What Does Cost of Attendance Mean and How Does it Affect My Student Loans?

Cost of attendance, or COA, is a number determined by a college or university and used to calculate your federal student aid eligibility. It is also used to calculate the maximum amount you are eligible to borrow in both federal and private student loans. Here’s what to know about the […]

Cost of attendance, or COA, is a number determined by a college or university and used to calculate your federal student aid eligibility. It is also used to calculate the maximum amount you are eligible to borrow in both federal and private student loans. Here’s what to know about the cost of attendance and how it can affect your student loans.

What Is Cost of Attendance?

When you select a college or university, you will have to look at tuition and fees to get an idea of how much attending that school will cost. These figures represent the amount that you will be charged by the college to enroll in and attend classes and are typically easily found on the school’s website, which can make it easier to compare colleges and factor those costs into your decision about where to attend.

However, tuition and fees are only one part of what it will cost you to attend school for a year — and that’s where cost of attendance comes in. COA factors in all associated expenses such as textbooks, a computer and other supplies needed for classes; room and board, or housing expenses if you will not live on campus; transportation; and qualified personal expenses such as child care.

Consider that living expenses, like rent and food, can vary widely across the country. For example, living in New York City for one year is far more expensive than living in a rural town. So while tuition and fees at a school located in New York may be lower in comparison to a rural school, your overall cost of attending that New York school could be far greater once you factor in the cost of living.

[Read Estimate Living Expenses to Determine College Affordability.]

Not all expenses factored into the cost of attendance are directly charged by your college; they’re an estimate of the total you can expect to pay for school-related expenses before any financial aid. The COA is the school’s sticker price.

Your college may determine and provide multiple COA figures based on different situations. For example, there may be one cost of attendance for students planning to live on campus — since room and board are set and transportation will likely not be needed — and another for students planning to live off campus that includes estimated rent and transportation costs.

How Does Cost of Attendance Affect Student Loans?

A college’s cost of attendance can affect your student loans in two ways.

First, it is a factor in determining your eligibility for need-based aid, which may affect how much you need to borrow. Second, it represents the maximum amount you are eligible to borrow in federal and private student loans. Put another way, COA can help you understand the minimum amount you may need to borrow as well as the maximum amount you are eligible to borrow.

Your eligibility for federal student aid depends on a few factors, including the information you provide on the Free Application for Federal Student Aid, or FAFSA; your year in school and enrollment status; and the cost of attendance. These calculations are done by the financial aid office at your college, but the method is set by federal law and regulations from the Department of Education.

[Read: An Ultimate Guide to Understanding College Financial Aid.]

First, your college will use the information provided on your FAFSA to determine your expected family contribution, or EFC, which is an estimate of your ability to pay that takes into account income, assets and other benefits as well as family size and the number of family members who are also attending college. The EFC is expressed as an index number, not a dollar amount of money a family will have to pay for college.

Then your EFC is subtracted from the cost of attendance to determine your “financial need,” a term for how much need-based aid you are eligible to receive. Federal need-based aid ranges from Pell Grants and Federal Supplemental Educational Opportunity Grants to federal work-study and direct subsidized loans. Your state and college may offer additional need-based aid options.

Depending on your situation, the amount of need-based aid you receive may affect how much you need to borrow. That’s because you will likely need student loans to pay any costs that you are not able to cover with savings or income, need-based aid and/or scholarships.

But COA also affects the amount of student loans you can borrow. Federal law states that you are only allowed to borrow federal student loans up to the cost of attendance minus other aid. Private student loans typically have similar restrictions.

[Read: Student Loan Options for Parents to Fill a College Tuition Gap.]

For example, if you choose a college where your cost of attendance is $20,000 the first year and your EFC is 15000, then your financial need is $5,000. That means you are eligible for no more than $5,000 in need-based federal student aid such as direct subsidized loans and Pell Grant funds, which have limits. If you’re considering the same school and receive $8,000 in private scholarships or need-based aid, you’re eligible for up to $12,000 in non-need-based aid such as direct unsubsidized loans and Parent PLUS loans.

Why Should I Look at a College’s Cost of Attendance?

While most colleges now publish the COA on their websites, if you are less familiar with this number and what it means you may not have noticed it until after you filed your FAFSA and received your determination of aid eligibility. It’s worth taking a closer look at a college’s cost of attendance, however, because it can provide some key information about how to budget for your first year of school.

For example, COA can help you estimate the cost of living near your college before you even start looking for housing and help you understand how much you will need to save or earn during the year to afford it. You can also get an idea of how much you should expect to spend on textbooks and other supplies, or how much child care might cost in the area around your school.

In addition to COA, each school is required to provide a net price calculator, a tool that can help you consider the cost of attendance, your EFC and the financial aid available at that college. Using net price, you can compare how much it would cost you to attend different schools. You can also get a better understanding of how much you will need to budget, as well as how much you might expect to borrow for each school.

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