We spend a lot of time talking about the high cost of college, and yet millions of Americans attend college every year. Which begs the question: How are they paying for it? A recent report by Sallie Mae and Ipsos, How America Pays for College 2018, sheds light on the subject.
A Joint Endeavor
According to the report, American families spent an average of nearly $26,500 on college expenses in the 2017-2018 year. Just under half of these costs (47 percent) were covered by family income and savings, while scholarships and grants (28 percent) and borrowing (24 percent) made up the rest.
It is worth noting that when it comes to family income and savings, both parents and students are making the investment: While parents pay an average of $8,891 (34 percent), students also contribute an average of $3,339 (13 percent) of their own money to pay for college.
The study also reveals parents of first-generation college students are likely to contribute more of their income and savings than parents of second-generation students: 45 percent compared to 30 percent.
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When it comes to bridging the gap between what families can afford and college expenses, scholarship and grants are more common than loans with 57 percent and 56 percent of college students receiving at least one scholarship or grant, respectively. In sum, scholarships paid for an average of $4,393 (17 percent) of college costs compared to $2,955 (11 percent) for grants.
More than half (53 percent) of families also end up borrowing, with 65 percent of parents saying they expected to borrow as part of their college budget plans. And while parents borrowed less in terms of college costs than students (10 percent compared to 14 percent), a third of them say the plan to share the responsibility of paying back their kids’ student loans until they are financially stable.
The FAFSA Imperative
Lastly, the study highlights the value of the Free Application for Federal Student Aid (FAFSA). “Filing a FAFSA is the single most important thing a student can do to get money for college -- there’s more than $150 billion in grants, work-study, and federal student loans,” it concludes.
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