Cost of Attendance vs. Direct Cost

Just because it says it costs $50,000 to attend a college doesn’t actually mean it does. A college uses what is called cost of attendance to assist in determining the amount of aid they can offer you. But when it comes to estimating your student bill and determining how much loan funds to borrow you will want to use direct cost.

Cost of Attendance

When you hear cost of attendance think more along the lines of a budget. A college uses cost of attendance to determine how much aid to award or offer a student. Most of the time the categories for cost of attendance consist of;

Tuition & Fees
Room & Board(Meals)
Loan Fees

Some of these categories are set by the institution while others are determined by the average cost of living in the area in which the college is located. Loan fees are set by whatever the cost of the origination fee is at that time. The miscellaneous amount can be things like healthcare, childcare, or personal care.

Ultimately the school has determined what the total of these categories. It is what they believe to be the cost to attend their institution. The cost of attendance is then used along with the information you have provided on your FAFSA to determine financial need.

There are scenarios in which you can contact your financial aid office to see if you can increase your cost of attendance. An example would be if you spend a crazy amount of money on dependent care that is beyond the amount included in the cost of attendance. In this situation you will have to provide documentation to the financial aid office for such an adjustment.

Direct Cost

Now just because the college has set the cost of attendance at a certain amount doesn’t mean that it will exactly cost that amount to attend their college. For example you may buy your books on a third party website instead of the bookstore. You may live on campus and not move your car except on weekends. Again cost of attendance is considered a budget and if you have ever used a budget tool you know there are some categories you don’t use, which brings us to direct cost. Direct cost is what you will want to use when you are ready to estimate your bill.

So you have the award letter in hand and you are eligible for a lot of different types of aid. Some of which are loans and you want to know if you need to borrow any loans and how much. In this scenario you would use direct cost. Direct cost consists of;

Tuition and Fees
Room and Board (Meals)

These categories are what will appear on your student bill. The direct cost total minus your award letter total will give you a better picture as to what it will cost you to attend college.