How Financial Aid Calculators Work

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.

You'll find financial aid calculators all over the Internet. One of the best known is on the FinAid.com 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, CNNMoney.com 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.