Families Report Spending More, But Also Missing Out on Opportunities to Make College More Affordable According to 'How America Pays for College 2025'
College Spending Increases 9% as FAFSA® Completion Rates Decline and Misconceptions About Scholarship Availability and Eligibility Persist
Families reported spending an average of $30,837 on college during the 2024–25 academic year—up 9% from $28,409 last year and a return to pre-pandemic spending levels, according to "How America Pays for College 2025," the annual study by Sallie Mae and Ipsos. Family income and savings covered nearly half of costs (48%), followed by scholarships and grants (27%), borrowing (23%), and contributions from family or friends (2%).
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Families See Value in College and Remain Focused on Cost
Nearly nine in 10 (89%) families said college is a worthwhile investment, and 82% are willing to stretch their finances to ensure the best opportunities for their students. Eight in 10 families (79%) reported eliminating a school based on cost, but nearly half (47%) of all families also reported paying less than the sticker price for college. Families most often cited proximity to home (40%), affordability (39%), and specific academic program (39%) as reasons for choosing a school. While 59% of families created a plan to pay for college before enrolling, just 38% considered starting salaries after graduation.
"While families continue to see college as a valuable long-term investment, they also remain cost-conscious," said Annaleise Lohr, vice president, Ipsos. "It's encouraging to see families are taking the time to plan for this significant investment but coupling that financial focus with expected post-college outcomes could lead to even more informed decisions."
Misconceptions Around FAFSA and Scholarships Could Be Costing Families
Roughly two-thirds of families (64%) found the new Free Application for Federal Student Aid (FAFSA) easier to complete, but overall completion rates dropped to 71% from 74% the year prior. In addition, just 21% of families knew the FAFSA is available beginning in October. That could mean families are missing out on financial aid that is limited or available on a first-come, first-served basis. In addition, 40% of families did not utilize scholarships to pay for college due to lack of awareness (34%) and the belief they wouldn't win (28%).
Access to Loans Leads Some Families to Reach for Higher-Priced Schools
Nearly half of families (48%) borrowed to help pay for college, consistent with prior years, and 72% of all families said they would rather borrow than miss out on attending. Roughly six in 10 families (59%) said the availability of federal student loans has driven up college costs, and 35% of those who borrowed said access to loans led them to consider more expensive schools. In addition, 42% of families with federal student loans expect their loans to be forgiven.
"Students and families navigating higher education today need greater transparency when it comes to the actual cost of college so they can make the most informed decisions about this significant investment," said Rick Castellano, vice president, Sallie Mae. "We also need to continue to promote FAFSA completion and reinforce the availability of scholarships, so families don't inadvertently leave free money on the table."
Free tools like Scholly Scholarships by Sallie and Scout College Search by Sallie help families plan smarter by finding thousands of scholarships and comparing schools based on majors, location, cost, and more—no registration required. In addition, the company offers responsible private student loans to cover any remaining financing gaps.
"How America Pays for College 2025" reports the results of Ipsos' online interviews of 1,000 undergraduate students and 1,000 parents of undergraduate students between April 8 and May 8, 2025.
Explore the full report and discover insights, trends, and free planning tools at www.salliemae.com/howamericapays.
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Sallie Mae (NASDAQ:SLM) believes education and life-long learning, in all forms, help people achieve great things. As the leader in private student lending, we provide financing and know-how to support access to college and offer products and resources to help customers make new goals and experiences, beyond college, happen. 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.
Category: Research
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Caron Jackson
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