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How American Families Pay for College

How American Families Pay for College

We all know college can be costly, so that's why financial aid is so important! But since very few students get full-ride scholarships or enough private awards to fully cover the cost of an education, how are their families coming up with the money to pay for college?

How Families Pay for College

It looks like American families are doing a lot to minimize higher education costs. According to the How America Pays for College study from Sallie Mae and Ipsos, 98% of families take at least one action to make college affordable. That's almost everyone! Here's what they are doing to reduce college costs:

  • 85% of families filled out the FAFSA (Free Application for Federal Student Aid), which determines a student's eligibility for grants and federal loans

  • 77% of students worked part-time or full-time while earning a degree

  • 62% of students limited their personal spending

  • 49% of students lived at home instead of in a dorm

  • 27% of students tried to complete their degree more quickly than the typical program length

But even students who take these measures still have costs they need to cover. The How America Pays for College study shows that despite what we hear about the student loan crisis, a big portion of college costs actually don't need to be paid back. Here's a breakdown of how Sallie Mae found the typical American family pays for college:

  • 34% of college costs were covered by grants and scholarships

  • 29% of college costs were paid for from parental income and savings

  • Student loans paid for 13% of college expenses

  • 12% of money for college came from a student's own income and savings

  • 7% of costs were paid for by parental borrowing

  • Family and friends contributed 5% of college expenses

This data shows just how important scholarships and grants can be for many students, and they're actually becoming even more critical. Half of all families with students attending college relied on at least one scholarship, and this number jumps to 68% at private four-year schools. Scholarships and grants now cover 34% of college costs. That increased from 30% in the 2014-2015 academic year.

The bottom line? Apply for scholarships, as they are readily available and can make a big dent in the cost of an education.

How Does Price Factor Into School Choice?

Is the cost of college a main deciding factor in your college search? Almost 70% of families crossed schools off their list due to the cost. Financial considerations were the third most common reason a student chose to enroll in a particular school. Grants and scholarships can cut the cost of attending school, creating a much lower net price to pay.

When public aid isn't enough to cover all costs, consider financing the gap with private student loans. Shop around to find the loans that fit your needs.

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