America Pays for College

How America Pays for College 2015 | Summary Report Sallie Mae | Ipsos
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Although borrowing accounted for 22 percent of the amount
American families paid for college in 2014-15, most families
do not borrow to pay for college in any given year. This year,
38 percent of families borrowed to pay for college, though
that ratio varied by school type. Fifty-six percent of those
at four-year private colleges borrowed, 43 percent at fouryear
public colleges, and 22 percent of those at two-year
public colleges.
The primary responsibility for borrowing fell to the
student. Among families who borrowed, students
borrowed in 83 percent of families and parents in
28 percent. Students signed for nearly three-quarters of the
dollars borrowed.
Families who borrow appear to use borrowed money to
reach for a more expensive college experience and spent,
on average, 34 percent more on college ($28,386) than
families who didn’t borrow ($21,219). On the one hand,
borrowers are more likely to seek alternate sources of
funds to borrowing, such as financial aid, tax credits, and
student earned income, than non-borrowers. On the other
hand, they are more likely to be enrolled in more expensive
institutions, such as private, four-year colleges, and less
likely to choose the lowest-cost housing option of living
at home.
Attitudes and Behaviors of Parents and
College Students
Overall, American families with a child enrolled in college
place a high premium on a college education. From
2009-15, an average of 97 percent of How America Pays for
College respondents agreed that college is an investment
in the future. Nearly nine in 10 (88%) agreed that they
were willing to stretch themselves financially to obtain the
best opportunity for the student’s future. These attitudes
are not universal, however, as seen in the four persona
types: “Procrastinators,” “American Dreamers,” “Reluctant
Borrowers,” and “Determineds.”
“Procrastinators” seem most concerned about cost, and
were most likely to have considered not attending due to
cost. “American Dreamers” are the most optimistic about
the value of college, and were the most likely to agree they
are willing to stretch financially to get there. “Reluctant
Borrowers” are a bit more practical than other personas,
seeing college as a means to an end. “Determineds” are
unwavering advocates for higher education, and were the
most prepared for college financially.
Two in five families reported having created
a plan to pay for all years of college before
their child enrolled. Those with plans were
twice as likely as non-planners to strongly agree that the
family expected the student to attend college, and a greater
proportion strongly agreed they were willing to stretch
financially to obtain college for the student. These attitudes
may be key to motivating families to create a plan. The
result of planning has tangible benefits: parents are able
to pay a larger share of costs out of pocket—even while
spending more on college—and students borrow less.
Looking beyond an undergraduate education, nearly half
of the respondents (45%) indicated the student intends to
pursue a graduate degree, about two-thirds of those directly
after college. Social science majors were most likely to say
they planned to attend graduate school (67%).
Nearly three-fourths of students worked at some point
during the previous academic year. More than half of college
students (52%) reported working year-round, and working
an average of 22 hours per week. Students who worked
year-round paid more of their own college costs, and were
more likely to be living at home.
College students and parents of
undergraduates have placed a high value on
college every year since this study began.
For the four years prior to 2015, however, they restrained
their college spending. How America Pays for College
2015 shows that families are spending more on college,
likely driven in part by parents feeling less constrained
economically. Current income from parents was the most
frequently used source of funds among all families, and this
year, given the increased amounts parents contributed from
their income, parent current assets rose to the top of the list
of college funding resources.
Families continued to be prudent in their financial choices.
The majority considered cost when choosing a school, the
majority took multiple affordability steps, and the majority
of students worked while enrolled. At the same time,
they seem to have been less cautious than in prior years
regarding cost-saving actions. Parents were less worried
about economic issues and families increased spending in
accessing the opportunity of higher education.