Study: College is worth cost to families, but planning is key

(StatePoint) Despite rising college costs, a clear majority of families believe higher education is well-worth the investment, and most students and parents are willing to stretch themselves financially to make it happen, according to a new study.

The national study from Sallie Mae – the nation’s saving, planning and paying for college company –  and Ipsos – an independent global market research company – “How America Values College 2018,” found that 66 percent of college-going families believe they are getting a good value for the price they’re paying for college, and 20 percent say college is worth every penny.

Even those willing to stretch financially are taking deliberate, resourceful and concrete steps to make college more affordable. 

Forty-five percent of college students are working year-round to earn money for school, and 37 percent of students live at home with parents or relatives to save on housing costs.

“Families resoundingly shared that college is worth the cost, and their resourcefulness made it more affordable,” says Raymond J. Quinlan, chairman and CEO, Sallie Mae.

Other ways students are saving on college costs? Sixty-seven percent of students are cutting back their spending, and 24 percent are taking classes over a shorter period of time in order to graduate sooner and reduce costs.

The way families pay for college is a good indicator of how much planning takes place before the first tuition bill arrives. The “How America Pays for College 2018” study from Sallie Mae and Ipsos, that examines how families pay for college, how much they spent and how they made their funding decisions, suggests that while families are feeling confident in their decision making, nearly 40 percent do not have a plan to pay for college. 

Last year, family income and savings covered 47 percent of all college expenses and the average amount spent on college in 2017-18 was $26,458, according to the study.

While income and savings cover the largest portion of college costs, scholarships and grants cover 28 percent of college costs, and students and parents use loans to account for 24 percent of college costs. Extended family and friends paid an additional 2 percent of college costs.

While no single resource is used by all families, the most prevalent college funding sources – scholarships, grants and parent income – are each used by about three in five families, with scholarships being the single most-used resource. In addition, 57 percent of families used scholarships last year, paying for almost a fifth of total college costs. Unfortunately, about a third of families don’t even apply for scholarship opportunities.

More than half of families, 53 percent, borrowed money to help pay for college last year and two-thirds of these families said they had always planned to borrow to pay for college. When it comes to planning to repay loans, however, 39 percent of families say they haven’t researched any repayment topics.

“It’s gratifying that families are so confident in the financial decisions they make regarding paying for college,” Quinlan said. “Still, there’s more work to do to equip families with the tools and information that will help them manage education expenses, whether it be applying for financial aid earlier in the process or taking steps to minimize student loan financing costs.”

When it comes to completing the Free Application for Federal Student Aid, (FAFSA), three-quarters of families report filing the form last year. However, the majority of them are not taking advantage of the earlier availability of the form: 69 percent of families are waiting until January or later to complete the FAFSA, which is now available on Oct. 1, and are potentially missing out on aid that’s awarded first-come, first-served.

The complete report for both studies and other resources are available at SallieMae.com. Experts say that with the right tools and knowledge, families can develop a smart strategy for paying for college.