Before College: How Your Fellow Americans Pay for College

Ever wonder how your friends and neighbors cover college costs? Sallie Mae has been researching this for the last 12 years. It’s most recent data were gathered last spring through interviews with 18-24 year old undergraduates and their parents. They offer some valuable insights.

College-Related Costs

College-related costs averaged $26,226 in academic year 2018-19 — just about the $25,890 average cost of attendance published by public four-year institutions. Of course, these costs keep rising but, even if they were to remain at 2018-19 levels for the four or more years it takes to get a bachelor’s degree, college costs would total at least $105,000 per student — way too much for low and middle-income American families to fully pay from their annual earnings.

College Finance Plans

Clearly, families need to execute college finance plans — featuring investments, savings, and other strategies — well before their students ever enroll, but just 46% of parents and 31% of undergraduates reported that they had such plans. Small wonder Americans now owe $1.5 trillion in college debt!

College Funding Sources

Despite their heavy reliance on financial aid and loans, families are the biggest source of college funding. Earnings and savings by parents and students combined to cover $11,303 (43%) of 2018-19’s college-related costs. However, since less than half of households have college financing plans, most of this comes earnings during the college years, not savings, meaning that parents and students pass up other important purchases, work extra jobs, and maximize overtime hours.

Most families count on grants and scholarships to help offset college costs. In 2018-19, 70% applied for financial assistance, and 57% received grants while 65% got scholarships. But grant and scholarship money combined to average just $8,177 — less than 32% that year’s college expenses.

Then there are loans. Although 28% of families hadn’t planned to borrow for college in 2018-19, more than half of them took on postsecondary debt during that year. Average amounts borrowed were $3,746 for undergraduates and $2,585 for parents. This means loans paid 24% of costs incurred while in college. But since they must be repaid with interest, loans actually expand and extend college costs.

Perceived Value of Higher Education

People know borrowing has drawbacks. The more debt students and parents took on, the more likely they were to feel that postsecondary learning was overpriced and overvalued. Clearly, the amounts that must be borrowed for college contribute to today’s high dropout rates.

Take Aways

These data suggest some important things about paying for college:

  • College is so expensive that, no matter how far away it is, you need a college finance plan.
  • Aggressively seek grants and scholarships before and during college, but you can’t count on them to cover even half of college-related costs.
  • Remember, students and parents pay the largest share of college costs, either from their incomes, their savings, or by borrowing.
  • The less borrowed, the more likely students are to actually get the degrees they seek.

Do you have one or more family members who are college-bound? Trying to figure out how you and they can minimize debt when paying college-related costs? A no-charge consultation with College Affordability Solutions just might help. Contact us at (512) 366-5354 or

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