The award letter usually includes the school's official "cost of attendance," a number that is frequently misunderstood, says Bill Leith, deputy director of application processing at the Department of Education. It's not a bill. It's more like a budget, one that reflects all the various and sundry costs of attending the school. At St. Olaf College in Northfield, Minnesota, for example, the cost of attendance for the 20042005 school year is $32,600, while the figure is $43,185 at New York University in Manhattan.
The cost of attendance includes direct expenses, like tuition, fees, and room and board. Then schools tack on an approximate price for books, supplies, and personal expenses like laundry detergent and toothpaste. Students with frugal lifestyles, who buy used books and bypass school meal plans for ramen noodles, for instance, can probably get by on less. The flip side is also true: Students hooked on designer clothes or owning a car, with its unavoidable need for gas, repairs, and insurance, may find the allowance for supplies and personal expenses piddling. The budget for transportation and travel can vary by student. It might be meager if the student attends college close to home, or it might need to be generous enough to cover a couple of airline tickets homewhen home is 3,000 miles away.
On the brighter side, the higher the estimated cost of attendance, the better the chances may be to qualify for financial aid. Let's say the cost of School A and School B is exactly the same. But School A figures a student will need $3,500 for transportation, books, supplies, and personal expenses, while School B allots the student $2,000 for the same expenses. The student's need at school A is thus greater than at School B. Need, remember, is the cost of attendance minus the expected family contribution. If both schools fully meet need, the student would get $1,500 more in aid from School A than from School B. Assuming the amount actually spent on those expenses at each school is similar, the student would come out $1,500 ahead at School A.
Things are seldom so neat and clean, of course. One school may be generous in judging costs but not fully meet need. Another might be stingier with its cost appraisal but more freehanded with grants. And a bigger travel allowance might simply reflect the fact that School A is further from your home than School B.
Figuring the real cost
The first step in determining which school offers the best deal is to identify which type of financial aid (loans, grants and scholarships, or work-study) has been offered.
While the award letter will probably tally all forms of aid together, applicants should separate the "free money" (grants and scholarships) from the "self-help" money (loans and work-study). That's not to dismiss loans and work-study. Student loans, especially if the government subsidizes them, are very inexpensive forms of borrowing. And work-study jobs often have the benefit of being flexible enough to accommodate students' schedules and their need to study at exam time, more so than a job at the local mall would. But they're nonetheless debts that have to be repaid or money that has to be earned.