Paying for College - Sallie Mae/Gallup Survey Results Released
August 20, 2008
On August 20, Sallie Mae released the findings of How America Pays for College, a study conducted by Gallup. This is the first of a series of annual studies and is intended to be a baseline to measure how policy and other changes affectingthe ability of American families to pay for college. During May 2008, Gallup interviewed 684 college-bound students and 720 parents of students aged 18-24 who were attending an institution of higher education in 2007-2008 to determine how families were paying for college, and to measure public attitudes toward college and various topics related to paying for college. Some major findings include:
- Fifty-eight percent of families reported ruling out schools because of cost at some point during the application process; another 42 percent of families did not limit their search based on cost--even after reviewing financial aid packages.
- In total, 70 percent of students and parents said a student’s expected post-graduation income either was not considered or did not make a difference on their borrowing decisions.
- Sixty percent of parents are worried that institutions will raise tuition, followed by 51 percent noting concern that loan rates will increase. Significant percentages of parents also expressed anxiety that student loan money will be less available, that their savings will decline, or the value of their homes will decrease.
- Credit card use for college expenses is relatively low in total (3 percent of students and 3 percent of parents charged part of their expenses). Those who used credit cards to pay for college cited emergency cash flow problems as the number one reason.
- Nearly nine out of 10 families (89 percent) with annual income below $35,000 filled out the Free Application for Federal Student Aid (FAFSA); this number drops off considerably to only 76 percent for families with annual incomes between $35,000 and $50,000, and continues to fall as income rises.
The study also revealed that:
- Parents, on average, contributed the largest share of paying for college, through current income and savings (32 percent of the total amount paid) and borrowing (16 percent of the total).
- The average student covered 33 percent of the cost, through borrowing (23 percent) and their own income and savings (10 percent).
- Grants and scholarships made up 15 percent of the amount paid.
- Support from friends and relatives made up 3 percent.
Overall, according to the study, college students and their parents see higher education as a critical investment in the future and will continue to overlook the cost of college as they select their school to further their education.
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