By Chelsea Walters
Senior Financial Aid Advisor, APUS

If you’re preparing to go back to school, you’ll need a financial plan. Creating a financial plan begins with identifying your educational costs, then establishing a budget for paying those expenses.

For students who receive Federal Student Aid, your expenses will be outlined in a financial aid package known as your Cost of Attendance (COA). Understanding the COA empowers you to make the right financial decisions in paying for school, especially if you plan to get a loan.

Cost of Attendance Is an Estimate

Your COA is the estimated cost for you to attend school. It is a reasonable estimation of your educational expenses for a period of study, typically an academic year, and is the basis of your financial aid package. Once the school has calculated your estimated costs, they will create a financial aid package, sometimes referred to as an “offer” or “award letter.” This package includes funding you may be eligible for to help pay for those costs.

COA varies from one school to another. It can include:

• Tuition and fees
• Room and board (or living expenses if you’re not living on campus)
• Books, supplies and fees
• Transportation
• Dependent care
• Costs related to a disability
• Reasonable costs for eligible study-abroad programs

The itemized costs in the COA may be actual, direct charges like tuition and fees, or estimated, like room and board. Knowing your costs will help you determine just how much you need to budget, save or borrow for college.

Cost of Attendance Affects Your Financial Aid Package

At the most, the school will package you with any available financial aid up to your calculated cost of attendance. For example, if it is determined your costs for going to school for one academic year is approximately $15,000, the school can put together an aid package up to a maximum of $15,000.

However, there are other packaging limitations to consider since there is a limit to how much in the Pell Grant, Federal Direct Loans, and other funding students may receive per year.

Only Borrow What You Need

You do not have to accept all of the financial aid you’re offered.

If you receive a financial aid package that includes student loans, consider how much funding you really need to borrow to pay for your educational expenses. Carefully review which expenses are necessities and which are personal wants. For example, a laptop is a necessity to attend school, but you do not have to purchase the newest, latest model.

Make sure you understand the type of loan(s) you are borrowing as well as the terms and any associated fees. Remember, loan debt must be repaid and with interest.

Plan Your Finances

You can review techniques to lower the overall cost of attending college. Use budgeting skills to cut college costs like personal or living expenses. Utilize tools like net price calculators and the College Scorecard to compare the cost of attending different universities.

Also, consider using online search engines to search for scholarships. These skills and tools can help you save money and reduce the funds you need to borrow.

Your education is an investment, and it may be necessary to borrow loan funding to help with your university expenses. However, you can limit the amount you borrow by understanding what your costs will be and determining what financial resources are available to you.