National Study from Sallie Mae and Ipsos Finds Families Reaching Into
Pockets to Spend More as Economic Worries Subside
62 Percent of Families Did Not Borrow to Pay for College Last Year
74 Percent of Students Worked During the Year to Help Cover Costs
The Bank of Mom and Dad is open for business as parent out-of-pocket
spending became the No. 1 source of college funding, according to “How
America Pays for College 2015,” the national study from Sallie Mae, the
nation’s saving, planning, and paying for college company, and Ipsos, a
global independent market research company. This year’s report—now in
its eighth year—found parent income and savings covered the largest
share of college costs, 32 percent, surpassing scholarships and grants
(30 percent) for the first time since 2010.
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Families covered the balance of college costs using student borrowing
(16 percent), student income and savings (11 percent), parent borrowing
(6 percent), and contributions from relatives and friends (5 percent).
Families Spend More on College
After four years of relatively stable spending, families spent 16
percent more money on college in academic year 2014-15, for an average
cost of $24,164, including tuition, room and board, living expenses, and
other direct and indirect costs. At the same time, fewer families were
worried that economic factors would affect their ability to pay for
college, fewer eliminated colleges from consideration due to cost, and
fewer took actions (cost-saving measures) to control college costs.
“The increase in the amount families are spending appears to be less
about the rising cost of college and more about the choices parents and
students are making about how much they elect to pay for college,” said
Michael Gross, vice president and head of the Higher Education practice
at Ipsos Public Affairs. “Traditional economic concerns, such as job
loss, declining home values, and decreased value of savings, are less
worrying for parents this year, allowing families greater freedom to
concentrate on college.”
The Role of Borrowing
Sixty-two percent of families did not borrow any of the money they used
to pay for college during academic year 2014-15. Among those who did,
the responsibility for borrowing fell primarily to the student, with
students signing for nearly three-quarters of the funds borrowed.
Those students and families who did borrow, however, took more
cost-saving measures to afford college than those who did not borrow.
Eighty-nine percent completed the Free Application for Federal Student
Aid (FAFSA), compared to 78 percent of non-borrowers; 73 percent of
students worked while attending school, compared to 68 percent of
non-borrowers; and 68 percent of students reduced personal spending,
compared to 55 percent of non-borrowers.
Students Working During the Year
Working students are now the norm as 74 percent of students worked
during the year to help cover costs. Most worked year-round, found
employment in food service or retail and worked an average of 22 hours
per week.
Planning for College
The overwhelming majority of families (97 percent) agreed college is an
important and worthwhile investment, yet only 40 percent have a plan to
pay for it. In families with plans, however, students are more likely to
pursue a bachelor’s degree, there is more willingness and ability to
spend on college, and students borrow 40-percent less than those without
a plan.
“College remains a priority for parents, and they are feeling more
confident as they reach into their own pockets and put their money where
their values are,” said Raymond Quinlan, Chairman and CEO, Sallie Mae.
“It’s gratifying to see families are borrowing responsibly and making
efforts to reduce costs. Still, too few plan for their college
investment. We at Sallie Mae would like to move that stubborn statistic,
and, to do so, we commit to expanding the free tools and information we
provide to help families create a plan for their college investment.”
“How America Pays for College 2015” reports the results of 1,600
telephone interviews Ipsos conducted in April 2015 of 800 parents of
undergraduate students and 800 undergraduate students between the ages
of 18 and 24. Data and years shown reflect academic years (July 1 to
June 30).
The complete “How America Pays for College 2015” report and a related
infographic are available at SallieMae.com/HowAmericaPaysForCollege.
Join the conversation using #HowAmericaPays.
Ipsos is an independent market research company controlled and
managed by research professionals. Founded in France in 1975, Ipsos has
grown into a worldwide research group with a strong presence in all key
markets, and is the world’s third largest survey-based market research
company. Ipsos delivers insightful expertise across five research
specializations: advertising, customer loyalty, marketing, media, and
public affairs research. Ipsos researchers assess market potential and
interpret market trends. They develop and build brands. They help
clients build long-term relationships with their customers. They test
advertising and study audience responses to various media and they
measure public opinion around the globe. Ipsos has been listed on the
Paris Stock Exchange since 1999 and generated global revenues of
€1,669.5 billion (2.218 billion USD) in 2014. Visit http://www.ipsos-na.com
to learn more.
Sallie Mae (NASDAQ:SLM) is the nation’s saving, planning, and
paying for college company. Whether college is a long way off or just
around the corner, Sallie Mae offers products that promote responsible
personal finance, including private education loans, Upromise rewards,
scholarship search, college financial planning tools, and online retail
banking. Learn more at SallieMae.com.
Commonly known as Sallie Mae, SLM Corporation and its subsidiaries are
not sponsored by or agencies of the United States of America.
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