College students face a daunting range of costs far beyond tuition and fees. Housing, food, transportation, books and supplies, and other expenses are fundamental necessities for most students. Many students struggle to meet these basic needs.
Institutions of higher education calculate this range of essential expenses through their “cost of attendance” (COA) estimates, which they then include in financial aid offers and disclose to the public. The COA estimate directly affects how much grant, loan, and scholarship aid a student can get and provides students (and their families) a type of “budget” they can plan around. When COA estimates differ significantly from actual expenses, students might have their financial aid cut short—exacerbating their basic needs insecurity.
Underestimates or overestimates in COA, in turn, could make students less likely to enroll or complete a college degree or credential. For example, colleges might undercount how much off-campus rent costs, lag behind inflation in how much they estimate for groceries, or fail to include health care expenses in their COA. Unfortunately, colleges have limited guidance and face complex internal incentives when calculating their COA estimates.
We explore these dynamics in this new report, How Colleges Set Their Prices: The Need for Federal Oversight of Cost of Attendance in Higher Education. The report recommends ways the federal government could boost transparency, support, and accuracy in college costs by helping institutions construct better COA estimates.