Sallie Mae and Gallup teamed up to determine how families really pay for college and the results were surprising – at least to me. Interviewing 1,404 respondents by telephone from May 1, 2008 through June 1, 2008, the study found that the majority of student’s expenses are absorbed by their parents.
Average percentage of total cost of attendance paid for each source
- 36 percent of expenses were paid by parental savings or income
- 25 percent of expenses were paid by grants or scholarships
- 14 percent of expenses were paid by student borrowing
- 10 percent of expenses were paid out of student savings or income
- 9 percent of expenses were paid by parental borrowing
- 6 percent of expenses were paid by friends or relatives
Remember, this is how the average family paid the total bill. Those number change drastically depending on parental income. As parental income decreased, the amount of grants and scholarships rose. If you’re like the average American, you’ll use a similar combination of these options.
That means that 71 percent of college expenses were paid without borrowing and that’s great, but 5 percent of students paid their college expenses with a credit card (ugh). Buried down in the report was an interesting little nugget: Families who BORROWED, spent more money than those who didn’t, exceeding the non-borrowers by 33 percent!
This finding would seem to support the oft cited axiom that borrowed money is more easily spent than non-borrowed money.
What are your plans to pay for college? Will you borrow? Is it worth it? Have you made plans to finish your education?
The full PDF version of the report is available.