Most Americans would be shocked to realize that two-thirds of the federal student aid money allocated to students at public colleges and universities goes for things other than tuition and fees. These so-called indirect costs of attendance include food, lodging, books and supplies, transportation, health care and miscellaneous other expenses such as the purchase of a computer, clothing and even study abroad program charges.
Each college or university that participates in federal student aid programs develops a cost of attendance budget for each academic year. Separate budgets are designed for dependent and independent students, undergraduate and graduate students, and on-campus and off-campus residents. The National Association of Student Financial Aid Administrators has provided guidelines for institutions to use in developing their unique cost of attendance budgets.
The College Board lays out the rationale for including indirect costs of attendance in the student financial aid programs. They note that people pay for housing, food and other living expenses whether or not they are in college. However, a significant cost of going to college is forgone earnings from the time devoted to school instead of the labor market. Department of Education regulations attempt to control these expenses by prohibiting postsecondary institutions from awarding student aid in excess of costs of attendance. This all sounds well and good, but as is the case with all government programs, the devil is in the details.
Let us start with on-campus housing. A quick check on the websites of five major universities in Washington, D.C., reveals a wide disparity in the least and most expensive per-semester prices of a two-person dormitory room. The lowest price at Georgetown University ($5,390) is 62 percent higher than the $3,312 that Howard University charges. The remaining three institutions (American University, George Washington University and the University of the District of Columbia) cluster between $4,765 per semester and $5,002 per semester.