More families have a plan to pay for college
College may be getting more expensive, but new research suggests that more families are preparing to meet those costs one way or another.
Eighty percent of families say they are confident in how they paid for college last year, and nearly half have a plan to pay for all years of college, according to “How America Pays for College 2019,” a recent study from Sallie Mae and Ipsos, an independent global market research company.
All this preparation could be attributed to the fact that the overwhelming majority of families recognize the value of higher education, with 90 percent of families agreeing college is an investment.
“The individual and socio-economic benefits of a college education are clear, so it’s particularly gratifying to see that families continue to view college as a worthwhile investment,” says Raymond J. Quinlan, chairman and CEO, Sallie Mae.
On average, families report spending $26,226 on college in academic year 2018-19, with a sizeable portion of costs — 43 percent — covered out-of-pocket through income and savings.
Scholarships, grants, and gifts — used by 82 percent of families — covered 33 percent of costs, and that “free money” can be especially important, both logistically and psychologically, opening doors to opportunities that would be otherwise unavailable and even making a difference in the way students view the college experience as a whole.
The study also found that while borrowing covered 24 percent of overall college costs, 57 percent of the families who borrowed to pay for college say they had always planned to do so as part of their paying-for-college strategy. What’s more, many families are getting a head start on paying their loans back, with 41 percent making payments on student loans while the student is in school.
Families are being proactive in other ways, too. Seventy-seven percent of families completed the Free Application for Federal Student Aid (FAFSA) for the 2018-19 academic year. Completing the FAFSA is the first step in receiving a financial aid award letter from schools. Of those who filed for the 2019-20 academic year, 25 percent did so in October, the first month the application is available. On the other hand, the majority of families waited until January or later to file, potentially missing out on free money for college.
For the complete report and a related infographic, visit SallieMae.com/HowAmericaPays. For new tools and educational resources that promote college planning, visit salliemae.com/college-planning.
“While more families are planning for college costs, we’d like to see that number continue to grow because we know those with a plan are better prepared to meet the costs, and typically have a better understanding of the financial aid process,” says Quinlan.