Want to know how other people pay for college? Sallie Mae’s recently-released annual report will tell you. This year’s survey was done in March and April of this year and reflects the 2019-2020 school year. A few key points:
- College costs went up. On average families paid just over $30,000 for the 2019-2020 academic year, compared with just over $26,000 in 2018-2019 and 2017-2018. This was across income levels and types of institutions.
- Parents’ contributions from income and savings increased by about $5,000 compared with the previous academic year, and a higher percentage of parents paid for some portion of college: 83% in 2019-2020 versus 66% in the previous year. Grant and scholarship funding decreased slightly, while student borrowing mostly held steady and parent borrowing declined slightly.
- Fewer families received scholarships and grants, too: 58% used scholarships and 48% used grants in the just-concluded school year, compared with 65% and 48%, respectively. At the same time, scholarships and grant amounts increased an average of 5%.
- Student loans covered about 1/5 of the cost for a typical family. 30% of students used federal student loans, 13% used private student loans and 6% used another type of loan including credit cards. Among families that borrowed, students borrowed an average of $11,836 and parents borrowed an average of $12,535. About 2/3 of those who borrowed had always planned to borrow, so clearly a large portion of families is experiencing higher costs than they had foreseen.
What to make of these numbers? Parents paying more and borrowing less, and less reliance on scholarship and grant dollars likely reflects income gains at the upper end of the income spectrum reducing many families’ aid packages or freeing up additional cash flow dollars to reduce borrowing needs. Student borrowing tends to remain steady year-to-year because of the caps on student loans.
On the good news side, more than half of families—52%– have an actual plan for paying for college. This percentage increased across the income spectrum compared with the previous year.
Across the board, 71% of families submitted the FAFSA for last school year, which is a decrease from the previous year. The completion rate was lowest—66%– among the lowest income level, which in this survey is annual income under $35,000. Several improvements have been made to the FAFSA to eliminate some systemic hurdles for lower income students, but there is definitely more work to be done in simplifying the process.
Speaking of complexity, 43% of families found at least one component of their financial aid award letter difficult to understand, primarily out-of-pocket expenses, amount of student loans and total cost of attendance.
Since the survey was done in March and April of this year, questions about the pandemic were included as well. At the time of the survey:
- 78% of families said their student intended to continue attending their current school, and 68% were comfortable with returning to campus in the fall
- 13% were uncertain about the coming school year
- Only 7% had changed their enrollment plans
Families are much more concerned about college affordability and the value of education than about health risks. And families are fairly evenly split between whether they’re receiving adequate value for the cost when classes are online.
The full report is available here.