Difference Between Direct And Indirect College Costs A Family Guide On Paying For College Educational Literacy Academy 502-721-8646 [email protected] Financial Solutions For Families COLLEGE LITERACY ACADEMY Understanding How To Pay For College (Ninth Edition) Copyright 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011 By: Educational Literacy Center All Rights Reserved No part of this publication may be used or reproduced in any manner whatsoever without written permission except in the case of brief quotations embodied in critical articles and reviews. For More Information Contact: Chuck Moore, CCFC, CAMC, CAFC Louisville, Ky 40207 Ph. 502-721-8646 Cell 502-931-3137 [email protected] www.collegeliteracyacademy.com This publication is general in nature and is not intended to give legal, accounting or investment advice. Before incorporating any ideas in this publication the reader should consult with their financial advisor, guidance counselor, or tax professional. Some of the information provide in this publication is from IRS Publication 970, Federal Financial Aid System and other resource material Direct And Indirect College Costs What Is The Difference Between Direct And Indirect College Costs When families first are exposed to college bills, many are confused on who to write the checks out to. Paying for the cost of college comes in two forms: �� Direct Costs �� Indirect Costs The first thing families need to understand is what is called the Total Cost Of Attending or COA. The COA is the accumulation of all costs that relate to getting a degree or certification from an educational institution. These costs are as follows: �� Tuition and Fees �� Room and Board �� Books and Supplies �� Personal Miscellaneous Costs Direct Costs are defined as any monies paid DIRECTLY to the college or university such as: �� Tuition: If the student has selected a state school, the tuition (cost of classes) will depend on his or her residency status. The difference between in-state and out-ofstate tuition can be thousands of dollars a year. Some schools base tuition on the number of credit hours taken in an academic period. Others rely on enrollment status (full time versus part time). �� Fees: Most schools charge set fees for services such as activities or athletic facilities. Such fees usually appear on the tuition bill whether the student uses these services or not. �� On-campus room and board: The student may choose to live on campus and eat in dining facilities. Meal plans prices can vary significantly. Indirect Costs are defined as any monies paid for other educational expenses that have an indirect link other than Direct Costs, such as: �� Books and supplies: Textbook costs are similar from school to school, but they vary greatly depending on the courses taken. Students can save by buying used books, buying online, or sharing with classmates. Some classes require more supplies than others; others have printing, copying, or computer costs. �� Computers: Many schools require students to have a personal computer. Check the admissions requirements to determine whether a basic PC will do or a more expensive laptop is required. Remember to add the costs of software, a printer, and — if your child lives off campus — connection to the Internet. �� Off-campus room and board: This category includes rent, furnishings, utilities, and meals. Even if your child lives at home, there will be expenses related to food and commuting. �� Transportation: If the student will commute to school, factor in the cost of public transportation, gas, car insurance, maintenance, and parking fees. Some schools provide free parking, while others require a paid permit. If the school is far away, don’t forget the cost of air travel to get home on breaks and holidays. The student can lower these costs by carpooling and by shopping around for student rates on airfare. �� Personal expenses: Students have lots of small personal expenses that add up and can make a huge difference in this category. Consider clothing, laundry, haircuts, cell phone, and entertainment. Teach your child to maintain a written budget since these expenses can easily spiral out of control. �� Other costs: Count on extra expenses such as lab fees for science courses, fees for course changes, and expenses for participating in athletics or joining a sorority or fraternity. Try to keep a little extra money in the budget to cover emergencies.