How Financial Aid Calculators Work

Want to get your degree from Harvard University? First you might need to determine how much money you can find through financial aid programs. See more college pictures.
Want to get your degree from Harvard University? First you might need to determine how much money you can find through financial aid programs. See more college pictures.
Darren McCollister/Getty Images

A college education can get you ahead in your career, but it can set your bank account balance back, too. Depending on the school you choose, it might set you so far back that you'll spend years of a good-paying career just trying to pay back what you owe. But with the assistance of online financial aid calculators, you can crunch numbers and outline a strategy that will maximize your savings and prevent unmanageable debt.

Planning for college expenses is no simple task, whether you're saving for your child's education or just balancing a variety of costs so that you can get a degree of your own. The reasons are simple -- college, quite simply, is a pricey proposition. A single year of tuition at Harvard University, for example, goes for around $33,000, and that's not counting room and board. Even if you're not interested in an Ivy League school, your education will cost you. Out-of-state tuition at Iowa State University goes for nearly $17,000.


In other words, secondary education in the United States is a serious investment that demands intelligent number crunching. Financial aid calculators can help. But there isn't just one category of calculator. There are dozens of versions that help you wade through issues on cost, needs analysis, loans, budgeting and even awards letter comparisons. The differences between the calculators may create frustration and cause more problems than they solve.

However, by picking and choosing the calculators you need for your specific financial situation, these tools really will speed up your planning process. They can help clarify murky money issues and pinpoint areas where you need help. Keep reading to see how these calculators work and how best to use them to your advantage.



How Financial Aid Calculators Work

College is getting more expensive all the time. Financial aid calculators can help you create the right savings plan.
College is getting more expensive all the time. Financial aid calculators can help you create the right savings plan.
© mocker_bat

Online financial aid calculators can be wonderfully useful tools. However, as you put them to work, keep a few things in mind. First and foremost, consider the source. Calculators hosted on university sites are generally trustworthy, but those you find on other sites may not adhere to the same standards. And although the calculators you find on a school site might be accurate, keep in mind that their primary purpose might be to keep you browsing the site. School marketing departments love to use engrossing tools like these to convert casual visitors into potential tuition-paying students.

Also realize that not all universities provide calculators solely out of goodwill. They do it because they have to. The Higher Education Opportunity Act requires all schools to post a net price calculator to their Web sites by 2011. Although each school will have a financial aid calculator, they can tweak the government's template to their liking. Most will stick to fairly simple calculations, requiring minimal data input from the user, to avoid discouraging potential students.


That's an important fact to remember. Whether you're using a net price calculator, cost estimator or budgeting calculator, the tools are only as good as the numbers you provide. In fact, every school must post a disclaimer indicating that the accuracy of these calculators requires best-quality user input. If you take wild guesses or provide overly optimistic numbers, the calculator's results might make you hopeful, but those hopes might be crushed when you see the real, cold, hard numbers.

So to minimize disappointment and maximize your planning effectiveness, take some time to prepare and use aid calculators properly. To use these calculators, you'll almost always need your most recent tax return, and if you're a dependent, keep your parents' return handy, too. You'll need to know items like taxable and non-taxable income. And you'll need to provide information about your family's size, estimated family contributions and other pertinent details.

Once you've found a few aid calculators relevant to your financial situation, you can put them to use. You'll see how they can help you budget, find aid and grants from private, state and federal programs. And you'll understand how these tools can clarify fuzzy, complicated math into more useful terms.


Getting Started With Popular Financial Aid Calculators

You'll find financial aid calculators all over the Internet. One of the best known is on the Web site. The site was started in 1994 by Mark Kantrowitz, a college planning author and financial aid expert.

The FinAid web site has dozens of calculators designed for various purposes. Site visitors most often use the College Cost Projector, which gives you a quick overview of the kind of expenses you'll face going into a two- or four-year school. The Savings Plan Designer shows you the amount you'll need to save monthly to achieve a specific savings goal. The simply named Loan Calculator gives you an approximate monthly repayment amount and the income you'll need to pay your loan back without incurring financial problems.


The Expected Family Contribution and Financial Aid calculator is also popular. As the name indicates, it helps you determine how much aid you'll need after considering your family's contributions. The calculator provides a good example of the kinds of numbers you need to input in order to see useful results. You must indicate whether you're a full- or part-time student, and input marital status, dependent details and household size. You'll find similar calculators at the College Board and ACT Web sites.

Your tax returns, as well as those of your parents, will provide most of the vital information that these calculators need. Without this income and asset information, the calculators can't provide you with any sort of ballpark figure that will help with your planning.

Finally, you'll need to have a good idea of the expenses that your school of choice will require you to pay. You already know that every school must have Net Price Calculator on their Web sites by 2011, but if you need numbers now, can help. The site has a College Cost Finder that provides a breakdown of university costs, including tuition, room and board, and fees, all of which are very useful features for financial aid calculators.

As you work with financial aid calculators, remember this -- take all of those numbers with a grain of salt. And take those required disclaimers seriously. A single minor calculation error (or user input error) can throw off hours of work and provide you with misleading numbers.

So after you do your own research, contact financial aid experts at schools you like. These experts will review your numbers to make sure they're correct, and then steer you in a direction that will benefit you most. As with your career in general, a little planning goes a long way when it comes to financial aid. Put these free tools to work for you and figure out how you can attend the school of your dreams.

For more information on the costs of higher education, financial aid and related topics, spend some time with the links on the next page.


Lots More Information

Related HowStuffWorks Articles

  • ACT. "Financial Aid Need Estimator." (Dec. 29, 2009)
  • Baylor University. "Financial Aid Estimator." (Dec. 29, 2009)
  • "Types of Student Loans And College Cost Calculators." (Dec. 29, 2009)
  • FinAid. "Calculators." (Dec. 29, 2009)
  • Hurley, Joseph. "Need-Based Financial Aid Strategies." Dec. 14, 2009. (Dec. 29, 2009)
  • IT Innovative Solutions Corporation. "Net Price Calculator." (Dec. 29, 2009)
  • Monmouth University. "Loan Calculators." (Dec. 29, 2009)
  • National Association of Student Financial Aid Administration. "ED Posts Net Price Calculator Template." (Dec. 29, 2009)
  • Post, Tim. "Aid Cushions Blow Of State Tuition Hikes." Dec. 8, 2009. (Dec. 29, 2009)
  • Think Ahead, LLC. "College Aid Calculator Helps Colleges Boost Conversion Rate with Web-Based, Customizable Financial Planning Tool." (Dec. 29, 2009)
  • Yale University. "Financial Aid Calculator." (Dec. 29, 2009)