How America Pays for College – Reflections From The Mother Of A High School Freshman (Me)

Yesterday, July 18th, Sallie Mae came out with their annual study on “How America Pays for College.” This is a study I consult every single year, to determine what the trends are in paying for college and what the approximate “real costs” are that I can expect when my three boys head off to school.

I had my oldest son back when I was relatively young – only a few months after I turned 23. That means he’s going to be starting college a few months after I turn 41. He’s entering high school this fall as a freshman (ahhhhh! wasn’t I just in high school!?!? Oh wait, no….). That means I can hear the clock ticking loudly now. I only have four more years to go. I’m so glad I have my college compact so I know exactly what my college funding goals are.


College Saving Study – Why It’s Useful To Me

Why do I consult this study every year? As folks know, college costs change drastically every year. I have my college compact with my kids, which outlines what I’m willing to pay for – and what I’m not – in specific detail (it’s one of my most popular articles!).  One of the keys of a good college compact is making sure that I adjust it annually as the environment and costs around college change-and as my kids get older.

My kids right now are 13, 10, and 2. That means college is imminent for my oldest (4 years to go), still pretty far away for my middle (8 years), and pretty far for my youngest (16 years left!). College costs are likely to be very different between the time my oldest and youngest head off to school, so I need studies like this to keep up to date on what the landscape looks like.

So what does it look like this year? Check out this cool infographic courtesy of Sallie Mae and Ipsos.


This summary is interesting, but personally I like to dive into the full 88 page report, in order to find the details matching my demographic as much as possible.

Why? Because averages are interesting, but they can also be skewed by people at the upper and lower levels of the range. Median can be a more useful measurement than mean (or average), because then it eliminates a lot of the outliers. It’s like that saying that if you put Bill Gates and 89 other people in a room together, their average net worth is a billion dollars. The high-end outlier is messing up the numbers for everyone else.

Interesting Tidbits From The Details

So what specifically did I find interesting from purusing the details of the How America Pays for College study? Here’s just a few things:

  • For families earning over $100k per year, they’re paying 74% of costs out of income and savings
  • Although those pricey colleges in the Northeast are messing up the numbers, most people in my demographic are sending their kids to public schools
  • In the Northeast, the cost to attend is higher – and the borrowing is much higher too. 62% of families borrowed, as compared to only 34% in the West
  • People in the middle income level ($35k-$100k) are most likely to borrow for college. My guess is that they feel squeezed-they don’t get the subsidies of the lowest income level, and they can’t save as much as the higher income level
  • Many more people in the Northeast send their kids out of state for school (32%) compared to the South (15%) and West (18%). Going out of state for school would drive up the cost of college tremendously
  • The most popular major? Business, followed by Health professions, then the sciences. Although the highest percentage response, at 28%, was “Other”.
  • In general, people with kids in college always expected their kids to go to college
  • There’s a large percentage of people – 37% – who expect to get a Masters degree. 18% expect to get a Doctoral degree. In reality, only 8.9% of people have a Masters and 3% a PHd.
  • Lots of people are reducing the overall cost of college by living at home (50%), having a roommate (47%), and reducing spending (47% for parents; 68% for students). In State tuition was the most popular way to save, though.

Why are costs so much higher in the Northeast, and why are private colleges so much more popular? I’m contemplating that question because, as a resident of Connecticut, this is where I live and work. I do know that in my state, there’s not really a great in-state public school system with lots of choices. We have UCONN, or the University of Connecticut (where I got my MBA), which is our one public university. Then we have three public colleges (CCSU, ECSU, SCSU) which cost almost as much as UCONN but aren’t considered as high quality. The rest of the schools are community colleges. So if you don’t get into UCONN, and you still want to go to a university in the state, the only option is private colleges. And we have plenty of them here – Wesleyan, Yale, Trinity, Quinnipiac, University of Hartford, University of New Haven, and a ton more. Since we’re in such a small state, with limited choices, I can see why some parents choose private college.

Will This Study Change My College Compact?

In a nutshell, no, it won’t. Right now I’m still targeting being able to fund four years at my state’s flagship university for each kid. If they go to a school that costs more, they’ll need to fund the difference – and if they go to one that costs less, I have some options for the way they can use the extra. I know that colleges won’t give me aid if I don’t feel like saving, so I’m going to continue saving and investing for my kids school. I know that even though I read a ton of advice saying I can’t get loans for retirement but I can get them for college, that’s only partly true. I know that total cost will be different for my oldest than for my youngest, since there will be a huge gap between them. That’s why my goals are expressed in percentage of a specific target school I’m going to pay for, rather than a dollar amount-because I can adjust as time goes on.

What did you find interesting about this study? What do you have planned for college? Let me know in the comments.

P.S., this post isn’t sponsored by Sallie Mae or anything like that – I just find the study interesting and wanted to share with all of you

Check out more about saving for college in my guide to college gifting, all about my college compact with my kids, or why sometimes the advice that you can get loans for college but not retirement is wrong.

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19 thoughts on “How America Pays for College – Reflections From The Mother Of A High School Freshman (Me)”

  1. With our oldest being five we’re more then a decade from college. I seriously believe online will be taking over by then and costs will drop. If I’m wrong though and even in your position now I’m thinking we’ll send our child to a community college part time while in high school. The more credits via the cheap route to transfer in the better. My wife went this way and it worked. I on the other hand went the ap test route. That turned out to be useless as my university did not recognize my ap tests.

    1. I’ve been thinking about both of those for my oldest-although I don’t think it’s an option until he’s a few years into high school. I went to community college for two years before transferring to a four year school myself. Since I had to pay for college on my own, and couldn’t get loans because my parents refused to complete the FAFSA, I needed to figure out a low cost way to go to school. Thanks for the reminder to double check when he’ll become eligible for those kinds of classes!

      1. It can be very helpful for students to have AP credit or comm college coursework (taken in HS). You can only get credit for AP courses if you take the exam, if you have a good score on the exam, if the institution you are attending will accept it, and if it falls into the requirements of the degree you are working towards. The AP exam scores tend to be low: Before taking college courses, I would recommend making sure that they will transfer over to the institution. The advisers at the comm college should know which classes will transfer to the state schools (for various majors). I see a lot of students taking coursework that doesn’t transfer over. Usually when AP units don’t transfer over it’s because the score wasn’t high enough or it simply isn’t a part of the degree requirements or there’s some duplication in the subject matter.

  2. My daughter went to a state university in NY and we paid 2/3 and she paid 1/3 of the cost. She also finished in 3 years – which saved all of us money. She’s now getting her MS degree paid for (and she’s even making money doing it), so I have money set aside that would have helped pay for the 4th year of undergrad that will be hers some day (car, down payment on house, etc.)
    My son leaves in 5 weeks to go to an out of state public university (U of Vermont). He’s paying the same percentage and he just checked and he’ll technically be starting as a 2nd semester sophomore. He plans on being done in 3 years and going on for an advanced degree (or certificate) to become an actuary (although that could change!) No loans yet for anyone – and we hope it stays that way. I love that your college compact post is one of your most popular. All families need to have those discussions and kids need to have real clarity on what parents will help with.

    1. An actuary-that’s cool! I’ve spent my entire career working in IT for insurance companies, so I can vouch for the importance of a good actuary in business. I had thought about that path myself, but landed in IT and decided to make that my home instead. Best of luck to your son!

  3. High Income Parents

    It didn’t change anything about my plan either. I’m still planning on helping with a four year state school and evaluating opportunities for other private schools for my kids.
    My oldest will be in college in three years and he is on track but we also do some things with dual credit classes to hopefully get him ahead and curb some costs.

    Tom @ HIP

    1. I’m hoping to get my oldest into some of those as well! He goes to a magnet arts school, so the big focus is on the arts, but they do have AP courses and we have a community college nearby where he can get a head start.

  4. Emily Jividen

    Thanks for pointing me toward the study. It looks like a great resource for planning.

    I feel pretty lucky that NC has good public options. As a Wake Forest alum, it pains me to really hope my daughter goes to one of them, even if it’s UNC.

    With the help of her grandparents, though, we’ve put away enough already to cover a couple of years at one of the publics, and we still have 10 years to save. If she wants to go to Duke or Wake, though, Little Bit’s going to have to come up with the difference.

    1. That’s great! Right now for my oldest I can cover four years of public tuition, or about two and a half years of all the costs of public college (room and board, books and supplies, etc.). My ultimate goal is to have all the costs saved before he starts college, so I can use those savings to pay while saving for the younger two kids. A big part of that plan is having the mortgage gone before my oldest starts college. That would free up plenty of cash flow for aggressive college funding.

  5. Super interesting way of doing this. I like the funding the difference idea because the choice is ultimately up to them but you could give a gentle push.

    With the age differences in between each child, are you thinking of having the older one report back on what’s they younger kids should do/look out for? When I was in high school, my Asian friends were big on “my guinea pig older brother tested out the waters at UCLA and said not to go there etc.” Which I thought was so unfair because I was an only child!!! 😂

    1. That’s a great idea-i hadn’t thought about that! There’s several years between each kid, so they should have enough experience to give good advice to their younger brother(s). I’ll make sure to do that when the time comes!

  6. DadsDollarsDebts

    College is a depressing thought. Well paying for it in 16 years is at least. My goal is to have a 100K in a 529 by the time my son is 10. Then let it ride for the next 8 years and hopefully grow enough to fund school. Makes me a bit stressed to think about.

    1. Sounds like a good plan-you can probably double it once (or nearly so) in eight years with that strategy. My goal is to have about $100k in my oldest two sons accounts by the time they leave for college, because that’s just about enough to pay for four years of UCONN if I have to pay the full cost myself.

  7. I wonder how many in the upper end of the $35k to $100k range are really squeezed, so they don’t save. Really if you’re making more than $60,000 or especially $80,000 per year, you have money to save. It is just a matter of actually doing it instead of putting money towards other things. Just saving $2,000 per year in an educational IRA we’ve been able to save up nearly half of the expected cost from my son, who is 16. With some money from current income, we should be able to swing his college without loans. When we started saving, my income was $59k per year.

  8. I want to love the 529, I really do. My state even offers a State Tax deduction.

    I worry about having too many buckets. It would be quite easy to just put all available money into one or another bucket: college, retirement (401k and IRA), health savings acct, emergency fund, etc etc etc, and the investment options are almost always the same (ETFs, stocks, bonds).

    There are a couple downsides to this. First, money assigned to a bucket is not always liquid and available when legitimate opportunities arise (like a particular big-ticket investment). Second, I really have no idea how much I want to have in the 529. As many have mentioned, it could range from almost nothing (my kid becomes an online self starter entrepreneur) to a huge amount (my kid is destined for Harvard Law).

    Anyway, thanks for sharing this. I’m like you, I think I’ll read the whole 88 page tome. –R

    1. The “not knowing” how much to save for college was exactly why I created the college compact concept that I linked in this article. Instead of getting frustrated at the unknowns I decided what I am and am not willing to pay for, which gives me a very specific target amount that I need. Part of that compact includes what it can and can’t be used for. And those savings are partly in 529’s but also in other types of accounts for increased flexibility. I’d recommend giving it a read, it may help!

  9. I’m a professor at a small private university. We have a tuition remission policy (90%) so my plan is for my kids (ages 7 and 10) to attend my university. We also have a tuition exchange policy where the children of staff/faculty can attend a participating university at reduced price. I’ve already saved enough (in 529s) for my kid’s tuition and books at my university. The catch is that I need to stay employed at my current institution or at an institution with a similar policy. I plan to increase the amount in the 529s over time as the cost of tuition increases or if the policy changes (e.g. covered percentage decreases). So, the costs are something I keep an eye on.

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