As with most everything, who pays for college, how much they pay and the general paying-for-college plan, varies family to family and household to household. Though there is no right answer for how you and your family should break down and divide the cost of school, we aim to present data here that gives you an idea of trends happening across the United States.
Perhaps this will better help you and your family navigate a plan for affording college.
How Americans Paid for College in 2018
Sallie Mae, a student loan provider, partnered with Ipsos, a market research company, to conduct a study to better understand how Americans pay for college. How America Pays for College 2018 explores the answers of 790 undergraduate students enrolled in the 2017-18 academic year and 799 of their parents to understand how Americans pay for school.
They explore the choices made regarding how college is paid for, who made those choices, resources used, and how much from each resource was used.
Who Pays for College?
Sallie Mae found that, not unexpectedly, families use a variety of financial sources to pay for college. The combined income and savings of parents and students makes up for nearly half (47%) of the funds families use to cover the entire cost of school.
On average, parents contribute almost three-quarters of those funds (34% of the total cost of college), while 13% of the total cost of college is the student’s responsibility. Parental income is the predominant source of money set aside for college, used to pay for more than half of a student’s attendance cost. Parents’ savings only account for two-fifths of coverage. Therefore, parent income at the time of enrollment has a huge effect on the ability to pay for a child’s college education.
Parents and students also each use borrowed money to cover some education costs. On average, parents pay 10% of the total amount due with borrowed funds; students cover 14% with student loans and other debt-forming sources.
The remaining 29% of the cost of college is mostly covered by scholarships and grants won by the student: 17% by scholarships and 11% by grants. The final 2% is covered by ad hoc family members.
Who Makes the Decisions?
Figuring out how to pay for college is up to the student, parents or a decision made by both the student and parents together.
The Sallie Mae study shows the way how-to-pay-for-college decisions are made. According to the study, 39% of families say parents made the decision on their own and 24% say students made the decision on their own. Thirty percent of families make the decision together. Parents tend to be more confident in their financial planning choices (84%) than students (78%).
Interestingly, the school type the student attends has a noticeable effect on decision-making. Community college attendees tend to make the decision on their own - as a student - more often than those that attend other types of schools. Parents are more likely to decide without student input if their student is attending a four-year public school. And those students attending private colleges tend to share the decision-making process with their parents.
What this Means for You
This is a study to assess patterns in how people pay for college. The numbers in this study show trends, not requirements. Parents and student should use these trends as a good conversation starter about how to cover the cost of school.
This study also discusses other valuable information that parents and students should consider in their process of navigating college costs. For example, Sallie Mae found that 25% of the families they surveyed did not apply for FAFSAⓇ, some not even knowing it existed.