Every year, families with college-bound students stare down the same tricky calculation: How do we cobble together enough money to pay for college?
It’s a question that requires crunching numbers, navigating unfamiliar financial aid terms and, this year, managing the variables of high inflation and the possibility of a recession.
A bachelor’s degree can be one of the most expensive purchases Americans make, with the average four-year public university costing about $15,000 and private colleges averaging $28,600. Nearly 8 in 10 families say they’re willing to stretch themselves financially to pay those sums, according to an annual survey from Sallie Mae released last month. While families’ budgets vary, it’s practically a given that coming up with the cash to cover tuition, room and board, and textbooks will require drawing from a variety of sources.
On average, the largest portion of college costs (43%) is paid from the parents’ income and savings, according to the survey. That’s followed by scholarships and grants (26%), and then a combination of borrowing (18%), student income and savings (11%), and money from other family members (2%).
Of course, the details of each household’s strategy of balancing savings, earnings, debts and financial aid are different. Here’s an inside look at how three families are solving the paying-for-college equation this year.
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Scholarships, savings and state school
Who are they?
The Kofkes, of Hoschton, Georgia
What do they earn?
About $120,000
How are they paying for college this fall?
- Scholarships: $4,895
- Savings: about $6,600 per semester for room & board
- Student loans: $0
With two teachers for parents, it’s little surprise that Ava Kofke grew up hearing a lot about the importance of good grades. Working hard in school was necessary for the sake of learning, of course. But it was also the path to major savings on a college degree.
Ava, a freshman at the University of Georgia, has her tuition covered thanks to the state’s Zell Miller Scholarship, which rewards residents based on test scores and GPA. Between the scholarship and her parents’ savings, the plan is for her to earn her bachelor’s degree without taking on debt, says her dad, Danny Kofke.
“You may not think [about] it when they’re in first grade and you’re helping them with their homework, but that does pay dividends in the future,” he says.
The Kofkes have always been vigilant about paying down debt and saving. When Ava was born, they set a goal to pay off their mortgage by the time she went to college. The idea was that they’d free up money in their monthly budget for college bills.
That didn’t pan out exactly as planned, though they’re not far off. They still have a small, 10-year mortgage with $800 monthly payments. Otherwise, they’re debt-free, with $82,000 in savings accounts outside of their retirement accounts. That sum is where they’ll pull some of their college funds from, but it also includes their emergency savings, as well as some smaller buckets for fun expenses like vacations and a celebration for their 25th wedding anniversary in a couple years.
Paying off debt while building up their savings wasn’t always easy. For years, they often walked around the grocery store with a calculator in hand. The purse strings were particularly tight during the first nine years of Ava’s life, when they lived off Kofke’s roughly $42,000 teacher salary as his wife stayed home to take care of the girls. (Ella, their younger daughter, is 15.)
In fact, they didn’t cross the six-figure household earning threshold until a couple of years ago, when Kofke left teaching to work for financial mentoring company Mentoro.
When it came time to look at colleges, he told Ava she was free to apply where she wanted, but he and his wife were open about what they earned and how much they’d saved.
For a while, Ava was interested in attending the University of Florida, which would have meant paying an exorbitant out-of-state tuition rate. Ultimately, Kofke says, the freedom that comes with graduating debt-free won out.
“Look,” he told Ava. “At 22, you won’t have any bills at all, and you’ll have a college degree. You want to go sell cappuccinos in Hawaii? You’re free to do so.”
The Kofkes just paid the first semester’s bill — about $6,600, including $4,600 for an on-campus dorm. They’ll also help cover day-to-day expenses as needed, though Ava also has a job lined up to generate some spending money.
The money for the fall bill came out of their savings, and Kofke is already looking to replenish it. Starting this month, he’s aiming to put aside $1,000 a month for future semesters.
He and his wife will manage that the same way they always have — by living below their means.
Kofke plans to drive their 2013 Kia Optima, which they bought outright in 2019, until it dies, for example. He also goes through their budget at least once a year to cut unnecessary items. Gone are the $200-a-month gym memberships and unused Audible subscription.
“I look at being wealthy as having options,” he says. “And that’s what I’ve always tried to do: give us options.”
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‘Back-paying’ loans with current earnings
Who are they?
The Gonzalezes, of Appleton, Wisconsin
What do they earn?
About $100,000
How are they paying for college this fall?
- Earnings from summer jobs: $6,250
- Student loans: $2,750
- Parent savings: $0
When Angela Gonzalez’s son was looking at colleges, he had three boxes to check: a football team he could play on, a good education program and, perhaps most importantly, an affordable price.
With a household income just over six figures, the family didn’t qualify for any need-based aid, and while Gonzalez and her husband had been setting aside about $50 a month for college expenses since Isaiah was a baby, they didn’t have enough in savings to pay outright.
So they decided Isaiah would start at the University of Wisconsin Oshkosh at Fox Cities, a branch campus of the university with a lower tuition rate than the main campus. As a bonus: It was close enough to their home that Isaiah could live at home his first year, netting even more savings.
The downside, Gonzalez says, was that the experience was very similar to high school; Isaiah commuted to classes. But the price was a huge selling point
“He’s going into his sophomore year without one penny of debt,” she says.
Now a sophomore, Isaiah has transferred into the main Oshkosh campus, where he owes about $9,000 for the fall semester for room and board, tuition and books.
He’ll use $2,750, half of the federal student loans he was awarded for the academic year. The rest he’ll cover with his savings, which he built up by stashing away a large tax refund in the spring and keeping all of his earnings from working as a lifeguard over the summer. (He also donates plasma for spending money.)
The fall bills will drain Isaiah’s savings, so next semester, in addition to the remaining $2,750 he has in federal student loans, Gonzalez says they also plan to take out private student loans. They considered federal Parent PLUS loans, but she did not like that they’d only be in her name.
“I’m fine with co-signing, but this is his education. This is his loan,” she says.
Next spring, Gonzalez anticipates that Isaiah will receive another large tax refund. Because he is paying out of pocket for the fall semester, he’ll likely qualify for the American Opportunity Tax Credit, which is worth up to $2,500. Then he’ll work again over the summer and use that money to pay down the private loans from the spring.
“We’re going to back-pay,” she says. “We’re not going to just keep piling on the private loans.”
The Gonzalezes also have about $10,000 earmarked for Isaiah’s education in a brokerage account. They’re leaving it untouched for now so that it can continue to grow (and hopefully recoup what they lost with this year’s stock market declines). They plan to give him the money when he graduates to pay down his loans. Altogether, his mom hopes he’ll have less than $25,000 in debt when he starts his career.
Now that their strategy of regularly paying down student loans with summer earnings is mostly set, Gonzalez is turning her attention to her daughter, Ariana, who’s a senior in high school this year. Cost will again be a driving factor in deciding where she attends. Ariana will likely apply to a mix of private and public colleges in Wisconsin.
For families going through the college application process for the first time, Gonzalez says she learned a lot from other parents through online groups like Grown and Flown. She also signed up for a local FAFSA session to help guide her through the financial aid form.
It’s crucial, she says, to prepare as much as possible.
“If you wait until the last minute, you’re going to be scrambling, and then you’re going to make a hasty decision,” she adds.
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Working multiple jobs and using proceeds from selling a home
Who are they?
The Marshes, of Parker, Colorado
What do they earn?
About $60,000
How are they paying for college this fall?
- Grants and scholarships: $5,000
- Current income and savings: $4,700
- Student loans: $0
Julie Marsh enjoyed the process of helping her oldest daughter apply to college so much that she went back to school to get a certificate in college counseling. Now, Marsh works full time managing an e-commerce website, works occasionally as a substitute teacher and takes on clients through Visualize College Consulting.
“College is expensive,” she says laughing, by way of explaining her three jobs. “I have to pay for it somehow.” Her daughter Anastasia is now a junior at Colorado State University.
For Marsh, one of the most challenging parts of the college application process — both as a parent and as a professional who guides other families — is managing the uncertainty around financial aid. You can estimate what you’re likely to pay, but nothing is guaranteed until you get a financial aid letter after applying to a college. Plus, it’s hard to predict how a family’s finances may shift over a period of four years, which can change what financial aid you’re eligible for.
Marsh also had the added complexity of getting a divorce right as her daughter was applying to colleges.
“Everything was very much up in the air, because at that time, I didn’t know what I would be doing or what support I’d be getting from her father,” she says. (Marsh now splits college costs with her ex.)
For the first year, her daughter received enough grants and scholarships that Marsh only owed about $1,600 out of pocket on a total bill of $24,200 (which included tuition and room and board).
Last year, she paid about $2,200 for her share of tuition and fees, plus $500 a month to Anastasia to put toward rent for her off-campus apartment, utilities and groceries. She also covers her daughter’s phone bill and car insurance.
During Anastasia’s freshman and sophomore years, Marsh’s out-of-pocket payments were reduced more than they originally expected, thanks to some extra money tied to pandemic emergency grants. Anastasia received a total of $6,250 over three semesters.
But since her daughter started college, Marsh’s financial situation has improved, so she’s expecting to owe more for her final two years.
This fall, in particular, the $9,400 bill is higher than normal because Anastasia is studying abroad in Florence, Italy. (Marsh owes $4,700, per her divorce agreement.)
So far, Marsh has been able to pay her portion of Anastasia’s college costs out of her current earnings and some savings she set aside from selling her house after the divorce.
But next year, she’ll have two daughters in college, and she says they may have to take out federal student loans. (She also has a son who’s a freshman in high school.) She doesn’t plan to take on Parent PLUS loans, in part because of their higher interest rates — “they’re a racket,” she says.
It’s easy, Marsh says, for families to get swept up in the emotion of choosing where to go to college and forget about the long-term financial viability of a specific campus. Anastasia, for one, loved some of the private colleges on the East Coast. Ultimately, though, they decided it was smart for her to stay in-state.
“Unless you have gobs of money and can afford full pay, it’s important to keep college expenses in perspective,” Marsh says.
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FAQs
How do most families pay for college? ›
Most undergrads have help from parents to pay for college. Many also receive grants, borrow student loans, or work part time. Find out how the average student covers the cost.
What is the largest source of how the typical family pays for college? ›On average, the largest portion of college costs (43%) is paid from the parents' income and savings, according to the survey.
How many parents actually pay for college? ›According to the oft-cited Sallie Mae study “How America Pays for College,” 77% of American families used parent income and savings to pay for some of their kid's college expenses. Another 18% of parents use borrowed funds to pay for some portion of their child's higher education.
What are three different ways people can pay for college if their parents can t afford it? ›Grants, work-study, loans, and scholarships help make college or career school affordable. Financial aid can come from federal, state, school, and private sources to help you pay for college or career school.
How much do families save for college? ›Americans seek to save $55,342 on average for their child's college expenses. On average, parents expect to pay roughly 30% of their child's college expenses.
What are the 4 ways that most students pay for college? ›- Scholarships. Scholarships offer money for college that does not need to be paid back. ...
- Grants. Grants, like scholarships, do not need to be repaid. ...
- Work-Study. A work-study program provides part-time employment opportunities while you're in school. ...
- Your Own Income and Savings. ...
- Federal Student Loans. ...
- Private Student Loans.
Tuition and fees are the biggest expense of going to college. Living expenses and lifestyle are also college cost considerations. There are many things you can do to keep college costs to a minimum. Learn more about budgeting, college cost breakdowns, and smart options to pay for college.
What is the biggest source of financial aid for most college students? ›There are several state aid programs, including the California Promise Grant and the Middle Class Scholarship, but the primary source of aid is the Cal Grant program.
How many people can afford college? ›A college education is widely perceived as unaffordable for most Americans, with 77% of U.S. adults saying a college degree would be difficult for someone like them to afford. 82% of women said a college degree would be difficult to afford, compared with 73% of men.
Do colleges look at parents income? ›If you're a dependent student, the FAFSA will attempt to measure your family's financial strength to determine your expected family contribution. Therefore, your family's taxed and untaxed income, assets, and benefits (such as funds collected through unemployment or Social Security) should be entered into the FAFSA.
Do colleges expect parents to pay? ›
Are parents legally obligated to pay for college? State law rules that the obligation to financially support your kids ends when the child turns 18. That means parents have no legal obligation to pay for their child's college education — with one exception.
What to do if your parents are rich but won t pay for college? ›- Fill out the FAFSA.
- Apply for scholarships.
- Get a job.
- Look into tax credits for qualifying college expenses.
- Minimize your college costs.
- Research tuition assistance programs.
- Consider taking out federal student loans.
In general, grants are given based on financial-need, while scholarships are merit-based and awarded to students based on their academic achievements, extracurricular activities, field of study, and more. Loans are the more commonly-used type of financial assistance.
How do people afford college without loans? ›Apply for Grants
Unlike loans, grants don't need to be paid back and are therefore an excellent source of funding for college. According to The College Board, most students receive grants from the college that they plan to attend, with private schools giving out more grants on average than public schools.
Although it can be difficult to get a student loan without your parents' information or credit history to support your application, it is possible, at least for some people. You can get student loans without parents if you're classified as an independent student, or, in some cases, a dependent student.
What happens to 529 if child doesn't go to college? ›What happens to unused 529 funds? Your 529 account will never expire, even if your child ends up not using it. You can leave the funds in the account, allowing investments to grow tax-deferred, and use the funds down the road for a grandchild or another qualified family member.
How much does the average American family spend on college? ›Report Highlights. The average cost of college* in the United States is $35,551 per student per year, including books, supplies, and daily living expenses. The average cost of college has more than doubled in the 21st century, with an annual growth rate of 7.1%.
What are 3 ways to pay for college? ›- College Savings Plans. Families can save for future college costs using a 529 plan. ...
- Federal Financial Aid. ...
- Grants and Scholarships. ...
- Cash From Savings. ...
- Work During School. ...
- Private Loans. ...
- Choosing a Cheaper College. ...
- Studying Abroad.
- Apply for a Scholarship. Scholarships are typically merit-based. ...
- Apply for a College Grant. College grants are need-based, and like scholarships, grants don't have to be repaid. ...
- College Work Study. ...
- Federal Student Loans. ...
- Private Student Loans.
Types of Financial Aid: Loans, Grants, and Work-Study Programs.
What percent of college students pay for their own education? ›
Report: 67% of college students fully paying for their own education - University Business.
Why college costs too much? ›Are you ready to discover your college program? Why is college so expensive? There are a lot of reasons — growing demand, rising financial aid, lower state funding, the exploding cost of administrators, bloated student amenities packages.
Is college unaffordable for most people? ›A college education is widely perceived as unaffordable for most Americans, with 77% of U.S. adults saying a college degree would be difficult for someone like them to afford. 82% of women said a college degree would be difficult to afford, compared with 73% of men.
What is the family income limit for FAFSA? ›There are no income limits to apply. Many state and private colleges use the FAFSA to determine your financial aid eligibility, and you must submit a FAFSA every year to receive federal financial aid.
What is the most attractive financial aid? ›Grants and scholarships are the most desirable forms of financial aid because they come in the form of free money, often with no strings attached.
Why rich students get more financial aid than poor ones? ›Colleges want wealthier students
“Better prepared students, higher graduation rates and a better chance of attracting students who will later give back to the college — that's the reward system that's in place,” says Van Der Werf, adding that there's no similar reward system for helping low-income students.
Economic Impact
51.04% of students drop out because they cannot pay for college (What to Become, 2021). Moreover, 55% of students struggle to financially support their education, which results in 79% of them delaying their graduation (ThinkImpact, 2021).
Ultimately, there's no one right answer to how much of your child's college tuition you should pay. When your child fills out the free application for federal student aid, you'll be provided with an expected family contribution amount and any financial aid will be reduced based on the amount you're expected to pay.
How to afford to live while in college? ›- Rent with roommates. Okay—Captain Obvious here, we know. ...
- Explore alternative living situations. ...
- Make room in your budget. ...
- Look for work exchange opportunities. ...
- Take on a side gig. ...
- Use student loans to pay for rent.
Declare Yourself Independent for Financial Aid. A student age 24 or older by Dec. 31 of the award year is considered independent for federal financial aid purposes.
Will I get financial aid if my parents make over $200 K? ›
The good news is that the Department of Education doesn't have an official income cutoff to qualify for federal financial aid. So, even if you think your parents' income is too high, it's still worth applying (plus, it's free to apply).
At what age does FAFSA stop using parents income? ›You can only qualify as an independent student on the FAFSA if you are at least 24 years of age, married, on active duty in the U.S. Armed Forces, financially supporting dependent children, an orphan (both parents deceased), a ward of the court, or an emancipated minor.
What is a good expected family contribution? ›The overall average EFC is about $10,000, with an average of about $6,000 for students at community colleges and $14,000 at 4-year colleges. Slightly more than half of students have an EFC of $2,500 or less. Slightly more than 10% have an EFC greater than $25,000.
Can upper middle class families get financial aid? ›The short answer is: YES! It's a common misconception that upper-middle class families simply make too much to qualify for any sort of aid when paying for college. A lot of families think they're simply stuck paying the sticker price for school.
How much income is too much for financial aid? ›There is no set income limit for eligibility to qualify for financial aid through. You'll need to fill out the FAFSA every year to see what you qualify for at your college. It's important to make sure you fill out the FAFSA as quickly as possible once it opens on October 1st for the following school year.
How to get financial aid if parents make too much? ›- Rich parents or not—fill out the FAFSA. Should I apply for FAFSA if my parents are rich? ...
- Look for scholarships and grants. ...
- Use non-need-based federal aid. ...
- Consider declaring your independence. ...
- Consider private student loans.
Scholarships, grants, and work study are the three main financial aid types that don't need to be paid back. Loans are the main type of financial aid that needs to be paid back. Most students use a combination of both types of college financial aid to help cover their expenses.
How can I get student loans if my parents won't cosign? ›If your parents won't co-sign a private student loan, you can ask another relative or a trusted friend to sign the loan documents. Eligibility requirements vary depending on the lender and the loan you want to take out, but generally the co-signer will need income and a good credit score to qualify.
Is a scholarship considered a gift? ›Grants and scholarships are kinds of financial aid that you don't have to pay back. That's why they're called gift aid. All kinds of students get gift aid.
How do people afford college without working? ›Scholarships and grants are two ways that you can pay for college without working. Both options give you money for college that you don't have to pay back.
What are 3 ways you pay for college if you do not have any money? ›
- Apply for scholarships and grants. Scholarships and grants are one way to put money in your pocket if you don't have college savings. ...
- Request work-study. ...
- Take out student loans. ...
- Cut expenses.
Apply for Grants
Grants are issued by federal and state governments, colleges, and non-profit organizations. For example: Federal Pell Grant: With a Pell Grant, low-income undergraduate students can receive up to $6,895 for the 2022-2023 award year. Unlike loans, Pell Grants don't have to be repaid.
File the FAFSA as an independent student
If your parents or guardians refuse to pay for college, your best options may be to file the FAFSA as an independent. Independent filers are not required to include information about their parents' income or assets.
Do parents have to cosign on student loans? If you're borrowing federal student loans from the Department of Education, the answer is usually no. But if you need a private student loan, you'll need a cosigner if you can't meet requirements for income and credit on your own.
Can parents make student loan payments? ›If you're wondering, “Can parents pay off student loans for their children?” the answer is yes. There are no restrictions for parents interested in helping their child pay off student loans. Still, there are some important considerations parents should factor in before doing so—namely, the gift tax.
How does the average person pay for college? ›The average cost of attendance for a student living on campus at a public 4-year in-state institution is $25,707 per year or $102,828 over 4 years. Out-of-state students pay $44,014 per year or $176,056 over 4 years. Private, nonprofit university students pay $54,501 per year or $218,004 over 4 years.
How do parents afford to send kids to college? ›How do most parents pay for college? The best way for parents to pay for college is to open a 529 savings plan for their child and start saving into it every month. They can also get other people, such as the child's grandparents, to contribute to these accounts.
Do colleges go by parents income? ›If you're a dependent student, the FAFSA will attempt to measure your family's financial strength to determine your expected family contribution. Therefore, your family's taxed and untaxed income, assets, and benefits (such as funds collected through unemployment or Social Security) should be entered into the FAFSA.
How can I afford college without loans? ›- Apply for Grants. ...
- Scholarships. ...
- Ask for More Money. ...
- Get a Work-Study Job. ...
- Take Required Core Classes at the Local Community College. ...
- Live Off Campus. ...
- Take Advantage of Employer Reimbursement Programs. ...
- Ask Friends, Family, and Even Strangers.
Today, 55 percent of California undergraduates have their tuition and fees fully covered through federal, state and UC-funded financial aid programs, and 70 percent get grants and scholarships that cover some portion of the cost.
How many college students pay for college on their own? ›
Overall, 32 percent of students have no responsibility in paying for college, while 39 percent pay for some of it, and 29 percent are responsible for all of it.
Do most students pay for college? ›California's robust student aid program, coupled with federal and institutional grants, ensures that the majority of California public college students do not pay tuition.
Should parents help their kids pay for college? ›Requiring your child to pay their own college tuition could help them develop personal responsibility and understand the impact of their decision making. Allowing a student to cover their own college expenses can also help them understand personal finance and learn the value of a dollar.
Is it the parents responsibility to pay for their kids college? ›The federal government and the schools consider it primarily the family's responsibility to pay for school. They provide financial assistance only when the family is unable to pay. If a family just doesn't want to pay, that won't make a difference.
Do colleges look at parents savings? ›Colleges will expect parents to use up to 5.64 percent of their assets toward college. Protected Assets. The asset protection allowance was eliminated in the 2023-2024 FAFSA, which means all of a family's assets are taken into account in the federal aid calculation.
Do colleges look at your family income? ›In summary, the short answer is income can affect college admissions. Being a full pay student can benefit you based on the school and their available funds. That's not to say that you should go to a school that you and your parents can't afford and that's going to put you in incredible debt.
What if I get accepted to a college but can't afford it? ›Here's what to do if you can't afford college:
Fill out the FAFSA. Apply for grants and scholarships. Accept federal student loans. Speak with your financial aid office.
- Apply to generous schools. ...
- Don't commit early to a college. ...
- Look for scholarships before and during college. ...
- Improve your financial aid eligibility. ...
- Learn how to evaluate aid packages. ...
- Get college credit on the cheap. ...
- Get a student job during college.