So recently, I’ve been pushing in numbers to do my net price calculators for some colleges and quite a few have them have had a relatively similar answer on the bottom of each; “Out of Pocket Cost”. What is the difference between out of pocket cost and … whatever the other cost is?
I think what you are referring to is what many NPCs refer to as “Remaining Cost”.
IMO the more important figure on the NPC is the Net Price. This is the price of the school after they have deducted any need-based aid (or guaranteed scholarships; i.e. ‘Grant/Gift Aid’ on the NPC) - things that you do NOT have to otherwise earn or PAY BACK.
Following the Net Price, NPCs may show you ‘Estimated Self-Help’. This includes:
- Student Work or Federal Work Study. That means you get a job on campus and EARN that money; no one actually gives you this money and it doesn't go to the school to pay your bill. You have to find the job, and the paycheck goes to you. If you don't get a job, or don't want to work many hours, it's your choice. The Work Study line is just an ESTIMATE of what you could earn to help pay expenses. (sometimes being eligible for a WS job makes it easier to find a job on campus.)
- LOANS are the other part of Self-Help. These you must agree to, understanding the interest rate and payback rules. You will have to pay these back to the loan company after you finish school. Some are Federally-subsidized, with lower interest rates that don't start accumulating until after you graduate; some have higher interest rates and the interest starts to accrue immediately. You always have the choice to take LESS loan than is suggested; or none at all.
The OOP, or “Remaining Cost” ASSUMES that you will earn the Work income, AND take out the loans as specified. If you have other sources of money to pay, you don’t have to work (or not as much as is estimated) and you don’t have to take out loans (or not as much as they are SUGGESTING).
It is important to compare school’s NET PRICES. Decide for yourself how much work/loan liability you are comfortable with. Some schools assume higher work income and much higher loan amounts (some schools put no loans in their estimate, although you may still be eligible for Federal student loans; while others will assume loans as high as 8500/yr). The bottom line (OOP/Remaining Cost) may LOOK the same, or even better, but these are not necessarily the best deal.
I think out of pocket expenses are anything beyond billed costs which are typically tuition, mandatory fees, room and board. Books, travel, etc beyond billed costs vary from student to student, are estimated, and make up out of pocket expenses. Though loans and work study may help pay for these things.
Books/supplies, travel, & personal expenses are typically included on the NPC/Financial Aid offer in the Total Cost of Attendance.
It is the usually the cost after aids. That means EFC plus the gap, if need not met. Nevetheless, the real out of pocket cost should include any loans and work study.
Thanks for all your responses I understand now. Cheers