Understanding the Cost of Higher Education: Key Insights from Sallie Mae’s “How America Pays for College 2024” Survey

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31 Oct, 2024

Understanding the Cost of Higher Education: Key Insights from Sallie Mae’s “How America Pays for College 2024” Survey

By Matt Konrad

Sallie Mae’s annual “How America Pays for College” survey offers valuable insights into the financial strategies and challenges faced by families as they navigate the cost of higher education. The 2024 edition of the survey gives scholarship providers, families and students an insight into current funding, revealing a landscape that continues to evolve in response to economic pressures and changing financial strategies.

Here’s what we’ve learned from this year’s survey—including the importance and the misconceptions surrounding scholarships.

College costs remain a top-of-mind concern.

For the 2023-2024 academic year, the average cost of attending a four-year public college is approximately $27,150 per year, while private institutions average $54,500. While this is only a 1% increase over 2022-23 averages, it’s clear that the cost of college attendance still represents the most significant barrier to earning a degree.

Family contributions cover the highest percentage of total costs, for those who can afford them.

Families continue to bear a substantial portion of college costs. According to the survey, parents are expected to contribute an average of $16,000 towards their child’s education this year. That total, which includes both parent savings and income and parent borrowing, represents nearly half of the average family’s total spending on college.

Financial aid remains a crucial component of the funding puzzle. The survey finds that 83% of families rely on some form of financial aid, including grants, scholarships, and student loans. However, the average amount of financial aid received has not kept pace with rising college costs, leading many families to seek additional resources to bridge the gap.

Scholarships can fill in those gaps—if students apply.

A full 80% of families who responded to the survey said they took advantage of scholarships and grants. Those awards averaged just over $8,000 and covered 27% of costs. But Sallie Mae reports that misconceptions are still preventing students from accessing this vital source of aid:

“More than half of families (52%) believe scholarships are only available for students with exceptional grades or abilities, and families who didn’t apply cited lack of awareness (50%), doubt in winning (32%), and effort required (21%).”

FAFSA issues and economic conditions have impacted budgeting and borrowing.

The troubled rollout of the 2024-25 “Better FAFSA” led to an overall decline in submissions—and an increase in stress and uncertainty.

Among families who completed the FAFSA in both 2023-24 and 2024-25, just 29% found the “improved” form easier to complete. More worryingly, 47% of families reported experiencing delays in getting a financial aid offer, which led to significant impacts: of those families, “44% reported experiencing stress waiting for financial aid decisions, 21% sought out additional financial aid options, 14% considered switching to a lower-cost school, and 10% transferred schools.”

Those shifts, along with concerns about inflation and budgeting, have led to changes in how families save and plan for college expenses. Many families are adjusting their budgets, reducing discretionary spending, and exploring more affordable college options to manage the financial strain.

What does it all mean for students and their families?

The data from the new How America Pays for College survey suggests that while the cost of higher education continues to rise, there are strategies and resources available to help manage these expenses. Families should leverage financial aid resources, consider cost-effective education options, and plan strategically to mitigate the financial impact.

In addition, the survey shows clearly that scholarships can do more to help a wider range of students, including those who don’t think they qualify. The truth is that there are scholarships out there for all kinds of learners with all kinds of skills pursuing all kinds of educational goals—and Scholarship America and our program sponsors are here to connect those students with financial help.