How America Pays for College 2013
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Transcript of How America Pays for College 2013
Driving Uncertainty into Opportunity
How America Pays for College 2013
Conducted by Ipsos Public Affairs
Sallie Mae’s National Study of College Students and Parents
Sonja McMullenDirector, Business DevelopmentSallie Mae
Driving Uncertainty into Opportunity
Background
Study Objective • Determine how American families are paying for college
– Trend over time behaviors and attitudes related to the purchase and value of higher education
Methodology• Sixth annual survey and report
• Quantitative telephone interviews conducted April-May 2013– 800 undergraduates enrolled AY 2012-13, ages 18-24
– 802 parents of undergraduates
• Composite of how the ‘typical’ family pays for college is a mathematical representation created in 2008 and applied consistently each year. – The composite illustrates the proportion of funding by category that pays for all college costs across all families.
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Attitudes and Values
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Optimism Emerging
• Belief in the value of college is unwavering
• Parents continue to worry about paying for college, but to a lesser degree
• Parents are more optimistic than they have been
• Only 9% of families considered their student not attending college at all due to cost
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0%10%20%30%40%50%60%70%80%90%
100%
2008
2009
2010
2011
2012
2013
2008
2009
2010
2011
2012
2013
2008
2009
2010
2011
2012
2013
2008
*20
09*
2010
2011
2012
2013
Willing to StretchFinancially
Rather BorrowThan Not Go
An Investment inThe Future
Degree More Important Now
Strongly Agree Somewhat Agree *Not asked in 2008 or 2009
Agreement with Value of College, Year-Over-Year
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Agreement with Reasons for Attending College, Year-Over-Year
Needed for Job
Earn More Money
Expected in Family
AmericanDream
20092010
20112012
20130%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20092010
20112012
20130%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20092010
20112012
20130%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20092010
20112012
20130%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Strongly Agree Somewhat Agree
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Fifteen Percent Fewer Parents are Worried this Year
Home Value Will Decrease
Value of Savings Will Be Lower
Loan Rates Will Increase
Student Loan Money Will Be Less Available
Student Won't Find Summer Job
Schools Will Raise Tuition
Income Will Decrease Due to Job Loss*
Scholarships/Grants Less Available**
FundsWill Deplete Before College Completion±
Life Insurance Insufficient for College Should Parent Die±
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
20%
17%
29%
18%
10%
32%
21%
31%
22%
22%
18%
35%
23%
25%
33%
38%
31%
27%
49%
33%
34%
22%
22%
28%
28%
17%
44%
25%
31%
22%
21%
30%
31%
14%
36%
23%
34%
13%
13%
25%
21%
10%
28%
17%
23%
12%
14%
2013 2012 2011 2010 2009 2008
Funds Will Deplete Before College Completion
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High Levels of Confidence that Student will Achieve Expected Degree
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Cost-Consciousness
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Families Work at Containing College Costs• Spending has leveled off• Families continue to eliminate certain colleges
due to cost– 79% attend college in state
• 82% of families—the highest since the study began—filed the FAFSA
• 96% of families took at least one action to make college more affordable
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Average Amount Spent on College, By Income, Year-Over-Year
For the purposes of this study, low-income families have been defined as those with an annual household income of less than $35,000, middle-income are families with an annual income from $35,000 up to $100,000, and high-income families are those with an annual income of $100,000 or more.
Driving Uncertainty into Opportunity
Average Amount Spent on College, By School Type, Year-Over-Year
AY2007-2008 AY 2008-2009 AY2009-2010 AY 2010-2011 AY 2011-2012 AY 2012-2013 $-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
$17,200 $19,432
$24,097 $21,889 $20,902 $21,178
$30,930
$38,651
$46,208
$41,545
$34,532
$39,434
$16,640 $17,630
$21,747
$18,719 $20,518 $19,796
$6,510 $7,661 $9,989
$11,963 $10,053 $10,668
Total4-yr private4-yr public2-yr public
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Cumulative Elimination of Colleges Based on Cost, Year-Over-Year
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Completion of FAFSA by Grade Level, Year-Over-Year
Total Freshman Sophomore Junior Senior0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
74%65%
74%
82%78%76% 75% 76% 73% 75%72%
80%74% 71%
61%
80%
91%
77%83%
72%
81% 83% 78%
88%81%82% 86% 82% 80% 78%
2008 2009 2010 2011 2012 2013
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Affordable Actions
Military
Transfer to Less Expensive School*
Part Time
Changed Majors
Parent Work More
Early Loan Payments
Accelerate
Add Roommate**
Tax Credits/ Deduc.
Student Work More
Parent Reduced Spending
Living At Home
Student Reduced Spending
0% 10% 20% 30% 40% 50% 60% 70%
4%
13%
15%
19%
20%
22%
27%
35%
41%
47%
48%
57%
60%
**Among students not living at home*Among non-freshmen
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Differences in Affordable Actions Taken by School Type
Live at home Roommate Transfer Part time Accelerate Change major0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
41%
32%
7%10%
23%
14%
48%
34%
10% 12%
24%
16%
83%
47%
23% 25%
34%
26%
4-yr private 4-yr public 2-yr public
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Funding Sources and Share
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Trends in Funding
• Parent out-of-pocket contributions pay a smaller share– More families took advantage of dedicated college
plan savings
• Grants and scholarships are filling the void left by parents
• Borrowing share has stabilized
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How the Typical Family Pays for College, Funding Source Share
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How the Typical Family Pays for College, Year-Over-Year
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How the Typical Family Pays for College, by School Type
2-yr public 4-yr public 4-yr private $-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$3,572 $4,499
$14,440
$363 $1,345
$1,466
$1,754 $2,651
$2,408
$2,937
$6,326
$8,502
$469
$1,183
$5,203
$1,573
$3,792
$7,415 Student Borrowing
Parent Borrowing
Parent In-come & Sav-ings
Student In-come & Sav-ings
Relatives & Friends
Grants & Scholarships
$19,796
$39,434
2-yr public 4-yr public 4-yr private
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
33%23%
37%
3%
7%
4%
16%
13%
6%
28%
32% 22%
4%6%
13%
15%19% 19%
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Percentage of Families Using Each Source Type, Year-Over-Year
Parent P
ersonal
Contributions
Grants/
Scholar
ships
Studen
t Pers
onal Contri
butions
Studen
t Borro
wing
Parent B
orrowing
Relatives
/ Frie
nds0%
10%
20%
30%
40%
50%
60%
70%
80%
59%
51%
42%
29%
15% 17%
64%
55%
45%
36%
18% 16%
66% 67%
50%
34%
13%19%
58% 61%
50%
36%
13% 16%
60%65%
51%
32%
12%18%
2008-09 2009-10 2010-11 2011-12 2012-13
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Use of Grants and Scholarships, by School Type
2-yr public 4-yr public 4-yr private0%
10%
20%
30%
40%
50%
60%
70%
48%
40%
52%
26%
38%
64%
Grants Scholarships
Perc
ent u
sing
sour
ce
2-yr public 4-yr public 4-yr private $-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$3,766
$5,696
$11,786
$5,450 $5,903
$13,709
Grants Scholarships
Aver
age
amou
nt u
sed
amon
g st
uden
ts w
ith so
urce
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Student Use of Borrowed Funds, by Grade Level, Year-Over-Year
Freshman Sophomore Junior Senior 5th Yr+ Total
-10%
0%
10%
20%
30%
40%
50%
60%
25%
31%
38%
46%41%
34%31%
28%
48%
41%44%
36%33%
21%
31%
45%
60%
32%201120122013
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Proportion Using Federal and Private Student Loans
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Planning to Pay for College
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Planning for College Costs is a Challenge
• Most families don’t have a plan for paying for all years of college when they start
• Amount paid for college and future earnings are not aligned proportionately by major course of study
• Parent savings become scarcer as students advance through college
• Families aren’t prepared for the ‘unexpected’
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Had a Plan to Pay for All Years Prior to Enrolling
2010 2011 2012 20130%
10%
20%
30%
40%
50%
60%
70%
39%
45%
39% 43%
24%26%
30%33%34%
43%
47% 46%
62% 62%
57%
52%
Total Low Income Middle Income High Income
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Comparing Average Cost of College and Starting Salary by Major, Overlaid with Proportion of
College Costs Paid by Borrowing
Visual and Per-forming Arts
Education Health Social sciences Math/Science Liberal Arts Business Engineering$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$19,849 $17,701 $17,701
$28,776
$20,420 $23,029
$18,576
$25,639
$33,800
$40,668
$49,196
$36,988 $42,471 $43,100
$53,900
$62,655
Average Cost Average Starting Salary
30%
13%
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Parent Personal Contributions by Grade Level
Income College savings/529 Retirement savings Other savings/investments0%
10%
20%
30%
40%
50%
60%55%
21%
6%
11%
53%
19%
3%
10%
47%
15%
3%
9%
50%
11%
4%
13%
Freshman Sophomore Junior Senior
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Role of Savings
• 17% of families used parent savings from dedicated college savings plans/529s
• 5% used retirement savings• 11% used parent savings from
other types of investments• 27% of families used student
savings
Saving for Col-
lege50%
Not Sav-ing for College
50%
Parents of Children Under 18 Sav-ing for College
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Planning Resources Used
Scholarship Search Websites
High School Counselor
Financial Aid Eligibility Calculator
College Cost Calculator
Loan Payment Calculator
College Net Price Calculator
Savings Planner
No Resources Used
0% 10% 20% 30% 40% 50% 60% 70%
60%
56%
55%
23%
22%
14%
13%
11%
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Unexpected Expenses
• 2 in five families report unexpected expenses– Most prevalent: books, supplies and equipment
• More than half of families have no financial contingency plan
• Confidence in time to degree not aligned with national averages: 92% enrolled in BA program believe they will achieve it in 5 years or fewer (vs. just over 61%)
Driving Uncertainty into Opportunity
Driving Uncertainty into Opportunity
The information contained in this presentation is not comprehensive, is
subject to constant change, and therefore should serve only as general,
background information for further investigation and study related to
the subject matter and the specific factual circumstances being
considered or evaluated. Nothing in this presentation constitutes or is
designed to constitute legal advice.