How america pays for college 2012

Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved.

HOW AMERICA PAYS FOR COLLEGE 2012Sallie Mae’s National Study of College Students and Parents Conducted by Ipsos

Presenterr Lisa Mitchell- Sallie Mae

ISFAA WINTER CONFERENCE

DATE: DECEMBER 13, 2012


2

Study Objective ► Determine how American families are paying for college

– Trend over time behaviors and attitudes related to the purchase and value of higher education

Process► Fifth annual survey and report► Quantitative telephone research conducted April-May 2012

– 801 undergraduates enrolled AY 2011-12, ages 18-24– 800 parents of undergraduates

► Composite of how the ‘typical’ family pays for college is a mathematical representation created in 2008 and applied consistently each year

Background

RESEARCH


3

College Spending DeclinesIn Academic Year 2011-12

RESEARCH


4

Total average spending, year-over-year, by income

RESEARCH

AY 2007-2008 AY 2008-2009 AY 2009-2010 AY 2010-2011 AY 2011-2012 $-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$17,200

$19,435

$24,097

$21,889 $20,902

$15,130

$16,955 $17,404

$19,888 $19,159

$16,910 $17,383

$22,628 $21,347

$20,065

$21,040

$23,817

$31,245

$25,760 $25,617

Total families Low-income families Middle-income families High-income families


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► Total average spending declined by 5% compared with academic year 2010-11– Spending represents the sum of the itemized

sources that families used to pay for college. • It is not the cost of attendance defined by the

college.

► If college costs didn’t decrease, how did spend decrease?– Choices designed to control spending were

put into play

Decline in spending

RESEARCH


6

More families eliminated colleges during the college selection process

RESEARCH

Before Researching Before Applying After Admission After Financial Aid0%

10%

20%

30%

40%

50%

60%

70%

80%

43%

49% 53%

58%

37%

43%

48%

56%

42%

48%

55%

63%

37%

45%

53%

64%

43%

51%

61%

69%

Cumulative Elimination of Colleges Based on Cost

2008 2009 2010 2011 2012


7

► 97% of families took at least one cost-saving measure including:– Student lived at home– Student added

roommates– Students reduced

personal spending– Families taking income

tax credits or deductions

Cost-saving measures

RESEARCH

2010 2011 20120%

10%

20%

30%

40%

50%

60% 57%

45%

50%49%

47%

53%

24%

37%

47%

Undergraduates Living at Home

Low income Mid income High income


8

Resources Used to Pay for College

RESEARCH


9

Percent of total costs paid from each source, AY 2011-12

RESEARCH


10

► In AY 2011-12– Parents contributed less from their income

and savings, compared to prior three years– Fewer families utilized scholarships than last

year– Students are taking on a bigger share through

using their current income and savings, and increasing borrowing, compared to the prior three years

Sources of funding are changing compared to prior year

RESEARCH


11

Average amounts and share paid from each category

RESEARCH

2012 2011 2010 2009 $-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$6,077 $7,124 $5,692 $4,859

$764 $956

$1,682

$1,166

$2,555 $2,392

$2,314

$1,944

$6,024

$6,664 $8,752

$6,997

$1,832

$1,573

$2,261

$1,749

$3,719 $3,180

$3,396

$2,721

Grants & Scholarships Relatives & Friends Student Income & Savings

Parent Income & Savings Parent Borrowing Student Borrowing

$21,889

$24,097

$19,435$20,902

2012 2011 2010 20090%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

29%33%

23% 25%

4%4%

7% 6%

12%11%

9% 10%

28%30%

37% 36%

9%7% 10% 9%

18% 15% 14% 14%




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How the typical family pays for college, by school type

RESEARCH

2-yr public 4-yr public 4-yr private0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

24% 23%

38%

8%3%

3%

24%

12%

9%

25%

35%

24%

4%

8% 10%

15%19% 17%



2-yr public 4-yr public 4-yr private $-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$2,444 $4,667

$13,182

$820

$673

$921

$2,417

$2,491

$2,962

$2,479

$7,165

$8,167

$391

$1,701

$3,394

$1,502

$3,818

$5,905



$20,515

$10,053

$34,531


13

Families rely on scholarships and grants more than other resources

RESEARCH

Parent Personal Con-tributions

Grants/ Scholarships Student Personal Contributions

Student Borrowing Parent Borrowing Relatives/ Friends0%

10%

20%

30%

40%

50%

60%

70%

80%

59%

51%

42%

29%

15%17%

64%

55%

45%

36%

18%16%

66% 67%

50%

34%

13%

19%

58%61%

50%

35%

13%16%

Percent of Families Using Each Type of Funding Source, Year-over-YearYears represented far left 2008-09 to far right 2011-12


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Use of grants and scholarships, by school type

RESEARCH

4-Yea

r Sta

te C

olleg

e/Univ

ersit

y

4-Yea

r Priv

ate

Colleg

e/Univ

ersit

y

2-Yea

r Pub

lic/C

omm

unity

Coll

ege

0%

10%

20%

30%

40%

50%

60%

70%

41%

59%

40%

35%

55%

16%

Grants Scholarships

Per

cent

Stu

dent

s U

sing

4-Yea

r Sta

te C

olle

ge/U

nive

rsity

4-Yea

r Priv

ate

Colle

ge/U

nive

rsity

2-Yea

r Pub

lic/C

omm

unity

Col

lege

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$6,491

$10,853

$4,678

$5,785

$12,274

$2,109

Grants Scholarships

Ave

rage

Am

ount

Use

d


15

Student loan usage in academic year 2011-12

RESEARCH


16

Student use of federal student loans has increased over time

RESEARCH


17

More families completed the FAFSA

RESEARCH

Total Freshman Sophomore Junior Senior0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

74%

65%

74%

82%78%

76% 75% 76%73%

75%72%

80%

74%71%

61%

80%

91%

77%

83%

72%

81%83%

78%

88%

81%

2008 2009 2010 2011 2012


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Values

RESEARCH


19

Students’ attitude toward college

RESEARCH

Willing to Stretch Fi-nancially

Rather Borrow Than Not Go

Investment in Future Degree More Important Now*

Attend for Experience Despite Future Earnings*

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

59%

67%

84%

50%53%

78%

56%

61%

84%

74%

32%

60% 61%

90%

74%

30%

61% 62%

89%

73%

29%

2008 2009 2010 2011 2012


20

Parents’ attitude toward college

RESEARCH

Willing to Stretch Fi-nancially

Rather Borrow Than Not Go

Investment in Future Degree More Important Now*

Attend for Experience Despite Future Earnings*

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

51%

56%

80%

62%59%

83%

64%

59%

81%

68%

33%

51% 51%

83%

70%

24%

53%

47%

77%

68%

19%

2008 2009 2010 2011 2012


21

Students’ reasons for attending college

RESEARCH

Needed for Desired Occupation Earn More Money Expected in Family American Dream0%

10%

20%

30%

40%

50%

60%

70%

80%

72% 73%

38%

32%

68%

63%

47% 46%

64%61%

49%

45%

73%75%

45%

38%

71%73%

43%40%

2008 2009 2010 2011 2012


22

Parents’ reasons for attending college

RESEARCH

Needed for Desired Occupation Earn More Money Expected in Family American Dream0%

10%

20%

30%

40%

50%

60%

70%

80%

71%

64%

40%37%

60%

64%

46%

60%61%58%

56% 56%

68%66%

44%

50%

70%

65%

36%

46%

2008 2009 2010 2011 2012


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Planning and Responsibility

RESEARCH

“Start saving early....you will never have enough money anyway but you can lessen the pain of payment…”

-Parent, college-bound student

“The child should be saving themselves and feel a sense of responsibility of paying for college with parent help…”

-Parent, college-bound student

“They can pay for themselves…” -Parent, college-bound student


25

Who should be responsible for paying?

RESEARCH

Parents should be entirely responsible for financing their children's college education

Children should be entirely responsible for financing their college education

Parents and children should both be responsible for financing the child's college education

13%

15%

75%

13%

14%

73%

4%

10%

86%

6%

16%

78%

Student 2012 Student 2011 Parent 2012 Parent 2011


26

College selection

RESEARCH


27

Paying for college decision-maker

RESEARCH


28

Decision making by income

RESEARCH

Stude

nt o

nly

Stude

nt m

ostly

with

som

e pa

rent

inpu

t

Stude

nt a

nd p

aren

t equ

ally

Paren

t mos

tly w

ith s

ome

stud

ent i

nput

Paren

t only

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

College Decision-Maker

Total Low Income

Middle Income High Income

Stude

nt o

nly

Stude

nt m

ostly

with

som

e pa

rent

inpu

t

Stude

nt a

nd p

aren

t equ

ally

Paren

t mos

tly w

ith s

ome

stud

ent i

nput

Paren

t only

0%

10%

20%

30%

40%

50%

60%

70%

How-to-Pay Decision Maker

Total Low Income

Middle Income High Income


29

Fewer families have a plan for paying for all years of college

RESEARCH

2010 2011 20120%

10%

20%

30%

40%

50%

60%

70%

39%

45%

39%

24%26%

30%

34%43%

47%

62% 62%

57%

Family Had a Plan for Paying for All Years of College

Total Low-income Mid-income High-income


30

Who will repay loans borrowed for college?

RESEARCH

Don't know on parent loan

Don't know on student loan

Parent(s) only on parent loan

Student(s) only on student loan

Student jointly responsible on parent loan

Parent jointly responsible on student loan

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

5%

2%

20%

41%

75%

56%

7%

1%

4%

74%

87%

25%

Student Parent


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SallieMae.com/HowAmericaPays

RESEARCH

The information contained in this presentation is not

comprehensive, is subject to constant change, and

therefore should serve only as general, background

information for further investigation and study related to

the subject matter and the specific factual circumstances

being considered or evaluated. Nothing in this

presentation constitutes or is designed to constitute legal

advice.

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How america pays for college 2012