This Study Breaks Down How Families are Paying for Their Student’s College

In-crowd shot during graduation
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Honest Abe

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My grandmother graduated from college 50 years ago and remembers paying $400 per semester in tuition.

Fast forward.

The average amount spent on college this past school year was $23,757, according to a recent Sallie Mae report.

That’s 38% higher than it was just 10 years ago.

How are families and students paying for this? Sallie Mae, a largely known student loan company, took a look by conducting phone interviews with 800 undergraduate students and 800 parents of undergraduate students.

Here’s How Families are Paying for College

We were wondering where that nearly $24,000 was coming from, too.

Here’s the breakdown of how American families paid for it:

  • Students relied on scholarships and grants the most, raking in an average $8,390 to foot the bill.
  • Another chunk of funding comes from the parents’ income and savings: $5,527.
  • Shortly behind that was student borrowing at $4,551 per school year. Think: The $1.4 trillion dollars we currently owe in student debt.

All of that adds up to $23,757.

Have a College-Bound Kid? Here are Some Resources

If you’re wondering how you’re going to afford that hefty bill when your kid heads off to college, we don’t think you’re the only one.

We’ve got a couple of resources:

  • Many students relied on scholarships and grants. Go ahead and send this list of 100 scholarships over to your student. Have them comb through and apply to anything and everything. Seriously.And apply for FAFSA. The student aid form’s completion rate actually continues to rise each year. Last year 85% of families filed. This year, it was 86%. If you don’t know where to start, here’s a guide that walks you through the process. If you qualify, this could be free money.
  • Some parents start saving early. According to the Sallie Mae report, 13% of families use 529 plans. These are the prepaid plans you strike up when your kid is an infant, ideally. The amount amount of money families spent from 529 plans was $10,031 last year. That’s about half of tuition. Don’t worry. We explain 529 plans, too, and how to find the best fit for your kid.
  • On student borrowing… Well, that’s been a popular topic lately, especially since we’re about $1.4 trillion in student debt. Let’s spend a little more time on this one.

Are You a Former Student Already in Debt? Consider This

Students are having to borrow more and more money.

In fact, students borrowed $1,375 more this past year than they did in 2015-16, according to Sallie Mae.

If you’re on the other side of those college gates and have your own stack of student debt, you’re probably cringing a little.

One fairly easy way to cut down that bill is to refinance or consolidate that debt, which will help with those crazy interest rates.

Here’s an example: John DePrato had $65,000 in student debt. He was paying $850 a month until he decided to refinance through a student loan refinancing site called Credible. It works like a online marketplace in that DePrato was able to shop around for the best rate.

He found it.

He cut his monthly payments down from $850 to $400.

More people out there have done the same, too. In fact, the average Credible user has $60,000 of loans and an interest rate of 7%. Once they refinance, they have an average savings of $18,668 over the life of their loans.

If you want to explore all your options to pay off your student loans, here are seven other strategies to consider.

Carson Kohler (@CarsonKohler) is a junior writer at The Penny Hoarder. As a former out-of-stater, she wished she only had to pay $400 in tuition…

Did this article help put money in your pocket?

Honest Abe

Disclosure:

Some of the links in this post are from our sponsors. We’re letting you know because it’s what Honest Abe would do. After all, he is on our favorite coin.