In an effort to reduce the cost of college, the recent House Reconciliation bill proposes to cap the total amount of federal student
aid a student can receive annually at the “median cost of college,” defined as the median cost of attendance for students enrolled in the same program of study nationally. This median cost of college program will be calculated by the US Department
of Education (ED) using data from the previous award year.
Today, colleges determine their Cost of Attendance (COA) annually. A student’s COA varies based on a variety of factors: undergraduate vs. graduate status, commuters vs. on-campus residents, a student’s major and whether there are additional required
course costs, in-state vs. out-of-state for students at public institutions, and main and regional campuses. In addition to tuition and fees, COA includes housing and food costs, books and supplies and miscellaneous personal expenses. Housing and
food costs vary in the COA because the cost of living varies significantly in different parts of the country.
The COA is a critical factor in financial aid awards because colleges determine students’ financial need by subtracting their Student Aid Index (SAI) and other financial assistance from the COA. Colleges cannot award student aid – federal, state, or institutional
– above the COA.*
The House reconciliation bill complicates the awarding of aid by capping federal financial aid at the “median cost of college (MCOC) of the program of study.” Under the proposal, ED will determine the MCOC of each program of study with data from the National
Center for Education Statistics sorted by the Classification of Instruction Programs (CIP) codes. The CIP provides a taxonomic scheme that supports accurate tracking and reporting of fields of study and program completion. Similar majors are assigned
the same CIP code. For example, all BAs in English literature or chemistry nationwide have the same CIP code. CIP codes are assigned at increasing levels of specificity. The first two digits of the CIP code best describe the general broad program
area of study, and the four-digit CIP indicates intermediate aggregation within the broad two-digit subject. The House reconciliation bill uses six-digit CIP codes, the most specific and granular classification available.
By definition, half of all programs of study offered around the country will have a MCOC that is above the median, and half will have one below it. Under the House reconciliation bill, federal student aid (federal grants and loans) will be capped at the
MCOC nationwide.
The bill specifies that MCOCs will vary for undergraduate or graduate students based on the credential awarded, but does not distinguish between associate and bachelor’s degrees, meaning the MCOC for an undergraduate degree in computer science will be
calculated using the COA at community colleges and BA-granting colleges and universities that offer the same major. Study abroad programs are not included, according to the legislation. This new method is proposed to take effect, July 1, 2026, for
the 2026-27 academic year.
Let’s look at some sample COAs from postsecondary institutions in Ohio with the same six-digit CIP code to illustrate the impact of this approach.
Institution
Major
Cost of Attendance
Columbus State Community College
Associates Degree - Computer and Information Science
$19,991 (2024-25)
The Ohio State University (four-year public)
Bachelors Degree - Computer and Information Science
$32,460 (2024-25)
Denison University (four-year private)
Bachelors Degree - Computer Science
$86,900 (2024-25)
If the MCOC for a BS in computer science is $30,000, students at Ohio State will be able to receive up to $30,000 in Pell Grants, Federal Work-Study, SEOG, and Federal Student Loans, but will have to look to state and institutional aid and/or private
scholarships or student loans for the remaining $2,460. Students at Denison who are paying the full cost of attendance will have to find $56,900 in non-Federal student aid.
Further complicating this approach are states like Ohio that have guaranteed tuition at public institutions based on the year students enter college. At those institutions, there is a different COA for every cohort of students that enters.
It is difficult to speculate about the impact of these changes, but it is highly likely that four-year independent colleges and their students will be hit the hardest. If the amount of federal aid is capped at the MCOC, schools with high COAs will see
the largest gaps between COA and MCOC. On average, COA at independent BA-granting colleges and universities is more than twice that of comparable public institutions. Although
this sector is known for providing significant institutional aid to reduce the net price students pay, private colleges will not have the funds to fill the large gaps created by this policy. And even though the bill increases aggregate loan limits
for undergraduate students, students with unmet need may still exhaust their available federal student aid if the COA at their institution is above the median, and have to take on additional private loans.
It is not clear which data source would be used to calculate the MCOC. It is also not clear which department within ED would be responsible for gathering and cleaning the data, calculating each MCOC and sharing that information with institutions to use
in packaging student aid awards. ED sustained a reduction in force of 50% earlier this year and
education research was particularly impacted. Colleges will need the MCOC by early November to provide aid packages for the following year, making timeliness a vital concern. If ED is unable to provide the MCOC by early fall, federal student aid will
be capped at a level that does not reflect recent inflationary increases and is unfairly low, compounding affordability challenges for students.
The bill also creates new annual and aggregate federal student loan limits. Aid eligibility will be very complicated if a student changes their major or transfers to a new college – and therefore is able to receive a different amount of federal student
aid – during their education.
If these changes proceed, federal legislators will need to clarify how these provisions will work in future versions of the legislation. Among the questions we believe need to be addressed are:
What will be the process and timeline for collecting the relevant data, calculating the MCOC and sharing that information with colleges and universities? Will there be a specific date by which colleges will be provided with the individual MCOCs?
If ED is using data from the previous academic year, as the bill specified, to calculate the MCOCs, how will the actual costs for the upcoming academic year be accounted for?
Does ED have the capacity to collect, clean, and disseminate this data in a timely fashion, given the recent cuts to agency’s research and data collection capabilities?
If colleges are using both COA and MCOC to award different types of student aid, how will financial aid management systems be able to be modified to make and disburse financial awards?
\Will the MCOC be adjusted for associate vs. bachelor programs?
\Will there be a cost of living or sectoral (public vs. private postsecondary institution) adjustment included?
Will ED publicly report MCOCs and develop communication materials for students and families to help them understand the process?
What packaging options will colleges with a COA above the median have to meet students’ need? Will students have to find and apply for private student loans on their own?
What MCOC will apply to students who haven’t declared a program or major? What about students who transfer institutions or change their program or major?
These proposed changes seem to conflict with a wide variety of current aid regulations related to the awarding of federal aid. It seems apparent that a significant amount of additional and clarifying language would be necessary to successfully implement
these changes. As we work to ensure students have the amount of aid needed to cover costs, the “median” concept is troubling. With the recent reduction of force at ED and cessation of funds supporting impactful educational research, it is difficult
to envision ED having the capacity to gather, calculate and share cost data in the critical time it is needed.
The National College Attainment Network (NCAN) will continue to follow reconciliation progress and keep members updated.
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