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.
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 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