Understanding how families are financing college is vital for effective financial aid counseling. A new national study by Sallie Mae® and Ipsos® Public Affairs, How America Pays for College 2012, explores the decisions that parents and students are making about choosing and paying for college — as well as how they put those decisions into action.
Decisions based on price begin early on in the admissions process. The percentage of families eliminating college choices due to cost rose to its highest level (69%) in the five years that the study has been undertaken. But families are still managing to tap resources to pay. Following are some of the highlights from the study:
Students are paying a larger share
The majority of parents and students (83%) surveyed strongly agreed that higher education is an investment in the future. But given today’s economic realities, students are footing a larger percentage of the college bill than previously.
In the study, the way that families paid for college changed in three ways:
Parents spent 32% less (compared to 2010) from their income and savings, while students contributed more from their own income — and borrowed more as well.
Fewer families used scholarships: 35% in 2012 versus 45% in 2011. (This may be due to colleges awarding less than they had previously.)
Grant usage remained high for the second year in a row, likely resulting from a substantial investment by the federal government to make Pell Grants available to more families.
As a percentage of total college costs, grants and scholarships covered 29% of college spending in 2012 — higher than in 2009 and 2010, but lower than last year.
 Sources of student payment for college, AY 2011/12
 Source  Percentage of total cost of college
 Grants and scholarships  29%
 Student borrowing  18%
 Student income and savings  12%

Sources of parent payment for college, AY 2011/12
 Source  Percentage of total cost of college
Parent income and savings  28%
Parent borrowing  9%
The remaining 4% came from relatives and friends.

The cost-conscious reality of affording college
While being more resourceful in paying for college, parents and students are also trying to cut costs wherever possible. Nine out of ten families surveyed took at least two actions to make college more affordable. The most common were: having the student live at home (51%) or get a roommate (55%), reducing student spending (66%), reducing parent spending (50%), having the student increase their work hours (50%), and taking an income tax credit or deduction (45%).
The need for an informed financial aid officer
Faced with financial realities, families are becoming more cost conscious and are seeking more value from their college choices. One of the more striking findings of How America Pays 2012 is that advance financial planning for college is low — just 39% of families had a plan for paying for all years of college prior to enrollment.
Now, more than ever, students and their families will need well‐informed help, guidance, and reassurance to make the best decisions for financing their higher education.
For the complete How America Pays for College 2012 study and an infographic of major findings, visit
Sallie Mae (NASDAQ: SLM) is the nation’s No. 1 financial services company specializing in education. Whether college is a long way off or just around the corner, Sallie Mae turns education dreams into reality for its 25 million customers. With products and services that include college savings programs, scholarship search tools, education loans, insurance, and online banking, Sallie Mae offers solutions that help families save, plan, and pay for college. Sallie Mae also provides financial services to hundreds of college campuses as well as to federal and state governments. Learn more at Commonly known as Sallie Mae, SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America. © 2012 Sallie Mae, Inc. Sallie Mae is a registered service mark of Sallie Mae, Inc. All rights reserved. SLM Corporation and its subsidiaries, including Sallie Mae, Inc. and Upromise, Inc., are not sponsored by or agencies of the United States of America. MKT5951

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