How accurate are college cost estimates? Hint: Not very

According to A New report From John Burton Advocates for Youth (JBAY), College Cash Uncovered There are significant discrepancies between colleges’ published cost-of-attendance budgets and the actual expenses students face. These discrepancies contribute to challenges of college affordability and insufficient financial aid. This leaves some students with financial gaps of $10,000 or more.

John Burton Advocates for Youth (JBAY) is a non-profit organization focused on improving the lives of youth who have experienced foster care or homelessness. They work in policy advocacy and provide resources to at-risk youth, including stable housing, education, health care, and financial support. The organization attempts to address access to higher education and financial aid and promote youth’s transition to adulthood.

What is the cost of attendance?

The college cost of attendance, or COA, is supposed to measure a student’s total annual college costs to attend college. Each college may have a different cost of attendance.

The cost of attendance includes direct and indirect costs. Direct costs of college are paid, while indirect costs are not paid. The distinction does not matter much for families, who must pay both direct and indirect costs, and financial aid eligibility depends on a combination of direct and indirect costs. But some colleges and trade groups emphasize only the direct costs, especially when trying to convince people that college costs haven’t risen.

The cost of attendance (sometimes called the student budget) includes provisions for the following costs.

• Tuition and fees
• Housing and Food (also known as Room and board): The housing allowance for college-owned or managed housing should be based on the average or median housing fee, whichever is greater. The food allowance must provide the equivalent of three meals a day.
• Books, supplies, study materials, and equipment: This includes an allowance for the purchase of a personal computer, as well as textbooks and educational materials.
• communications: The transportation allowance must cover the cost of transportation between school, home and work. The transportation allowance does not include the cost of purchasing a car, only the additional transportation cost.
• Personal expenses: Personal expenses include laundry, clothing, toiletries, and personal needs.
• Other costs: Other costs can include dependent care costs, disability-related expenses, study abroad expenses, and loan fees for federal loans but not private loans. It can also include the cost of professional licensing and certification and the cost of first professional credentials. Dependent care costs include, but are not limited to, classroom time, study time, fieldwork, internships, and commuting time.

Cost of attendance is used to determine eligibility for need-based financial aid. Financial need is defined as the difference between the cost of attendance and the student aid index. The Student Aid Index (SAI) was formerly known as the Expected Family Contribution (EFC).

Related to:Financial aid calculator

What are the problems with cost of attendance calculations?

The basic problem is that some allowances in the cost of attendance differ from actual student expenses.

For example:

• Colleges routinely tend to underestimate textbook and transportation allowances.
• Some costs of attendance allowances are average costs, compared to actual costs. Students from at-risk populations often incur higher than average costs.
• The accuracy of cost allocations is often unreliable. In many cases, colleges use outdated numbers that are only adjusted for the standard inflation rate over the years, which fails to capture actual increases in costs. At nearly a third of colleges, nontuition costs are not adjusted for inflation at all. In addition, off-campus housing allocations often underestimate true costs, especially since rent is usually higher in college towns.

Furthermore, several expenses are eliminated from the cost of attendance:

• Many fees are not included in the tuition allowance, such as technology fees, activity fees, athletic fees, orientation fees, health center fees, library fines, laboratory fees, copy fees, and graduation fees.
• Technology costs, such as computers, software, and peripherals, are often omitted from the cost of attendance.
• Transportation allowances often eliminate the cost of parking, insurance, and maintenance.
• Housing allowances often eliminate the costs of utilities (electricity, heat, phone, Internet), renter’s insurance, and security deposits. There may also be fraternity and sorority dues.
• The cost of attendance also does not include the cost of health insurance, insurance deductibles, copayments, and over-the-counter medications.
• Colleges routinely omit dependent care allowances and disability expenses. Students should know how to request these allowances.

It is also important to note that even the cost of tuition may not be finalized until students have to accept enrollment. Many colleges do not finalize their exact tuition costs until June or July of the year, depending on the financial calendar. Since college prices tend to rise 3-5% annually, this can also create inaccurate estimates.

The JBAY report notes that cost-of-attendance budgets often fail to take into account regional differences and the unique needs of diverse student groups, such as child care costs or disability-related costs.

This results in a misleading representation of the true financial burden on students.

Bad cost estimates hurt students

The JBAY report identifies discrepancies between colleges’ published cost of attendance (COA) budgets and the actual expenses students face. Underestimating the actual cost of living makes it difficult for many students to afford college, especially those from at-risk populations with limited financial resources.

Discrepancies in cost of attendance (COA) budgets.

Many colleges significantly underestimate the actual expenses students face, especially for low-income youth, young adults, and other vulnerable groups. There is a wide gap between published cost of attendance figures and the true costs of accommodation, food and transport, especially in high-cost areas. This discrepancy results in a much heavier financial burden than is reflected in official college cost of attendance estimates.

According to the report, more than half of colleges use cost-of-attendance budgets that don’t take actual expenses into account. With lower estimates sometimes exceeding $10,000 per year. Many students face food and housing insecurity and are unable to absorb discrepancies in the cost of attending university, further exacerbating their financial hardships.

Disproportionate impact on vulnerable students

Inaccurate cost-of-attendance estimates disproportionately harm low-income students, who often struggle to cover true costs despite receiving financial aid.

Standard cost of attendance budgets do not take into account the unique circumstances of youth and students without family support, who lack access to parental housing during school breaks. The unmet needs of former foster care students are nearly twice that of their peers.

In addition, students with children incur expenses that are much greater than the costs included in the college’s student budget. These inaccurate estimates result in severe financial stress, making it difficult for these students to succeed and persist in their academic endeavors.

Lack of transparency in calculating costs other than tuition fees

Many colleges do not disclose how non-tuition costs are calculated into the cost of attendance budget, nor do they proactively inform students about the process of requesting an adjustment based on actual expenses.

This lack of transparency makes it difficult for students to claim higher cost of attendance, even when their expenses exceed college estimates. Additionally, there can be significant differences in estimates of nontuition costs between colleges in the same geographic area.

Insufficient financial aid

Underestimating actual college costs results in lower financial aid offers that do not meet students’ actual financial needs.

Financial aid gaps make it difficult for many low- and moderate-income families to afford college, forcing them to work long hours, borrow from private student loan programs, and attend part-time rather than full-time.

Ultimately, these financial pressures increase the likelihood that students will drop out of college.

Key recommendations

The JBAY report makes several recommendations to better align cost of attendance estimates with actual student expenditures. This will help close financial gaps and support student success.

• Colleges need to improve the accuracy of their cost of attendance calculations.
• The calculation of non-academic expenses such as housing, books, and transportation must be standardized, taking into account local and regional cost differences.
• Colleges should enhance support for students who need financial aid adjustments and ensure that the adjustments reflect the student’s particular circumstances.
• Financial aid awards should be increased to cover the gap between the cost of attendance and the student’s ability to pay.
• The financial aid application and award process should be streamlined to avoid creating barriers to college access and success.

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