Sallie Mae is a NASDAQ-traded corporation that conducts student lending services and provides resources for families planning to pay for college. It has changed dramatically since it was set up in the early 1970’s as a Federal entity that made and serviced Federal student loans. Sallie Mae became a private corporation in 2014 when it split its loan servicing arm, Navient, from its other businesses.
“How America Pays for College”
Among Sallie Mae’s resources for planning is an annual study called “How America Pays for College” (the Study). Sallie Mae partners with Ipsos, an independent company that offers survey design, data collection, and analytics in addition to marketing research expertise.
Sallie Mae/Ipsos surveys undergraduates students and their parents about their attitudes toward college education and the means by which they pay for it. The Study explores college funding sources, including family income and savings, scholarships, grants, and loans. It also tracks perceptions and attitudes related to the value of a college education.
The Study was published by Sallie Mae in August 2025. It reflects the results of surveys of students and families conducted in April 2025. Data in the 2025 Study is from AY 2024-25.
Key Findings of the 2025 Study
College spending rose from AY 2023-24 to AY 2024-25, with families covering nearly half of the increase out-of-pocket. In AY 2024–25, undergraduate families reported spending an average of $30,837 on college, which was a 9% increase from $28,409 in 2023-24. Spending in AY 2024-25 was finally back to the pre-pandemic level of AY 2019–20, when families spent an average of $30,017 on college.
Families relied primarily on income and savings to cover college costs, accounting for 48% of total college spending. Nearly 75% of families relied on parent income and savings to pay for college in AY 2024-25, contributing an average of $15,754. Families across all income levels contributed out-of-pocket, although the average amounts increase with household income. For instance, 87% of parents from families earning $150,000 or more contributed an average of $21,922. In comparison, 64% of households earning less than $150,000 contributed an average of $12,214.
Scholarships and grants, considered free funds in that they don’t need to be repaid, were the next largest source, covering 27% of total funds. Borrowed funds were 23% of spending, split between student and parent borrowing at 12% and 11%, respectively. The remaining 2% of college costs were covered by relatives or friends. The broad category of parent income and savings includes:
- Parent current income, used by 58% of families,
- Other parent savings or investments, used by 34% of families,
- College savings funds, used by 32% of families, and
- Retirement savings withdrawals, used by 17% of families
Scholarships
Scholarships played a key role in paying for college, but misconceptions about them abound. In AY 2024–25, 60% of families relied on scholarships to help pay for college, receiving an average of $8,004. In the survey, 75% these families agreed that scholarships made it possible for the student to attend college.
The most common source of scholarships continues to be the student’s college. 63% of scholarship recipients received them from their college, with an average award of $9,791. Scholarship usage and average awards varied significantly by type of school:
- 67% of families with students at 4-year private schools used scholarships, averaging $13,857,
- 63% of families with students at 4-year public schools used scholarships, averaging $6,064, and
- 49% of families with students at 2-year public colleges used scholarships, averaging $3,068.
Nearly 33% of recipients received scholarships from their state or local governments, averaging $3,479. Over 32% won scholarships from a community organization or a business, averaging $2,520.
Scholarships remain a valuable source of funds for college. However, 40% of undergraduate families did not use scholarships in AY 2024–25. Among them, 70% did not even apply for scholarships. Leading reasons cited by families include lack of awareness of opportunities (34%) and doubt that the student can win a competition (28%).
Beyond these reasons, persistent misconceptions discourage many families from applying. Over 46% believe scholarships are only for students with exceptional grades, scores, and abilities; 36% think they can only apply before their first year of college; and 32% assume the student can’t win because the family earns too much money.
Grants
Grants, especially Federal Pell Grants, played a vital role in paying for college for low-income families. In AY 2024-25, 57% of undergraduate families used grants, receiving an average of $6,180.
Grant usage varied significantly by income level. Families earning less than $50,000 were 69% more likely to report using grants than higher income families, whereas only 35% of families earning between $50,000 and $150,000 used grants.
Loans
Families value ready access to Federal loans, but are increasingly aware of the role loans play in rising college costs. 76% of respondents support the availability of Federal loans to help them pay for their child’s education. 67% support limits on the amount of Federal loans can be used by a family. 59% believe that the easy availability of Federal loans has driven up college costs.
Below are several additional findings of the Study for 2024-25:
- The top factors influencing college choice are, 1.) affordability (40%), 2.) proximity to home (39%), and 3.) availability of desired academic program (39%),
- 82% of families are willing to stretch financially to pay for college,
- 79% of families eliminated at least one school based on cost, and
- 74% say that college is worth the cost.
The FAFSA and Financial Aid
Students and families used the Free Application for Federal Student Aid (FAFSA) to obtain $112 billion in Federal financial aid for college in AY 2024-25. Students received Federal aid in the form of grants, loans, tax credits, and work-study. Most states and colleges rely on information from the FAFSA to determine need-based aid and merit scholarships.
The FAFSA submission rate decreased after the problem-ridden roll-out of the new, “simplified” FAFSA in January 2024. 71% of families submitted the FAFSA in AY 2024–25, a decline from the previous year’s 74% submission rate.
As reported in How America Pays for College 2024, the obstacle in the financial aid process last year was FAFSA delays. 47% of college families experiencing a lag in receiving financial aid offers for AY 2024–25. This brought about difficult decisions for many families. While delays were less common in AY 2025-26, 22% of families still reported problems.
In 2024-25, just over half of FAFSA filers (54%) reported receiving the amount of financial aid they expected, while 21% received less than expected, 6% received more, and 19% had no expectations.
64% of families who completed both the previous and the new version of the FAFSA had a better experience with the new FAFSA, 16% noticed no difference, and 20% found the new FAFSA more difficult. Despite the goal of simplifying the FAFSA, 58% of filers indicated they needed assistance in completing the application.
Among undergraduate families, 29% did not submit the FAFSA for AY 2024-25. As in previous years, the most commonly cited reason was the belief that the family’s income was too high to qualify for aid, as reported by 34% of non-submitters. The perception that family income was too high to qualify was shared by:
- 57% of non-submitting households earning $150,000 or more,
- 32% of non-submitting households earning $50,000 to $100,000, and
- 20% of non-submitting households earning less than $50,000.
Other reasons for not submitting the FAFSA included:
- 15% – Lacking necessary information,
- 15% – Missing the deadline,
- 13% – Not having time to complete the form,
- 11% – Being unaware of the FAFSA, and
- 11% – Problems with the application.
Net Cost of Attendance
Currently enrolled families report that nearly half (47%) paid less than the full published Cost of Attendance (COA) for AY 2024–25, while 42% said they paid the full amount, and 11% were unsure. 54% of families with students attending 4-year private schools said they paid less than the COA, compared to 45% at 4-year public schools, and 44% of families at 2-year public colleges. Families earning $150,000 or more were more likely than those who earn less to report paying the full price (50%).
Conclusions of the Study
The majority of families continue to view college education as a worthwhile, long-term investment and are willing to stretch financially to secure the best opportunities for their students. This year’s How America Pays for College findings underscore the importance of early planning and starting the college education journey with goals that take into account the full range of options in affordability and careers.
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