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How America Pays for College 2013

Sallie Mae’s National Study of College Students and Parents. How America Pays for College 2013. Conducted by Ipsos Public Affairs. Sonja McMullen Director, Business Development Sallie Mae. Background. Study Objective Determine how American families are paying for college

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How America Pays for College 2013

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  1. Sallie Mae’s National Study of College Students and Parents How America Pays for College 2013 Conducted by Ipsos Public Affairs Sonja McMullen Director, Business Development Sallie Mae

  2. 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.

  3. Attitudes and Values

  4. 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

  5. Agreement with Value of College, Year-Over-Year Willing to Stretch Financially Rather Borrow Than Not Go An Investment in The Future Degree More Important Now *Not asked in 2008 or 2009 Strongly Agree Somewhat Agree

  6. Agreement with Reasons for Attending College, Year-Over-Year Expected in Family Needed for Job Earn More Money American Dream Strongly Agree Somewhat Agree

  7. Fifteen Percent Fewer Parents are Worried this Year Funds Will Deplete Before College Completion

  8. High Levels of Confidence that Student will Achieve Expected Degree

  9. Cost-Consciousness

  10. 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

  11. 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.

  12. Average Amount Spent on College, By School Type, Year-Over-Year

  13. Cumulative Elimination of Colleges Based on Cost, Year-Over-Year

  14. Completion of FAFSA by Grade Level, Year-Over-Year

  15. Affordable Actions **Among students not living at home *Among non-freshmen

  16. Differences in Affordable Actions Taken by School Type

  17. Funding Sources and Share

  18. 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

  19. How the Typical Family Pays for College, Funding Source Share

  20. How the Typical Family Pays for College, Year-Over-Year

  21. How the Typical Family Pays for College, by School Type

  22. Percentage of Families Using Each Source Type, Year-Over-Year

  23. Use of Grants and Scholarships, by School Type

  24. Student Use of Borrowed Funds, by Grade Level, Year-Over-Year

  25. Proportion Using Federal and Private Student Loans

  26. Planning to Pay for College

  27. 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’

  28. Had a Plan to Pay for All Years Prior to Enrolling

  29. Comparing Average Cost of College and Starting Salary by Major, Overlaid with Proportion of College Costs Paid by Borrowing 30% 13%

  30. Parent Personal Contributions by Grade Level

  31. 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

  32. Planning Resources Used

  33. 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%)

  34. 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.

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