(Image courtesy of Sallie Mae.)
The student debt crisis in the U.S. is a hot topic these days.
Engineering degrees are expensive, with average in-state college costs beginning around USD$15,000 per year and out-of-state costs beginning around $20,000. The top range reached as high as $69,000 per year.
Factor in living costs and discretionary spending, or higher tuition costs for more specialized engineering programs and the financial load on students can become quite heavy.
The recent release of the 2017 edition of Sallie Mae’s study “How Americans Pay for College” offers a look at how students finance their post-secondary education and how students and their families approach payment methods and ways to manage or mitigate potential debt.
The report examines all academic disciplines, not just engineering, with the average amount spent on college in 2016-17, across all types of academic programs and schools, equaling about the same as 2015-16 ($23,757 vs. $23,688).
Students, Parents and Scholarships Split College Costs 3 Ways
The overall takeaway from the report is the fact that students and their parents shared the responsibility of paying for college equally in academic year 2016-17, with each party contributing about one-third of the total expenses.
For most students, scholarships and grants covered most of the remaining costs, approximately 35 percent. This is the largest share of education costs being covered by scholarships ever seen over the report’s 10-year history.
Scholarships were used by 49 percent of all families and grants were used by 47 percent.
Parents funded the second-largest share of their children’s college costs through a combination of income and savings and borrowing, which covered 23 and 8 percent respectively, totaling 31 percent.
Students’ own income and savings covered 11 percent of costs and borrowing to cover the a further 19 percent. Contributions from relatives and friends provided 4 percent.
Overall, 42 percent of families borrowed money to pay for college in 2016-17.
More Information Means Smarter Consumers
With so much news coverage and information on student debt available these days, families of college-bound children have become increasingly savvy higher education consumers, as 98 percent of families are planning carefully and taking proactive measures to reduce college costs.
These measures include:
- 73 percent of students choosing an in-state school
- 50 percent opting to live at home to reduce additional living expenses
- 26 percent enrolled in an accelerated program in order to finish sooner and begin earning a salary.
In addition, most students (76 percent) worked while in school to help offset their college costs. More than half (55 percent) worked year-round and half of working students (50 percent) increased their work hours.
(Image courtesy of Sallie Mae.)
The study showed that most families (87 percent) were willing to stretch themselves financially to accommodate their child’s college degree into their budgets. However, approximately 69 percent families eliminated at least one college from consideration during their selection process specifically because of the cost for that school. By comparison, only 58 percent of families said they eliminated a college due to cost in 2008.
The attitudes of families were almost evenly divided on whether paying more for college equals a better education — 55 percent of families said paying more always or sometimes yields better quality of education, while 45 percent said cost has no relationship to quality.
A College Degrees is an Investment in Your Student’s Future
Regardless of cost, however, nearly all families (98 percent) agreed that college is a worthwhile investment in the student’s future and nearly nine in 10 families (86 percent) said they had expected their child to attend college since he or she was preschool age or younger.
Even further, 59 percent said they expected their child to pursue a graduate degree.
“Throughout our 10 years of conducting this study, families have consistently demonstrated they are determined to make college happen and they’ve also become more value-conscious as they pay for higher education,” said Raymond Quinlan, chairman and chief executive officer at Sallie Mae. “The value families place on a higher education degree is so strong that the majority expect their child to achieve a graduate degree.”
While college is the expectation many parents hold for their children, only four in 10 families said they had a plan to pay for college. In addition, only 13 percent of families said they were using 529 college savings plans, the lowest percentage in the past five years.
“For the past decade, ‘How America Pays for College’ has annually chronicled the ways in which students and parents are addressing the challenge of paying for college and how it has very much become a family decision,” said Julia Clark, senior VP of Ipsos Public Affairs. “Their views and how they choose to pay for college reveal valuable insight into factors that have the potential to shape the future of higher education policies and practices.”
To learn more, the full report is available from Sallie Mae.
“How America Pays for College 2017” reports the results of 1,600 telephone interviews Ipsos conducted in March and April 2017 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).