Survey Says: Financial Considerations Affecting College Choices
August 19, 2009
The primary reasons for having the student borrow instead of the parent included student should take responsibility (19%), student prefers to not rely on parent (12%), parent couldn’t qualify for loans (7%), parent shouldn’t have to pay (6%), lower interest rate than parent loans (6%), parent unwilling to help pay (3%), and not enough available funds (3%). There were a few significant differences among students and parents. 30% of parents felt that students should take responsibility compared with 9% of students. 18% of students said that they preferred to not rely on their parents, compared with 6% of parents. Lower income families were much less likely to say that the student should take responsibility, with 9% of families earning less than $35,000 agreeing with this statement compared with 22% of those earning $35,000 to $150,000.
College costs influenced selection and enrollment at colleges. 37% of families eliminated colleges based on cost at the beginning of the process of applying to colleges, increasing to 56% of families by the end of the process (after receipt of the financial aid package). Cost was more likely to have an impact for low income families, with 45% of families earning less than $35,000 eliminating colleges based on cost, compared with 38% of families earning $35,000 to $100,000, 32% of families earning $100,000 to $150,000 and and 20% of families earning more than $150,000.
On average 25% of college costs came from grants and scholarships (16% from scholarships and 9% from grants), 23% from borrowing, and 46% from family income and savings (with roughly 2/3 income and 1/3 savings). About a third of family savings came from college savings plans.
About a quarter (24%) of families did not submit the Free Application for Federal Student Aid (FAFSA). Application rates decreased with increasing income. 86% of families earning less than $35,000 submitted the FAFSA, compared with 79% of those earning $35,000 to $100,000, 74% of those earning $100,000 to $150,000 and 50% of those earning more than $150,000. The primary reasons for not completing the FAFSA included Family Doesn’t Need Financial Aid (39%), Didn’t Think Family Would Qualify (30%) and Wasn’t Aware of the FAFSA (18%). There were some significant differences among studnets and parents, with 20% of parents being unaware of the FAFSA compared with 15% of students and 47% of parents saying that the family doesn’t need financial aid compared with 29% of students.
The most popular cost-cutting measures considered by families included living at home (51%), attending a less expensive college (48%), attending a community college (37%), enrolling part-time (15%) and delaying attendance (9%).
Despite the cost, a majority of students and parents feel that a college education is necessary and worthwhile. 71% strongly agreed that college leads to a better quality of life, 64% that it leads to the ability to earn more money, and 64% that a college degree is required for the student’s desired occupation.
The How America Pays for College survey findings are based on telephone interviews of 800 undergraduate students age 18-24 and 804 parents of undergraduate students age 18-24 who had been enrolled in academic year 2008-09. The survey was conducted from March 20, 2009 through April 17, 2009. The survey results are statistically significant with a confidence interval of +/- 3% (5% for student-only or parent-only questions) at the 95% confidence level.