Did you know that most students and parents nearly equally share responsibility for paying for college? That’s what student loan company, Sallie Mae, found when they released their 10th annual How America Pays for College report.
The report, which is released annually, surveys undergraduate students and parents of undergraduates about how much they pay for college and the resources they use to fund the expense.
Families paying less
The average amount families paid towards college in 2016-2017 was $23,757. While this may seem like a hefty amount, it’s actually $5,527 less than the previous year.
Not to mention, it's also the lowest amount paid by parents since 2009.
What's causing this decrease? The report showed that 69% of families eliminated a college from consideration due to its cost. That's actually good news, because it means parents and students are paying more attention to the long-term consequences of acquiring a large amount of student loan debt.
Plus, where that money is coming from has shifted. Students are contributing more of their own money (income, savings, and borrowing) than in previous years. In fact, at 30%, it is the highest since 2011-2012.
Parents are still putting more money into the college account than their kids, but only about 1% higher than the student contribution.
Scholarships and grants
More families are looking for “free money" or gift aid to help pay for college.
The report sheds light on some promising new statistics: scholarship and grant money covered the largest share of college costs in a decade.
Specifically, 35% of costs were covered by these funding sources, which worked out to about $8,390 of the average college expense.
To qualify for federal grants, complete the Free Application For Federal Student Aid (FAFSA). Grants are awarded based on financial need.
Parent income and savings
If you're a parent and you expect your child to go to college but you haven’t made a plan for how you’re going to pay for it, you’re not alone. In fact, 86% of parents (close to 9 in 10) always knew their child would go to college, but only 39% (less than 4 in 10) made a plan to pay for college.
You might also be wondering how you compare to the rest of the country when it comes to helping your child with college.
In addition to income, savings, and loans, you may have a 529 college savings plan set up to help cover the expense of school.
What’s interesting, though, is the report found that only 13% of families used 529 plans to help cover expenses, at an average amount of $10,031 — the lowest percentage in the past five years.
The report found that parent income and other savings generally covered 23% of college costs.
If paying for some of your child’s college education is a goal, you may be considering a loan. The report revealed that parent borrowing generally covered 8% of college costs.
Fortunately, there are several options for parent loans, including private loans and the Parent PLUS Loan through the federal government. Terms and rates vary between each loan, so it’s a good idea to do your homework before applying for a parent loan.
It’s no secret that student loan debt has become a fact of life for many college grads. That’s why it’s no surprise that student borrowing increased in 2016-2017.
However, the survey found that 84% of student borrowers expect to be solely responsible for repaying their loans.
But before you decide to take out a private student loan to fund your education, make you've exhausted options for scholarships and grants first, followed by low-interest federal loans.
If you’re considering a private student loan, check out our guide to the Best Private Student Loans of 2018.