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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
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.
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.
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.
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.
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.
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.
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.
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.
College Ave Student Loans products are made available through either Firstrust 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.
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.
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. This informational repayment example uses typical loan terms for a first year graduate student 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 7.10% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $141.66 while in the repayment period, for a total amount of payments of $16,699.21. 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 11/24/2021. 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 Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
3 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 3.19% APR to 13.03% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.19% APR to 11.69% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance 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, and using the daily interest rate based on actual days in the year and rounding up, plus a margin and will change on the 1st of each month. 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.
4 Important Disclosures for Ascent.
Ascent loans are funded by Bank of Lake Mills, Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: AscentFunding.com/Ts&Cs.
Rates are effective as of 01/01/2022 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes income-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates.
1% Cash Back Graduation Reward subject to terms and conditions, please visit AscentFunding.com/Cashback. Cosigned Credit-Based Loan student borrowers must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest APRs are available for the most creditworthy applicants and may require a cosigner.
5 Important Disclosures for SoFi.
UNDERGRADUATE LOANS: Fixed rates from 2.99% to 10.66% annual percentage rate (“APR”) (with autopay), variable rates from 0.95% to 11.18% APR (with autopay). GRADUATE LOANS: Fixed rates from 4.08% to 10.90% APR (with autopay), variable rates from 1.00% to 11.29% APR (with autopay). PARENT LOANS: Fixed rates from 4.23% to 10.66% APR (with autopay), variable rates from 1.15% to 11.18% APR (with autopay). For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law. Lowest rates are reserved for the most creditworthy borrowers. If approved for a loan, the interest rate offered will depend on your creditworthiness, the repayment option you select, the term and amount of the loan and other factors, and will be within the ranges of rates listed above. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Information current as of 11/01/2021. Enrolling in autopay is not required to receive a loan from SoFi. Loans originated by SoFi Lending Corp. or an affiliate (dba SoFi), licensed by the Department of Financial Protection and Innovation under the California Financing Law License No. 6054612. NMLS #1121636 (www.nmlsconsumeraccess.org).
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
Undergraduate Rate Disclosure: Variable interest rates range from 1.03% – 11.01% (1.03% – 10.24% APR). Fixed interest rates range from 3.23% – 11.70% (3.23% – 10.83% APR).
Graduate Rate Disclosure: Variable interest rates range from 1.89% – 10.66% (1.89% – 10.41% APR). Fixed interest rates range from 4.64% – 11.23% (4.64% – 10.95% APR).
Business/Law Rate Disclosure: Variable interest rates range from 1.89% – 9.22% (1.89% – 8.50% APR). Fixed interest rates range from 4.24% – 9.74% (4.24% – 9.02% APR).
Medical/Dental Rate Disclosure: Variable interest rates range from 1.89% – 8.02% (1.89% – 7.72% APR). Fixed interest rates range from 4.18% – 8.54% (4.18% – 8.24% APR).
Parent Loan Rate Disclosure: Variable interest rates range from 1.97%-7.06% (1.97%-7.06% APR). Fixed interest rates range from 4.55%-7.58% (4.55%-7.58% APR).
Bar Study Rate Disclosure: Variable interest rates range from 4.44% – 9.58% (4.44% – 9.52% APR). Fixed interest rates range from 7.39% – 12.94% (7.39% – 12.82% APR).
Medical Residency Rate Disclosure: Variable interest rates range from 3.53% – 7.03% (3.53% – 6.75% APR). Fixed interest rates range from 6.99% – 10.49% (6.97% – 10.08% APR).
IS Variable Rate Disclosure: Variable Rates advertised are based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of December 1, 2021, the one-month LIBOR rate is 0.09%. Variable interest rates will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree and presence of a co-signer. Your final variable rate may be based upon the 30-day average SOFR index, as published by the Federal Reserve Bank of New York. The maximum variable rate is the greater of 21.00% or Prime Rate plus 9.00%.
ERL 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 December 1, 2021, the 30-day average SOFR index is 0.05%. 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.
Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer. Borrowers should carefully review federal benefits, especially if they work in public service, are in the military, are considering possible loan forgiveness options, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision on our website including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.
Eligibility Criteria: Applicants must be a U.S. citizen, permanent resident, or eligible non-citizen with a creditworthy U.S. citizen or permanent resident co-signer. For applicants who have not attained the age of majority in their state of residence, a co-signer is required. Citizens Bank reserves the right to modify eligibility criteria at any time. Citizens Bank private student loans are subject to credit qualification, completion of a loan application/Promissory Note, verification of application information, and if applicable, self-certification form, school certification of the loan amount, and student’s enrollment at a Citizens Bank participating school.
Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
7 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.
8 Important Disclosures for Edly.
1. Loan Example:
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.