Why You Should Care About Your College’s Cost of Attendance

 July 17, 2020
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When you apply for financial aid, the amount you qualify for is based in part on the college’s “cost of attendance.” But do you understand what this important term really means?

Before accepting an offer for financial aid, make sure you know the definition of the cost of attendance, how it’s calculated, and how financial aid offices use it to determine your student aid offer.

Let’s look at the following topics:

College cost of attendance definition
Expenses included in cost of attendance
Expenses not included in cost of attendance
How calculated cost of attendance costs may differ from actual costs
How cost of attendance is used to determine financial need
Shopping around for the cost of attendance

College cost of attendance definition

The cost of attendance is a figure calculated by financial aid offices that represents the average cost of attending their college.

As you know, costs vary widely depending on whether you’re going to a community college, state college or private college. No matter where you’re going, however, the cost of attendance should not be confused with what you are actually going to pay for college.

What you end up actually paying out of pocket will depend on how much financial aid you get first. That’s where cost of attendance comes into play — it’s one of four factors used by financial aid offices to determine your financial aid eligibility, which also includes your Expected Family Contribution, your enrollment status and the year of college for which you are enrolled.

Expenses included in cost of attendance

While the cost will vary from school to school, the categories of school expenses included in cost of attendance are pretty much the same:

  • Tuition and fees: Types of fees may include activity fees (for maintaining the student center, library and on-campus gym), health fees (for visits to the campus health center), counseling fees (for career and general guidance), parking fees, enrollment fees, technology fees (for computer labs) and “green” fees (for energy-related expenses).
  • Room and board: This covers the cost of housing and food, whether you live on campus or off. That said, your off-campus allowance for living expenses will be limited, meaning it won’t automatically cover whatever you choose to spend on rent or food. If you go over the allowance, the difference will have to come out of your pocket.
  • Books, supplies, transportation and miscellaneous expenses: The cost of buying your own personal computer or printer may be included in this category.
  • Child care or other dependent care: This cost allowance is decided on a case-by-case basis.
  • Disability expenses: This is another cost allowance decided on by a case-by-case basis.
  • Studying abroad: First, the program has to be eligible. If it’s approved, the cost allowance is limited to “reasonable” expenses.

Your cost of attendance is calculated by adding all of these qualifying expenses together. Most schools calculate this figure based on the cost of attending a fall and spring semester. However, the cost of attendance time frame may be longer for certain certification programs.

It’s also worth noting that the cost of attendance is generally higher for graduate and professional students. Keep in mind as well that your cost of attendance may rise year over year, as tuition and other expenses increase.

There is one circumstance in which this list of included expenses will vary. If you are attending school less than half- time, there may be limits on how much will include room and board, for example.

Expenses not included in cost of attendance

Though the cost of attendance includes basic living expenses, including housing costs, food and some personal expenses, it’s limited. That means you’re not going to see your college incorporating any of the following types of cost into your cost of attendance:

  • Car payments or insurance (the cost of attendance allowance for transportation is limited to the cost of commuting and parking)
  • Credit card debt
  • A new wardrobe
  • Travel (other than potentially some study-abroad programs)

If you budget right, you may have enough extra money here and there to pay a credit card bill or buy a new outfit. But if you have much more than that left over from your student loans, for example, then you may be borrowing too much and could pay the price by having too high of a debt load.

How calculated cost of attendance costs may differ from actual costs

It’s possible that the cost of attendance calculated by your college may not be entirely accurate in reality. For example, perhaps your textbook expenses may be more — or less — than the calculations. Or perhaps you have class fees that were not a part of the original formula.

If you believe your cost of attendance does not cover all your actual expenses, you may be able to request a cost of attendance adjustment from your financial aid office. Be sure to properly document all of your expenses to make your case.

How cost of attendance is used to determine financial need

Once your cost of attendance has been calculated by adding up all of the qualifying expenses together, it is then used by the financial aid office to determine your financial need.

Need-based aid

Cost of attendance – Expected family contribution = Need-based aid

It’s this figure — need-based aid — that determines how much you are eligible to receive in the form of federal Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), direct subsidized loans and work-study programs.

But the use of cost of attendance doesn’t end there. It’s also used to determine non-need-based aid.

Non-need-based aid

Cost of attendance – Financial aid already awarded = Non-need-based aid

Once you have received your need-based aid, which includes any need-based aid and scholarships you were awarded, non-need-based aid is calculated using the formula above. Non-need-based aid encompasses federal direct unsubsidized loans, PLUS loans, and Teacher Education Access for College and Higher Education (TEACH) Grants.

Borrowing more than the cost of attendance

You may wonder if it’s possible to borrow more than the calculated cost of attendance. The short answer to that is — no, not if you are sticking to federal loans. The calculations are there for a reason. Consider the example given by the Office of Federal Student Aid. The story of a student with a cost of attendance of $16,000 is outlined.

Given the calculations discussed above, if the cost of attendance is $16,000 and the Expected Family Contribution is $12,000, the student’s level of financial need is $4,000. Therefore, the student cannot receive more than $4,000 in need-based aid, including loans and grants. The same student, if they are awarded $4,000 in need-based and private scholarships, is eligible for up to $12,000 in non-need-based aid.

Keep in mind that there are annual limits for federal loans, based on the year in which you are enrolled. For example, if you are a freshman, your annual federal loan limit is $5,500, of which no more than $3,500 may be subsidized. In your third year of college, that limit rises to $7,500, of which no more than $5,500 may be subsidized. The aggregate loan limit for dependent students (aside from those whose parents cannot obtain PLUS loans) is $31,000, of which no more than $23,000 may be unsubsidized.

Beyond federal loans, you might consider private student loans, which may have larger borrowing limits (although you generally cannot borrow more than your cost of attendance with private loans either).

What if you have a 529 plan?

If you are paying for college through a 529 plan, this may affect your ability to receive need-based aid, as it may increase the Expected Family Contribution amount. The amount in decreased eligibility can depend upon who is actually holding the 529 plan, and it is more advantageous for the student if parents can have the plan under their name, rather than holding the account themselves as independent students.

Make sure you understand exactly how your particular 529 plan may affect your needs-based federal aid eligibility. Here’s more on the pros and cons of 529 plans.

Shopping around for the cost of attendance

It’s nice to have your heart set on a specific school. But if the cost of attendance is too high, you may find that the financial aid offer doesn’t help enough to make it an affordable choice for you.

Keep your options open and shop around for your best deal, considering everything you are looking for in a school. That doesn’t have to mean the cheapest option, but it can mean finding an affordable school that fits your needs and doesn’t break your bank.

You can go here to learn about the five things one financial aid expert tells every college student.

Rebecca Stropoli contributed to this report.

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1 Important Disclosures for College Ave.

CollegeAve Disclosures

College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC.. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

  1. As certified by your school and less any other financial aid you might receive. Minimum $1,000.
     
  2. Rates shown are for the College Ave Undergraduate Loan product and include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
     
  3. This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

Information advertised valid as of 11/15/2022. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.


2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.

Earnest Disclosures

Interest Rate Disclosure: Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.24% APR to 13.03% APR (excludes 0.25% Auto Pay discount). Variable rates range from 3.83% APR to 12.53% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

Auto Pay Disclosure: You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment from a checking or savings account. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

Loan Cost Examples: Earnest’s Loan Cost Examples: These examples provide estimates based on principal and Interest payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 15-year term (180 monthly payments of $118.28) and a 11.69% APR would result in a total estimated payment amount of $21,290.40. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 15-year term (180 monthly payments of $126.82) and a 13.03% APR would result in a total estimated payment amount of $22,827.79.

These examples provide estimates based on interest only payments while in school. Variable APR: A $10,000 loan with a 15-year term (180 monthly payments of $145.41) and a 11.69% APR would result in a total estimated payment amount of $26,173.03. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 15-year term (180 monthly payments of $156.59) and a 13.03% APR would result in a total estimated payment amount of $28,186.67. Your actual repayment terms may vary. Other repayment options are available.

These examples provide estimates based on fixed $25 payments while in school. Variable APR: A $10,000 loan with a 15-year term (180 monthly payments of $169.92) and a 11.69% APR would result in a total estimated payment amount of $30,584.74. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 15-year term (180 monthly payments of $188.42) and a 13.03% APR would result in a total estimated payment amount of $33,915.55. Your actual repayment terms may vary. Other repayment options are available.

These examples provide estimates based on deferred payments. Variable APR: A $10,000 loan with a 15-year term (180 monthly payments of $174.79) and a 11.69% APR would result in a total estimated payment amount of $31,462.16. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 15-year term (180 monthly payments of $193.75) and a 13.03% APR would result in a total estimated payment amount of $34,874.28. Your actual repayment terms may vary. Other repayment options are available. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

Loan Eligibility criteria: Eligible students must: 1) For college Freshmen, Sophomores and Juniors, attend, or be enrolled to attend, a Title IV school full-time. For college Seniors and Graduate students, attend, or be enrolled to attend, a Title IV school at least half-time; and 2) be pursuing a Bachelor’s or Graduate degree. Earnest private student loans are subject to credit qualification, completion of a loan application, verification of application information, self-certification of loan amount, and school certification.

Before applying for private student loans, it’s best to maximize your other sources of financial aid first. It’s recommended to use a 3-step approach to assembling the funds you need: 1) Look for funds you don’t have to pay back, like scholarships, grant and work-study opportunities. 2) Next, fill out a FAFSA® form to apply for federal student loans. Federal student loans do not require a credit check or cosigner, and offer various protections if you’re struggling with payments. 3) Finally, consider a private student loan to cover any difference between your total cost of attendance and the amount not covered in steps 1 and 2. For more information, visit the Department of Education website at https://studentaid.ed.gov.

Earnest Private Student Loans are made by One American Bank, Member FDIC. One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104.

Earnest loans are serviced by Earnest Operations LLC, 535 Mission St., Suite 1663 San Francisco, CA 94105, NMLS #1204917, with support From Navient Solutions, LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by agencies of the United States of America.

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4 Important Disclosures for Edly.

Edly Disclosures

1. Loan Example:

  • Loans from $5,000 – $20,000
  • Example: $10,000 IBR Loan with a 7% gross income payment percentage for a Senior student making $65,000 annually throughout the life of the loan.
    • Payments deferred for the first 12 months during final year of education.
    • After which, $270 Monthly payment for 12 months.
    • Then $379 Monthly payment for 44 months.
    • Followed by one final payment of $137 for a total of $20,610 paid over the life of the loan.

About this example

The initial payment schedule is set upon receiving final terms and upon confirmation by your school of the loan amount. You may repay this loan at any time by paying an effective APR of 23%. The maximum amount you will pay is $22,500 (not including Late Fees and Returned Check Fees, if any). The maximum number of regularly scheduled payments you will make is 60. You will not pay more than 23% APR. No payment is required if your gross earned income is below $30,000 annually or if you lose your job and cannot find employment.

2. Edly Student IBR Loans are unsecured personal student loans issued by FinWise Bank, a Utah chartered commercial bank, member FDIC. All loans are subject to eligibility criteria and review of creditworthiness and history. Terms and conditions apply.


5 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  • Variable Rate Disclosure: Variable interest rates are based on the 30-day average Secured Overnight Financing Rate (“SOFR”) index, as published by the Federal Reserve Bank of New York. As of September 1, 2022, the 30-day average SOFR index is 2.23%. Variable interest rates will fluctuate over the term of the loan with changes in the SOFR index, and will vary based on applicable terms, level of degree and presence of a co-signer. The maximum variable interest rate is the greater of 21.00% or the prime rate plus 9.00%.
  • Fixed Rate Disclosure: Fixed rate ranges are based on applicable terms, level of degree, and presence of a co-signer.
  • Lowest Rate Disclosure: Lowest rates are only available for the most creditworthy applicants, require a 5-year repayment term, immediate repayment, a graduate or medical degree (where applicable), and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Rates are subject to additional terms and conditions, and are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.

     

    Undergraduate Rate Disclosure: Variable interest rates range from 3.25%-10.35% (3.25% – 9.69% APR). Fixed interest rates range from 4.24% – 10.59% (4.24% – 9.93% APR). 

    Graduate Rate Disclosure: Variable interest rates range from 3.75%-9.90% (3.75% – 9.68% APR). Fixed interest rates range from  5.22% – 10.14% (5.22% – 9.91% APR). 

    Business/Law Rate Disclosure: Variable interest rates range from 3.75%-9.35% (3.75% – 9.16% APR). Fixed interest rates range from 5.20% – 9.59% (5.20% – 9.39% APR).

    Medical/Dental Rate Disclosure: Variable interest rates range from 3.75%-9.02% (3.75% -8.98% APR). Fixed interest rates range from 5.18% – 9.26% (5.18% – 9.22% APR). 

    Parent Loan Rate Disclosure: Variable interest rates range from 3.25%-9.21% (3.25% – 9.21% APR). Fixed interest rates range from 3.96%-9.50% (3.96%-9.50% APR).

    Bar Study Rate Disclosure: Variable interest rates range from 6.58%-11.72% (6.58% – 11.62% APR). Fixed interest rates range from 7.39% – 12.94% (7.40% – 12.82% APR). 

    Medical Residency Rate Disclosure: Variable interest rates range from 5.67%-9.17% (5.67% – 8.76% APR). Fixed interest rates range from 6.99% – 10.49% (6.97% – 10.08% APR).


6 Important Disclosures for Funding U.

Funding U Disclosures

Offered terms are subject to change. Loans are made by Funding University which is a for-profit enterprise. Funding University is not affiliated with the school you are attending or any other learning institution. None of the information contained in Funding University’s website constitutes a recommendation, solicitation or offer by Funding University or its affiliates to buy or sell any securities or other financial instruments or other assets or provide any investment advice or service.