The Surprising Way Americans Pay for College
Source: Sallie Mae, How America Pays for College.
The big surprise
But if you're anything like me, the biggest surprise is the wide diversity of funding students and families rely on to obtain a degree. Shown a little differently, you can see the variety of sources -- whether out of pocket money, borrowing resources, or receiving grants and scholarships -- trusted to help pay for college:
So often when we hear of college and the rising costs, we think our economy is preparing to be crippled as a result. After all, BusinessWeek ran its article in January that asked: Student Loans, the Next Big Threat to the U.S. Economy?
But as the chart shows above, borrowing represents just a fraction of how Americans actually pay for college. And this is to say nothing of things like College Board revealing the rise in the published tuition and fees is far greater than the net tuition increases , which factors in those growing grants and scholarships:
Source: College Board.
Of course there are some colleges -- particularly those for-profit ones -- with questionable practices. Yet by and large, we have also seen how beneficial a college diploma is.A recent study by the Pew Research Center titled "The Rising Cost of Not Going to College" found someone with a high school degree in the 1960s could expect to earn 80% of what a someone with college degree made ($31,300 verus $38,800). But for those in the Millenials generation, that gap has widened to 60%. As a high school graduate is only expected to make $28,000, whereas a college graduate on average earns $45,500.
All of this is to say, although tuition may be rising slightly, the surprise is, Americans aren't being forced to take on drastically higher levels of debt to pay for it.
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