indirect-college-costs

Calculating indirect college costs could make all the difference


A new report suggests that further research into the indirect costs beyond tuition and fees could be critical in determining financial aid allowances

indirect-college-costsTuition and fees represent less than 40 percent of the total cost of attendance for students attending four-year public colleges and universities, and just one-fourth the cost of attendance for community college students.”

That’s just one of the revelations highlighted by the American Council on Education (ACE) in a new brief urging more research on the implications for college students of indirect costs such as room and board, and books and transportation.

The brief, titled “Exploring the Topic of Indirect Costs to Today’s Higher Education Students,” is the seventh in a series of Quick Hit reports about current and emerging topics in higher education attainment and innovation released by ACE’s Center for Education Attainment and Innovation and funded by Lumina Foundation.

The report emphasizes that much more goes into the full price of attending college aside from tuition costs, but more research is needed in order to gauge these extra expenses and account for the needs of individual students.

It’s imperative that the higher education community can accurately calculate these indirect costs– the full cost of attendance and net price, or the cost of attendance less all grant aid received–says the brief, because federal regulations prohibit students from receiving a financial aid package larger than the total cost of attendance,

When students are forced into situations where they need to work more than 15-20 hours per week because their financial aid package does not cover reasonable living expenses, it can prove highly detrimental to their academic performance, resulting in lower persistence and completion rates.

On the other hand, ACE adds that if the cost of attendance provides a student with money well beyond basic living expenses, it could result in over-borrowing. These extremes show just how important it is to put in the necessary research towards determining the actual price of attending college.

“Both of these events can adversely affect colleges and universities, so they have at least some incentive to accurately estimate living expenses,” says the brief. “As Higher Education Act [HEA] reauthorization continues to be discussed, more research needs to be conducted on the topic of indirect costs.”

(Next page: A breakdown of the indirect costs faced by students)

According to ACE, “tuition and fees represent less than 40 percent of the total cost of attendance for students attending four-year public colleges and universities, and just one-fourth the cost of attendance for community college students.”

Prices of tuition and fees are set based on a combination of the previous year’s amounts, state appropriations and political considerations, and students’ willingness to pay.

Other prices such as room and board, however, are often more flexibly decided upon so that the college or university can at least break even on its costs. The allowance for students living on campus is generally based on campus housing and meal plans, yet do not always consider the most expensive available options.

Other cost considerations include books and supplies that often vary by major or program due to different book and equipment requirements, as well as transportation fees based on whether or not students commute to school from off campus. Finally, health insurance premiums, the cost of purchasing a computer, and slight allowances for laundry (and even entertainment) are sometimes taken into account–but not always.

For tables breaking down indirect costs for every type of institution and more on the topic, read the full report here.