When it comes to how families pay for college, no two families are alike. As How America Pays for College 2018, uncovered, however, they commonly rely on a combination of three main college funding sources:
- Family income and savings
- Grants and scholarships (also referred to as “gift aid”)
- Money borrowed by the family
In academic year 2017-18, families reported spending an average of $26,458 on college. That single-year average includes a variety of school types: public and private, and two- and four-year schools. It also includes the full cost beyond tuition, including items such as living expenses, fees, books, supplies, and transportation.
The study found that families use multiple sources to meet those costs:
- Almost half of costs last year (47%) were paid using family income and savings
- More than one-quarter of costs (28%) were paid from gift aid
- Slightly less than one-quarter of costs (24%) were paid with borrowed money
Who contributes more: parents or students?
When combining the contributions from income, savings, and borrowing, parents paid more for college in 2017-18 than students, 44 percent of total college costs vs 27 percent, respectively. The remainder came from outside the immediate family.
Out-of-pocket: Parents generally earn a lot more than their college-age children—and many have saved money over time for college. As a result, they contribute 2½ times more from income and savings than students—34 percent of college costs vs 13 percent, respectively.
Borrowed money: On the other hand, students borrow more money—primarily student loans—than their parents to help meet the cost of college: 14 percent of the college bill vs 10 percent, respectively.
Gift aid: Scholarships, which can be awarded based on merit or financial need, contribute more than grants, which are typically awarded based only on need: 17 percent of costs vs 11 percent, respectively.
In addition, grandparents or other friends and family contribute about 2 percent of college funds.
Making paying-for-college decisions
Parents take the lead on paying-for-college decisions more often than students, but not always (39% vs 24%, respectively); 30 percent of the time, they shared the decision-making.
- Students who attend community college were more likely to make the paying-for-college decisions themselves, as compared to students enrolled in other school types.
- Parents with students enrolled in four-year public colleges were more likely to make decisions without the student’s input than those whose children were enrolled in other school types.
- Students attending private colleges—typically more expensive than public schools—were more likely than those attending public colleges to share decision-making with their parents.
Most families feel they put together the right package of funding resources to pay for college last year. Among those who had at least some say in the decision, eight in 10 feel confident they made the right financial decisions about how to pay for college.
Find out more about How America Pays for College 2018.
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Using student loans to pay for college
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About this study
How America Pays for College 2018, a national study by Sallie Mae and Ipsos, explores how much families of undergraduates spend on college, how they pay for it, and how they reach their funding decisions.