Tools & Regulations Impacting College Selection Processes – U.S. Department of Education

Last Updated: 04/10/2024

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Overview

The U.S. Department of Education (USDOE) provides a suite of consumer tools such as the College Financing Plan (formerly known as the Financial Aid Shopping Sheet), the College Scorecard, and the College Navigator. These tools are designed to help learners and families make more informed decisions about college and compare key information such as college costs, average student loan debt, and graduation rates across different institutions.

The USDOE also provides guidance to higher education institutions that participate in the Title IV federal student aid programs related to posting a net price calculator on their websites; and regulations (the 90/10 rule) for for-profit institutions.

Under the Higher Education Opportunity Act of 2008, the USDOE is required to provide college cost lists that are annually updated using data collected by the National Center for Education Statistics through the Integrated Postsecondary Education Data System (IPEDS). Additional updated data on individual schools is provided on the USDOE’s College Navigator.

The College Affordability and Transparency Center (CATC) on the College Navigator website enables users to explore lists of higher education institutions with the highest and lowest tuition and fees and net price, and lists of the institutions that are not meeting the 90/10 revenue requirement.  The USDOE first released College Affordability and Transparency in the Higher Education in 2011.

The Center posts College Affordability and Transparency Lists that highlight institutions with the highest tuition prices, highest net prices, and institutions whose prices are rising at the fastest rates. Included on the site are 'highest increase' lists applicable to all postsecondary institutions that participate in, or are applicants for participation in, any federal financial assistance programs authorized by Title IV of the Higher Education Act of 1965, as amended. This includes:

  • Highest increase in tuition and required fees (Tuition & Fees): A list of the 5% of institutions within each institutional sector that have the largest increase in tuition and required fees, expressed as a percent change, over the 3-year time period for which the most recent data are available.
  • Highest increase in net price (Net Price): A list of the 5% of institutions within each institutional sector that have the largest increase in average net price, expressed as a percent change, over the 3-year time period for which the most recent data are available.

Lists are broken down by 9 IPEDS education sector categories (e.g., private not-for-profit, public, private for-profit; 4-year, 2-year, less-than-2-year institutions).  For each of the 9 sectors, the lists include the:

  • Top 5% most expensive institutions in terms of tuition and fees in the most recent preceding academic year for which data is available.
  • Top 5% most expensive institutions in terms of net price in the previous academic year.
  • Top 5% of institutions with the largest percentage change in tuition and fees over the 3 previous academic years.
  • Top 5% of institutions with the largest percentage change in net price over the 3 previous academic years.
  • 10% of institutions with the lowest tuition and fees in the previous academic year.
  • 10% with the lowest net price in the previous academic year.

For-Profit Institutions

A federal regulation (the 90/10 rule) governs for-profit higher education institutions. The rule is a proxy for measuring educational value at proprietary institutions with the intent to ensure schools do not overly rely on federal aid and to encourage diversification of funding.

  • Cap on Federal Funding: A proprietary school can receive a maximum of 90% of its revenue from federal financial aid sources such as Pell Grants and federal loans).
  • Remaining10% of revenue:  The remaining amount of revenue a proprietary school can receive must come from alternative sources, excluding federal funds.

The USDOE subsequently updated the 90/10 rule to require proprietary institutions to receive at least 10% of their revenue from nonfederal educational assistance sources every fiscal year. This change was made to enhance financial stability and accountability within the for-profit education sector.

Rules for Title IV institutions: Net Price Calculators

Beginning in 2011, each postsecondary institution participating in the Title IV federal student aid programs has been required to post a net price calculator on its website, in accordance with the Higher Education Act of 1965 (HEA), as amended on October 29, 2011.

A net price calculator uses institutional data to provide estimated net price information to current and prospective students and their families based on a student’s individual circumstances. The calculator also allows students to calculate an estimated net price of attendance at the institution (defined as cost of attendance minus grant and scholarship aid) based on what similar students paid in a previous year. The net price calculator is required for all Title IV institutions enrolling full-time, first-time degree- or certificate-seeking undergraduate students.

Institutions meet this requirement by using the USDOE’s  Net Price Calculator template or by developing their own customized calculator that includes, at a minimum, the same elements as the federal template consisting of various input and output elements:

  • Input elements must include data elements to approximate the student’s Expected Family Contribution (EFC), such as income, number in family, and dependency status or factors that estimate dependency status.
  • Output elements must include: Estimated total cost of attendance; Estimated tuition and fees; Estimated room and board; Estimated books and supplies; Estimated other expenses (personal expenses, transportation, etc.); Estimated total grant aid; Estimated net price; Percent of the cohort (full-time, first-time students) that received grant aid; and Caveats and disclaimers, as indicated in the HEA.

References

Consumer tools such as the College Financing Plan (formerly known as the Financial Aid Shopping Sheet)

https://www.ed.gov/

https://nces.ed.gov/ipeds/report-your-data/resource-center-net-price#Template

U.S. Department of Education’s official page on the 90/10 rule

 

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