58 Percent of Families Invested in Higher Education Last Year Without Borrowing
67 Percent Confident in Their Ability to Continue to Meet Cost of College in Current Economy
RESTON, Va., Aug. 20, 2009—American families are making the investment in higher education the smart way – by pursuing grants and scholarships more frequently than borrowing – according to Sallie Mae’s How America Pays for College study, conducted by Gallup. The study found that among American families, 51 percent received grants and scholarships, 25 percent of students borrowed federal loans, 12 percent of students borrowed private education loans and 5 percent used credit cards to pay for college expenses. Fifty-eight percent of families paid for college last year without borrowing at all.
Based on a nationally representative survey of college-going students and parents of undergraduates, the study found that for the average family, parents paid the largest portion of last year’s college expenses, 36 percent, using current income and savings. Families used scholarships and grants to cover 25 percent of the college bill and loans to cover an additional 23 percent of college costs. Students worked and saved to pay an additional 10 percent, and family and friends helped with the remaining 6 percent.
The study, conducted in March/April 2009 among 1,604 college students and parents of undergraduates, confirmed that families deeply value higher education, with 91 percent agreeing that continuing education leads to a better quality of life. The study also found that, despite the country’s economic challenges, American families continue to have strong conviction in their ability to continue to pay for their son’s or daughter’s higher education: 67 percent were confident or extremely confident, compared to just 13 percent who expressed little or no confidence.
“Clearly there is no single way to pay for a college education, however, we are encouraged that the data confirms families follow the ‘1-2-3 approach’ that Sallie Mae has recommended for years: first, savings, scholarship and grants; second, federal student loans; and third, private education loans,” said Albert L. Lord, vice chairman & CEO. “Experience has taught us that when we counsel people to borrow wisely, students benefit from lower defaults.”
How America Pays for College found that 58 percent of families who borrowed did not take the student’s expected starting salary into consideration when deciding whether or how much to borrow. In addition, 23 percent of students could not answer when asked to estimate their future monthly student loan payment. The remaining 77 percent gave estimated future student loan payments that showed little correlation with the total amounts the students said they borrowed.
To help families navigate the college financing process, Sallie Mae offers its free online tool, Education Investment Planner (www.SallieMae.com/invest), which enables families to estimate the cost of a degree at 5,500 colleges and universities, build a plan to pay for college, and, if loans are part of the plan, estimate the starting salary needed to keep payments manageable.
How America Pays for College is the second annual study of college students and parents, and the full report is available at www.SallieMae.com/howAmericapays.
For more information contact:
Patricia Nash Christel (703) 984-5382 (Sallie Mae)
Erica Eriksdotter (703) 984-5628 (Sallie Mae)
Eric Nielsen (202) 715-3030 (Gallup)
SLM Corporation (NYSE:
SLM), commonly known as Sallie Mae, is the nation’s leading provider of saving, planning and paying for education programs. Through its subsidiaries, the company manages $192 billion in education loans and serves 10 million student and parent customers. Through its Upromise affiliates, the company also manages more than $21 billion in 529 college-savings plans, and is a major, private source of college funding contributions in America with 11 million members and more than $500 million in member rewards. Sallie Mae and its subsidiaries offer debt management services as well as business and technical products to a range of business clients, including higher education institutions, student loan guarantors and state and federal agencies. More information is available at
www.salliemae.com. SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.
Gallup has studied human nature and behavior for more than 70 years. Gallup’s reputation for delivering relevant, timely, and visionary research on what people around the world think and feel is the cornerstone of the organization. Gallup employs many of the world's leading scientists in management, economics, psychology, and sociology, and our consultants assist leaders in identifying and monitoring behavioral economic indicators worldwide. Gallup consultants also help organizations boost organic growth by increasing customer engagement and maximizing employee productivity through measurement tools, coursework, and strategic advisory services. Gallup's 2,000 professionals deliver services at client organizations, through the Web, at Gallup University's campuses, and in 40 offices around the world. For more information, go to www.gallup.com.