A school’s Cost of Attendance (COA) serves two essential functions.
For prospective students, the COA is the number used to compare the prices of different schools. The COA includes the cost of tuition, housing, fees, books, and miscellaneous living expenses.
For current students, the COA functions as a cap on financial aid. A student’s grants, scholarships, and student loans cannot exceed the COA.
Despite the significance of the COA, it is a number generated by a school’s financial aid office with relatively little oversight or guidance.
Does the Estimated Cost of Attendance overestimate or underestimate the actual cost of college?
In my personal experience, the actual cost to attend school was far less than the listed COA. I attended a midwestern public school as an in-state student, and I attended an expensive east coast private law school. In both cases, the COA exceeded my actual expenses each semester. Based upon this experience, I concluded — perhaps unfairly — that the COA was a conservative estimate.
When I received an email from a student who needed student loans beyond the COA, I warned that needing more money was a red flag and something was wrong.
I’ve now heard from several students who argued the opposite: the COA at their school was unreasonably low. They claimed the low COA made getting student loans and paying for college especially difficult.
Rules for Colleges Calculating Cost of Attendance
The items included in the Cost of Attendance are set by federal law.
For full-time students, the cost of attendance includes:
- tuition and fees,
- supplies (including a personal computer),
- transportation, and
- room and board.
The COA also includes special allowances for childcare and expenses for students with disabilities.
Unfortunately, Department of Education oversight into the Cost of Attendance is lacking. Schools have broad discretion in the COA calculations.
The Federal Student Aid Manual offered the following guidance to schools (emphasis added):
There are a variety of methods to arrive at average costs for your students: periodic surveys of your student population, assessing local housing costs or other pertinent data, or otherwise use reasonable methods you may devise which generate accurate average costs for various student cohorts.
Given the broad discretion that schools have, it shouldn’t come as a surprise that there are concerns about the accuracy of the Cost of Attendance.
Research into Cost of Attendance Accuracy
One academic study found that nearly half of all colleges provide living-cost allowances at least 20% above or below estimated county-level living expenses.
For those who don’t want to read the complete study, this article has an excellent summary of the results, including some helpful visuals.
When the Chronicle of Higher Education reached out to the Department of Education about the accuracy of COA estimates, a spokesperson said: “We would suggest that a prospective student ask the institutions how the allowances were derived and updated.”
The Student Perspective
If you are a student, the rules regarding estimating the cost of attendance don’t really matter. Changes to improve the calculation may help future students, but a student trying to get a loan has to live with the current system.
There is one crucial takeaway for students and their families: the estimated cost of attendance might not be accurate. It could overestimate the cost of college, or it could underestimate the costs.
Both estimation errors present unique challenges to students.
Dealing with an Underestimated Cost of Attendance
The big problem with an underestimated cost of attendance is that it limits all forms of financial aid.
Students who have costs that exceed their financial aid have four options to fix the problem:
(1) Ask for an Adjustment – Your school’s financial aid office should have a procedure for COA adjustments. Schools are permitted “to adjust the COA on a case-by-case basis to allow for special circumstances.” Requesting an adjustment to the COA opens the door for additional financial aid, including more student loans.
(2) Personal Loan – Personal loans exist outside the scope of student aid. Unfortunately, they also have significantly higher interest rates, less forgiving terms, and repayment usually begins immediately. A personal loan may make a bad situation worse.
(3) Earn Extra Income – Money earned during the summer or from a part-time job doesn’t impact the Cost of Attendance. Thus, students who need a bit of extra cash can supplement their financial aid with outside employment.
(4) Spend Less – Even if your school has an unreasonably low Estimated Cost of Attendance, it is still possible to live on this budget. Options like having roommates or buying used books could be sufficient to make the numbers work. If a tight budget still doesn’t work, revisit option one and talk to the office of financial aid.
When the Cost of Attendance is too high
Most students would prefer that their colleges overestimate the cost of attendance.
The primary danger to the student in this situation is borrowing too much.
While excessive student loan borrowing is a mistake, it also provides some opportunities.
Suppose you earn more than expected at your part-time job and have an extra $2,000 at the end of the semester. Traditionally, students use this money to pay down their most recent student loans. However, students could use this money to attack high-interest debt or private student loans. This strategy may help students convert private debt into federal debt.
The important thing for students with a COA on the high side is to avoid lifestyle inflation. Living in a fancy apartment is nice, but choosing affordable housing is usually the best choice in the long run.
Living with the Estimated Cost of Attendance
There is plenty of reason for concern about the accuracy of the Estimated Cost of Attendance.
However, it is worth keeping in mind that schools have a pretty big incentive to be accurate. If their estimates are too low, students won’t be able to afford school. If the estimates are too high, the hefty price tag will scare away potential students.
For students, this means the estimated cost of attendance is likely a decent starting point for your budget. Even if it is a little tight for the average student, there is nothing wrong with keeping your expenses below average to minimize student loan borrowing.