PowerPoint presentation of Braden Hosch, delivered May 27, 2015

How much does it cost to live in Philadelphia, Pennsylvania? According to Drexel University, students who don’t live on campus should budget $18,365 for their living expenses over a nine-month academic year. But Peirce College says it costs only $7,790 for housing, food, transportation, healthcare and other personal expenses, such as clothing. That’s a $10,575 difference in the same city, where both campuses are connected to the city’s public transportation network.

Naturally, living costs vary by location. But colleges make wildly different cost estimates within the same geographic area, in both urban cities and rural counties. Take Sumter County, South Carolina, for example. Sumter Beauty College says living expenses are $15,705. Morris College, next door, says they’re only $8,725.

Who’s right?

A team of academic researchers found that one third of colleges and universities underestimated actual living expenses by more than $3,000. Another 11 percent of schools overestimated by more than $3,000. In other words, almost half get it wrong by a big margin. (In the two examples above, the researchers calculated that the cost of living for nine months is $16,020 in Philadelphia and $11,889 in Sumter).

The research is part of an ongoing series of papers, the most recent one delivered on May 27, 2015 at the Association for Institutional Research Annual Forum in Denver, Colorado. An earlier version of this research, titled  “The Costs of College Attendance: Trends, Variation, and Accuracy in Institutional Living Cost Allowances,” was presented at the annual meeting of the Association of Public Policy and Management in October 2014.

PowerPoint presentation of Braden Hosch, delivered May 27, 2015

Calculating living costs properly is more than a matter of academic debate. Students who go to schools with higher estimated living costs can receive more in financial aid and scholarships. At a four-year public university, living costs add up to almost 60 percent of the total cost of attendance, on average. At a two-year community college, they account for more than 70 percent. (The rest is tuition, fees and books.)

“Your ability to take out federal loans is compromised if your school has underestimated what it costs to live,” said Sara Goldrick-Rab, one of the October paper’s authors and a sociologist at the University of Wisconsin-Madison. “You’re capped at the cost of attendance. It leads to ugly conversations between students and college financial aid officers, where the student says, ‘I don’t have enough money,’ and the financial aid officer says, ‘You have to learn how to budget.’ And the student leaves with no recourse.”

Goldrick-Rab makes the case that if students don’t have enough money to live on while at college, they end up having to work additional hours to make ends meet and can’t focus on their studies sufficiently to graduate on time. Some students, she says, turn to credit cards and get themselves mired in debt.

It’s easy enough for schools to estimate living costs for the 13 percent of U.S. students who live on campus. Dormitory and meal plan rates are set by the colleges themselves. And colleges generally assume that parents are still supporting the 37 percent of college students who live at home. But for the 50 percent of college students who live off campus, separately from their parents, colleges estimate what those costs are and report them to the federal government.

Interactive map created by Braden Hosch, comparing living costs reported by each college and university in the country, with the estimate he calculated using federal data.

Braden Hosch, another co-author of this research and an assistant vice president at Stony Brook University, explained that the federal government doesn’t specify how colleges should estimate off-campus living expenses. Financial aid officers typically survey students. A well-to-do student body could report higher living-cost figures. A cash-strapped student body might report lower housing and food costs.

“We’ve taken an economics problem and pushed it down to financial aid administrators. I don’t think a beauty school is equipped to do this,” said Hosch. “Schools should be provided with a federal source that can come up with reasonable estimates.”

Hosch and his colleagues calculated their own cost-of-living estimates for each county of the United States, by adapting the MIT cost-of-living calculator to a university student. They primarily used federal data from the Department of Housing and Urban Development, the Department of Agriculture and the Bureau of Labor Statistics.

“Reasonable people can come up with a different estimate,” Hosch said, noting that some academic colleagues have quibbled with his group’s decision to use the cost of an efficiency apartment, for example, rather than a shared apartment with a roommate. “But at the end of the day, I think institutions should all do it the same way.”

Goldrick-Rab says that some financial aid administrators have tried to correct figures that were too low, but were overruled by their college provost or president. “Marketing is a huge issue,” she said. “You don’t want it to look like you’ve raised your prices.”

The researchers found that for-profit colleges had been lowering their cost-of-living estimates, beginning in 2010, presumably to reduce their total price tags or to offset tuition hikes. By contrast, non-profit and public institutions have consistently raised their cost-of-living estimates every year since 2006, the first year that the researchers studied.

Indeed, the flawed living expenses call into question an increasingly used statistic: net price. Net price is simply the total cost of attendance minus aid. And it’s thought to be a better measure of college cost than the posted tuition price tag, which is often discounted. But with all the wild variations in cost-of-living calculations, which can make up the majority of “the cost of attendance,” net price might be worse.

[Cross-posted at The Hechinger Report]

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Jill Barshay is the founding editor and writer of Education By The Numbers, The Hechinger Report's blog about education data.