Paying for College

Sallie Mae, the too-big-to-fail, government-backed lender, recently put out study on how Americans pay for their college educations.  Since the cost of an undergraduate education continues to increase, how students continue to pay for it is important to understand.  Here is a link to the short writeup, and here is a link to the full report.

How Americans Pay for College 2013

How Americans Pay for College 2013. Taken from the short article “How America Pays for College 2013: A national study by Sallie Mae and Ipsos” on the Sallie Mae, Inc. website. Used for educational purposes.

Above is a nice pie chart from the article breaking down the percentages of where the average college student’s funding originates.  I find fault with this chart in one area though:  Grants and scholarships do NOT pay for college.  Grants and scholarships are not a funding source.  In my work with my College Price Comparison Tool and as university professor, grants and scholarships are simply fancy words for the discount a college or university gives a student off of their advertised sticker tuition price for the first year.  This discount is primarily based on that student’s (and that student’s parent’s) ability to pay through savings, income, and borrowing.  The sticker tuition price has no more to do with how much people actually pay for college than the sticker price on a vehicle at a used car lot.  And claiming the amount one can talk a smarmy car dealer down as “funding” for a vehicle is simply wrong.  Therefore, a more accurate set of percentages can be found by not considering the dubious category of “grants and scholarships.”

With that in mind, here is a chart showing more accurate percentages of where the average college student’s funding originates:

Funding sources for the average American student's college education.

Funding sources for the average American student’s college education.

Looks a bit different, right?  The big thing I notice is that, in the average case, parents, friends, and relatives will put themselves on the hook for about 60% of the average student’s education.  But for the rest, the student is on their own.

As always, find the total price of a four-year college education for every college on your list, before even visiting or applying, by visiting Birdseye College Price Comparison.

Nate Bird

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