below, or ask me on Facebook or Twitter.

Money 101 for college students & their parents

When it comes to SAT prep, college applications, and even sex, drugs, and dorm living—parents spend hours drilling lessons into their kids' heads. But Mom and Dad tend to avoid one taboo topic: money. Putting off this conversation could lead to big-time financial mistakes, especially for college-bound kids who are testing out financial independence (to varying degrees) for the first time.

Some popular questions parents ask me: How do I teach him how to make a budget on the drive to college? (He doesn't even do his own laundry!) Should I give my kid a credit card? What do I need to know about debit cards? Should he open a bank account near campus? Does she have to study a subject that she thinks will help her get a job—say accounting—in order to pay her student loans? Will working part-time hurt her grades? Should I let him stay on the family cell phone plan?

Lots to consider! That's why I went going on WNYC's "The Brian Lehrer Show" today to give advice and answer listener questions—tune in and post any remaining questions here.

What do young adults really need to know about money?

NPR's "Morning Edition" recently devoted a whole series to young adults and money. And lucky me got to participate!

All last week they tackled topics like "Is it smart to borrow a lot of money to go to college?", "Are tech-savvy youngsters out-budgeting their parents?" and "Can a mock mall teach 8th graders how to spend smart?" So interesting!

My segment was a wrap-up of the week, kind of like a cheat sheet on the financial basics all young adults should know. Take a listen—the 3-minute show could save you thousands!



If you're looking for money for college…

I've been writing about paying for school for 20 years, and the guy who knows more big-picture info about college costs than anyone else: Mark Kantrowitz.

I call him when I need to know the right answer—and he is incredibly smart, practical, and plugged in. And that's not just my opinion. In a great profile of him last year, The Wall Street Journal said: "Nearly every college student who has borrowed money to pay tuition over the past decade can thank Mark Kantrowitz for helping to make the process easier and cheaper." Doesn't get better than that!

He's talked me through everything from the latest on the new "net price" calculators required to be on all college websites this fall, to the perils of high-priced private student loans, to the benefits of income based repayment (IBR). He makes esoteric topics accessible—perhaps the most important role he can play for all those families desperate for financial aid.

If you're thinking of sending a kid to college one day or planning to attend yourself, you need to look at FinAid.org, Kantrowitz's website, which covers all things financial aid, and FastWeb.org, which is also his baby and focuses on scholarships.

The great news: Kantrowitz recently published a book called "Secrets to Winning a Scholarship," a 100-page guide to everything you need to know about snagging a scholarship to help pay for college. In it he gives insider advice about creating an "accomplishments resume," digging up unusual scholarships (like those for vegetarians or left-handed students), and acing interviews conducted via webcam.

If you do pick it up, don't be thrown off by the fact that "Secrets to Winning a Scholarship" doesn't look glamorous. After all, neither is paying for college.