This Is How America Pays for College
Wondering how America pays for college? Last week, Sallie Mae released its annual report, How America Pays for College 2014, which breaks down how students 18-24 and their families are navigating through tuition and fees at colleges and universities. The results are a telling picture of where the nation stands financially when it comes to postsecondary education. Here are just a few of the key points from that report — and why they’re important.
We’re living in the college age of “deliberate decisions.” Families are increasingly aware of how expensive college is, and it shows in this year’s report. Sallie Mae found that families borrowed the lowest amount they have in five years and paid more “out of pocket” using income and savings. In total, families said that they contributed an average of $8,750, or 42 percent of the total amount paid for college.
The more practical parents are becoming, the more students are taking notice, as they also say that they’re taking the responsibility of paying for college seriously. This likely explains why the majority of students (77 percent) said they enrolled in college in-state, taking advantage of in-state tuition, and why nearly two-thirds reported that they got rid of colleges on their prospective list because of cost. Other tactics like living closer to home and filing for education tax credits also demonstrate how families are using multiple methods to pay for college. One size does not fit all anymore when paying for college, and many families are aware of this reality.
Despite the cost, college is still worth it. College isn’t cheap, but higher education still holds value. Sallie Mae reported that an overwhelming majority (98 percent) of American families believe that higher education is a worthwhile investment. Interestingly, this year’s report also notes that nearly three in 10 students are first-generation students. As the first in their families to attend postsecondary education, a majority strongly agree that college is part of the American Dream.
According to the report, “[o]verall, families report they are willing to stretch themselves financially in order to facilitate a college education, and most would rather stretch financially than not attend.”
There’s still a gap in what’s left to pay. Although total out-of-pocket spending increased from last year and borrowing is at a five-year low, the total spent on college decreased overall. And, as the report notes, expenses can add up quickly. Fortunately, Sallie Mae discovered that the majority of families didn’t experience any surprise encounters in paying for college. But for the third that did, surprises as seemingly small as a campus parking permit added up. Textbooks were the No. 1 unexpected expense, with travel and transportation also creeping into costs more than families anticipated.
This makes the gift of scholarships even more crucial. Scholarship America’s Dreamkeepers program, for example, helps students stay in college when faced with an unforeseen financial emergency. Rather than worrying about how to fix one’s car and afford school, scholarships, grants and other assistance that don’t need to be repaid impact students in large ways, no matter the dollar amount.
How America Pays 2014 saw an increase in scholarship and grant money use at 44 percent, up from 35 percent just two years earlier. But in an age when family contributions and federal aid don’t cover all college costs and when student loan debt tops $1.2 trillion, there’s still a shortfall in funds that can cause students to drop out of school or not enroll at all. The news about college costs and family preparedness is promising, but every shortfall affects our nation’s youth and their future chances of obtaining a higher education — something that we can’t afford to lose.