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How to find out what college will really cost you

(CBS MoneyWatch) Are you worried about college costs?

College prices continue to rise, but the only dollar figure that really matters is what a particular college is going to cost you.

You can't look at price tags to determine what your cost will be. Thanks to grants and scholarships, two-thirds of college students don't pay full price. Traditionally, families haven't known what a college would really cost until teenagers applied. Students, however, often didn't get their financial aid packages until a month or two before the freshman deposit was due.

Luckily, there is a new way to determine what your price will be before your child starts getting serious about any college. You can use a school's net price calculator.

New net price calculators
The net price calculator is a new federally mandated tool that allows a family to obtain a personalized estimate of what a particular school will cost before a teenager ever applies.

These calculators will go a long way towards making college pricing transparent. The upcoming admission season will be the first time these net price calculators will be available to all applicants.

Before using a net price calculator (which schools must post on the websites), you should gather your latest income tax return and investment statements for taxable accounts and college accounts. If your child has earned a salary and/or has investments in his own name, you will need that information too.

Faulty net price calculators
Beware that not all net price calculators are accurate. Most schools use calculators based on a federal template, which doesn't ask enough questions to generate reliable net prices for all families. When a calculator poses less than 10 questions, it's probably using the federally based template.

Selective private colleges and universities tend to have developed more elaborate net price calculators that may ask dozens of questions. I'd rather take 15 minutes to generate an accurate price estimate than sail through a calculator that will provide a misleading estimate.

In my next post, I will show you how one family used net price calculators to determine what impact home equity would have on his daughter's financial aid package. The results were dramatic.

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