Personal finance

With college costs soaring, here’s how American families are paying for school

Few purchases deliver a dose of sticker shock like the cost of college. Yet many families rarely pay the full amount.

Tuition and fees for a four-year private college averaged $35,830 in 2018-19; at four-year, in-state public colleges, it was $10,230, according to the College Board. And that’s not even adding in room and board or other expenses.

As of last year, the amount families actually paid was $26,226, on average, according to Sallie Mae’s 12th annual “How America Pays for College” report. That figure is relatively unchanged from a year earlier.

Your net price is a college’s tuition and fees minus grants, scholarships and education tax benefits, according to the College Board.

In addition to income and savings, more than 8 in 10 families tapped scholarships and grants — money that does not have to be repaid — to help cover the cost. More than half of families borrow, or take out loans, the education lender found.

“Very few families — only 10% — paid for the entire cost of college out of pocket, everyone else is either borrowing or using a combination of resources,” said Marie O’Malley, the senior director of consumer research at Sallie Mae. “Most people are cobbling together resources.” (See Sallie Mae’s chart below.)

“The net tuition, what you are actually going to pay, is lower than the sticker price but it’s still awfully high,” said Michael Horn, co-author of the upcoming book, “Choosing College.” “From all angles it’s hammering people.”

As the cost of a degree continues to rise, price has become a bigger consideration among students and parents. Now, financial concerns govern decision-making for nearly 8 in 10 families, Sallie Mae found, outweighing even academics when choosing a school.

More from Personal Finance:
Applying for college can be expensive. Here’s how to save
Four accounts that will help you ease the pain of paying for college
No bachelor’s degree? No problem.

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