NEWARK, Del.--(BUSINESS WIRE)--Ninety-eight percent of families agree that college is a worthwhile investment, but the way they covered the bill last year changed, according to “How America Pays for College 2014,” a new national study from Sallie Mae and Ipsos. The annual study, now in its seventh year, found that while the average amount spent on college was consistent with prior years, families spent more out of pocket (42 percent of college costs) while overall borrowing (22 percent of college costs) was at the lowest level in five years. Low-income students, in particular, reduced their reliance on borrowed funds when paying for college last year.
Families used grants and scholarships to cover 31 percent of college costs, and contributions from relatives and friends paid another 4 percent.
“American families truly believe in the value of higher education” says Cliff Young, President of Ipsos Public Affairs. “One size, though, does not fit all. Indeed, families are very creative and diverse in their solutions to paying for college. Our persona analysis really shows the wide range of family-specific choices.”
Virtually all families adopted at least one measure to make college more affordable. This year, families reported the highest enrollment in two-year public colleges since the survey began (34 percent, up from 30 percent last year). In addition, students opted to attend in-state institutions (69 percent), cut back on entertainment (66 percent), or live closer to home (61 percent) or at home (54 percent), among other cost-saving measures, to help reduce the cost of college.
Thirty percent of students were the first in their family to attend college. These students were more likely to apply cost-saving measures (76 percent chose a school close to home and 72 percent lived at home), spent less on college overall and received less financial support from their parents.
“How America Pays for College 2014” found that fewer than half of respondents – 38 percent – created a plan for paying for all years of college before the student enrolled. In addition, only 40 percent indicated their family had a contingency plan to pay for college in case of unexpected events. Approximately one-third of families reported encountering unexpected expenses last year.
“Families are committed to college and are making deliberate decisions to reduce how much they pay for it,” said Raymond Quinlan, chairman and chief executive officer, Sallie Mae. “The majority of families approach paying for college as a shared responsibility, and with reliance on so many sources of funds, we see that it is. Planning for this critical investment brings greater peace of mind and more choice. That’s why Sallie Mae is committed to providing families with free tools and information to help them plan for college.”
This year’s study also sought to understand more deeply the motivations, values and attitudes of families paying for college. “How America Pays for College 2014” identified four main personas with distinct orientations towards higher education: “American Dreamers,” “Determineds,” “Reluctant Borrowers” and “Procrastinators.”
Of the four personas, American Dreamers represented 28 percent of respondents, many of whom were the first in their family to attend college. American Dreamers were driven by the aspirational values associated with a college education and relied heavily on financial aid to make it a reality. Determineds represented another 28 percent of respondents and were most prepared to meet college costs (80 percent had created a plan to pay for college, 85 percent had a contingency plan to pay). Reluctant Borrowers represented 18 percent of respondents and were disinclined to borrow or stretch financially, yet were more likely (73 percent) than others (38 percent) to have a plan to pay for college. Procrastinators represented 26 percent of respondents and were the least prepared financially and the most likely to have considered not attending college due to the cost.
The 2014 nationally representative study, “How America Pays for College,” is the seventh in the series. Ipsos interviewed 1,601 individuals: 801 parents of 18-24 undergraduate college students, and 801 undergraduates by telephone in the spring of 2014. The margin of error on percentages using the whole sample is +/-2.5 percentage points with a confidence level of 95 percent. The full study and a related infographic are available at www.SallieMae.com/HowAmericaPays.
For information and tools to build a plan to pay for college, visit www.SallieMae.com/planforcollege.
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 American families. With products and services that include Upromise rewards, scholarship search and planning tools, private education loans, insurance, and online banking, Sallie Mae offers solutions that help families save, plan, and pay for college. Learn more at SallieMae.com. Commonly known as Sallie Mae, SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.
Ipsos is an independent market research company controlled and managed by research professionals. Founded in France in 1975, Ipsos has grown into a worldwide research group with a strong presence in all key markets. In October 2011, Ipsos completed the acquisition of Synovate. The combination forms the world’s third largest market research company. Ipsos delivers insightful expertise across five research specializations: advertising, customer loyalty, marketing, media, and public affairs research. Ipsos researchers assess market potential and interpret market trends. They develop and build brands. They help clients build long-term relationships with their customers. They test advertising and study audience responses to various media and they measure public opinion around the globe. Ipsos has been listed on the Paris Stock Exchange since 1999 and generated global revenues of €1,363 billion (1.897 billion USD) in 2011. Visit www.ipsos-na.com to learn more.