College is a significant investment, and it’s important to understand the true cost before making a decision. In addition to tuition and fees, there are many other expenses to consider, such as room and board, textbooks, transportation, and personal expenses. This article will break down all the costs associated with attending college, so you can make an informed decision about your education.

The US Government Accountability Office was asked to study college costs and the financial aid offer process.  In 2021, the Department of Education (DOE) disbursed nearly $112 billion in financial aid to students through various programs. The study used a mix of 176 colleges and assessed them against the DOE’s 10 best practices compiled by 22 different agencies.

New Government Report states only 9% disclose the true total cost

A recent government report has revealed that less than 10% of colleges and universities disclose the true total cost of attendance to prospective students. A recent GAO report found that only 9% of colleges provide a full cost of attendance in their financial aid award letters to students.

This means that many students and their families may be unaware of the full financial burden of attending college. It’s important to do your own research and ask questions to ensure you have a clear understanding of all the costs involved before deciding where to enroll.

The report looked at best practices which would include a true estimate of the cost of attendance.  This would include tuition, fees, room, board, books, personal living expenses, and travel.  The report also reviewed the clarity of the gift aid in the award offer for clarity.

Standardization of the Award Letter Is Another Problem

The report identifies another major problem.  The financial aid award letters are not consistent.  This makes it very difficult for families to compare colleges side by side.  The report identified three major categories of award letter types that the colleges use:

• Discloses cost and financial award properly – 9%

• Discloses only college cost and mixes award details – 34%

• No cost disclosure and mixed award details – 24%

We must realize that the college financial decision is the largest financial decision that families make without a third party approving the loans.  In most cases, we depend on colleges, high schools, and state agencies to help families navigate this process.  If the information is inconsistent, how can we expect the average family to make a good decision in a very complex process?

There are a growing number of companies starting to address this problem.  PayForED’s College Cost Analyzer provides the analysis that the report recommends.  This would include the current cost of attendance, award letter standardization, and proper debt structure.  Here is an example of our College Financial Award Comparison Report.

The new FAFSA Simplification rules do not require this change but the report recommends that some changes need to be made to improve a family’s ability to make a better decision.

New Rules of Cost of Attendance Under FAFSA Simplification.

The new rules of cost of attendance under the FAFSA Simplification Act were to go into effect for the school year 2023-24.  Full implementation of FAFSA Simplification is planned for the school year 2024-25.

Colleges and Universities are required to make it easier for students and their families to understand the true total cost of attending college. The cost of attendance now includes more items that reflect the total cost of getting a degree or certification.  There were specific directions for part-time students and special situation students that are included in this new law.

Some of the terminologies are changing and are classified under different categories.  As an example, Room and Board are changing to Housing and Food.  These are listed under Living Expenses which has specific rules regarding the number of meals and location of the meal.

One of the issues facing families is the separation of the direct and indirect costs going forward.  Direct costs are services provided by the college and paid to the college.  Indirect costs are expenses incurred but paid to another party.  Off-campus living would be an example.  This was another issue the CAO report identified as a problem that is unclear under the new rules.

A more comprehensive and transparent approach to calculating the cost of attendance can help students make more informed decisions about their college choices and financial aid options.

Colleges Provide Only One Year of Cost – Why

When considering the cost of college, it’s important to remember that colleges typically only provide one year of cost estimates.  Due to the Department of Education (DOE) rules called Student’s  Satisfactory Academic Progress (SAP), colleges cannot legally provide a cost to graduation.

As an example, if a student drops a course or two in their freshman year, they are not full academic sophomores.  Their financial aid will be prorated based on their credit earned at the time of financial aid disbursements.

This means that students and their families need to do their own research to determine the true total net cost of attendance over the entire duration of their program. This is the biggest issue that students and families face.  It is difficult to project the total cost and debt to graduation.

PayForED has also developed the In-College Payer tool.  This tool helps students project their total cost to graduation, understand their debt structure, and the repayment options related to their specific college.  We believe this transparency and approach is needed to fix the student debt crisis.

Other College Costs that Families Need to Consider

Students with special situations may want to contact the financial aid office to see if additional cost items can be added to their COA number for financial aid reasons.  This is done on a case by case situation by the financial aid office.  It is called Professional Judgement.  Items like special diet, tutoring, and medical reasons could be included.

In addition to the total student cost of attendance, there are many other expenses that families need to consider when calculating the total net cost of college. These include additional travel, parent’s travel, and care packages just to name a few.

It’s important to factor in these costs when creating a budget since these cannot be included in the financial aid award. They can significantly impact the overall final cost of a college degree and the debt a family may need to take on.

Understanding the Total Cost of College Summary

College is often seen as a necessary investment in a person’s future, but the true cost of attendance can be shocking. This new report shows how the current process needs to change before we can fix the student debt crisis.

The college decision is a highly emotional decision for families.  Without the proper information, it can impact the financial future of both the student and parents for years.  The PayForED In-college Payer can add transparency that the current process does not offer.  By understanding the full cost of attendance, families can make informed decisions about their financial future and plan accordingly.