Determining College Costs

Calculating College Cost Sample CASE Study

The sample exercises that are included below illustrate how to analyze the college bill, deduct anticipated financial aid credits, and budget for annual educational expenses not included on the bill.

After reviewing the sample case below, be sure to complete a similar exercise yourself based on real life information and data from your college award letters.

Sally Student at Sunny University

 Semester 1 Bill (Academic Year 2012-2013)

Tuition – Semester 1                                                                           $15,325

Health Fee – Semester 1                                                                      $     250

Athletic Fee – Semester 1                                                                    $     125

Room and Board – Semester 1                                                             $  4,250

Total Bill Due College – Semester 1                                                       $19,950

 Sally’s Cost of Attendance (COA) = $44,000

Tuition = $30,650, Fees = $750, Room & Board = $8,500, Books = $1,000, Transportation = $600 and Personal Expenses = $2,500

 Sally’s Financial Aid Award Package

Sunshine University Grant                  $20,000

Restricted Scholarship                        $10,000

Subsidized Stafford Loan                  $  3,500

Federal Work Study                           $  3,000

                           Total Academic Year Financial Aid        $36,500

 Sally Student Sample Exercise

Budgeting for the Academic Year 

1)   Total Cost of Attendance (COA):

$ 44,000.00

 

2) Semester 1 Bill:

Tuition

$ 15,325.00

Room & Board

$   4,250.00

Fees

      $      375.00

Total Semester 1 Bill

$ 19,950.00

 

3) Subtract Grant Aid:

 

Grant

$ 10,000.00

Scholarship

$   5,000.00

Subtotal Owed after Subtracting Gift Aid

$   4,950.00

 

4) Subtract Subsidized Stafford Loan:

  $   1,723.75

 

Balance Owed for Semester 1 Bill

 $   3,226.25

5) Multiply by 2 (For Annual Expense)

X 2

Total Amount Family Needs to Plan for Bills

$   6,452.50

 

6) Add in amount of Books, Personal Expenses, and Transportation from COA for Year

$   4,100.00

 

7) Add in additional amount to budget for not included in COA for the year

$   1,900.00

 

Total Amount Family Needs to Plan for Year

$ 12,452.50

 

8) Subtract Available Resources:

 

       Outside Scholarships

$   1,800.00

       Federal Work Study

$   3,000.00

       Savings

$   2,000.00

       Student Summer Earnings

$   1,000.00

 

       Balance to Cover                                                 

       $  4,652.50

     Tuition Payment Plan

     PLUS or Private Education Loan

     Home Equity

 Sample Chart Explanation

Now let’s walk through Sally Sample Case Study and explain the steps taken to arrive at the bottom line:

 1)   Remember that the Cost of Attendance (COA) amount given to you by the college is for the whole year; however, the initial bill is only for the first enrollment period of college, in most cases. However, it is very important that you plan your financing strategy for the whole year by conducting an exercise similar to the one included above.

2)   Most colleges will bill the student for each enrollment period. Billable expenses include tuition, fees and room and board.

3)   Half of Grant, Scholarship, and Loan Amounts can be deducted from the Semester 1 bill. In this sample case, half of the grant, scholarship and Stafford Loan amounts can be deducted. Remember that grant aid and student loans typically can be deducted from the bill since they are anticipated credits, whereby, Federal Work Study awards cannot be deducted since students need to work actual hours to earn the award.

4)   There is a 1.5% fee that is withheld when borrowing the Federal Direct Stafford Loan. The first half of the loan amount minus the fee can be deducted from the bill.

5)   Although just the first semester bill is due initially, it is important to plan for the whole year, so multiply the first semester expenses by “2” to determine a total amount needed to cover the BILL for the academic year.

6)   The $4,100 amount is the amount of the books, personal expenses and transportation allotments that are included in the Cost of Attendance (COA) for the year. These estimated allocations are not billed expenses but must be paid for by the family.

7)    Families also need to plan for any expenses specific to the student that are not included in the college’s Cost of Attendance (COA). In this sample case, the family should plan for an additional $1,900 for the year, which will cover the cost of three round trip flights home and a $1,000 laptop for the student. Students should also plan for any monthly expenses such as medications, cell phones, car insurance, parking fees, subscriptions, etc.

8)   Total amount that the family needs to cover for the year.

9)   For planning purposes subtract any available or anticipated resources for the academic year. Resources may include savings, gifts from family members, outside scholarships, income from summer earnings, graduation money, etc.

10)  In this sample case, Suzy Student was diligent in securing outside scholarships in the amount of $1,800 which are available to help with college costs.

11)  Suzy Student was awarded Federal Work Study in the amount of $3,000.00. She will need to secure a FWS job and then will be paid for hours worked. Her paychecks can offset expenses during the year.

12)  In this case, the family has $2,000 in a savings account that they plan to utilize for college expenses.

13)  Suzy Student will work during the summer before her freshman year at college and has committed to saving $1,000 to help with college costs.

14) Balance that the family still needs to plan for after accounting for all resources. Families can then take steps and look into tuition payment plans, the Federal PLUS Loan Program, a variety of private loan options through lenders, and/or home equity options. Families may want to utilize just one of the options, or utilize a combination of options when developing their funding plan. College financing is a very individual process; families should explore all the options and make decisions based on particular family circumstances.

The sample case above is for illustrative purposes. For your budgeting pleasure, a blank template of the FIGURING OUT THE BILL WORKSHEET AND ANNUAL BUDGETING TOOL is included in Financial Aid Sense.

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