How Do Most People Pay for College?

Most undergrads have help from parents to pay for college. Many also receive grants, borrow student loans, or work part time. Find out how the average student covers the cost.
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Data Summary

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    According to recent data from the Department of Education (ED), about 8 in 10 bachelor's degree students (82%) have had help from their parents to pay for college.[1]
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    Almost one-third of parents (32%) contributed more than $10,000 a year to their child's college education.[2]
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    In 2019-2020, just over half of first-time, full-time undergraduates (52%) received college grant money from the federal government.[3]
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    Almost half (49%) received a grant from their college.Note Reference [3]
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    41% borrowed federal student loans.Note Reference [3]
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    About one-third (35%) received a state or local grant.Note Reference [3]
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    In 2022, the average student put about $500 of their savings toward their college education.[4]
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    40% of full-time students work.[5]

It's no secret that college is expensive. Recently, increasing college costs have outpaced inflation and the median household income. Yet, people with degrees may qualify for higher-paying jobs and generally make more money than those without.[6]

So, how do people afford college? The answer is different for everyone. But most people rely on a combination of sources, including scholarships, student loans, and help from their parents.

Keep reading to find out how the average college student pays for college and how often they take on debt or qualify for free financial aid.

How Do People Pay for College?

In 2022, Sallie Mae and Ipsos surveyed roughly 1,900 undergraduate college students and their parents about how they paid for college. Students used a variety of means — splitting the bill among loans, scholarships, parents' money, gifts from relatives and friends, and their own earnings.

At an average of $10,932, parental contributions covered the lion's share of a year of college expenses. Scholarships and grants took up the next largest share at $6,682, followed by loans ($4,340), student income and savings ($2,811), and gifts from relatives and friends ($548).

The sections below dig deeper into different ways people pay for college. We'll also use data from the National Center of Education Statistics (NCES) to fill in gaps in the Sallie Mae and Ipsos survey results.

Help From Parents

According to a 2015-2016 NCES survey of undergraduate college students, 78% of students had help from their parents to pay for college expenses.Note Reference [1]

That included:

  • 68% of certificate program students
  • About 72% of associate degree students
  • Roughly 82% of bachelor's degree students

Most parents front less than $10,000 a year for their child's college education.Note Reference [2]

  • 18% contributed zero dollars to their child's education.
  • Half (50%) contributed some money but less than $10,000.
  • 21% contributed $10,000-$24,999.
  • 7% contributed $25,000-$49,999.
  • 4% spent $50,000 or more for a year of their kid's college.

In the 2022 Sallie Mae and Ipsos survey:Note Reference [4]

  • 75% of families surveyed reported using parental income and savings to pay for college.
  • 63% said they used a parent's current income to pay for college.
  • One-third (33%) relied on funds saved in a college savings account, like a 529 plan, to pay for school.
  • 18% of parents withdrew from a retirement account, like a 401K, to pay for their child's college.
  • 37% used some other parental savings or investments.

Some parents may take out loans to help their kids pay for college. Learn more about parent loans later on in this report.

Scholarships and Grants

Students can receive scholarships and grants from federal, state, and local governments or from their schools. In 2019-2020:Note Reference [3]

  • Nearly 52% of full-time, first-time undergraduate students received federal grant funding.
  • About 35% received a state or local grant.
  • Roughly 49% received a grant from their school.

Grants given by colleges tend to be larger than public grants. In 2019-2020:Note Reference [3]

  • The average federal grant amount awarded was about $4,600.
  • The average state or local grant was roughly $3,860.
  • The average institutional grant was about $11,720.

The average grant amount also depends on the type of school you're attending. On average, students at four-year private nonprofit schools receive the most scholarship and grant funding to pay for college. Students at two-year private for-profit schools receive the least.

Did You Know…

Scholarships aren't just for athletes and academics.

Public grants are generally need-based, meaning that you qualify if you have a financial need. Learn more about how income levels affect the average grant amount in our financial aid report.

And make sure to take advantage of free money for college! Fill out the Free Application for Federal Student Aid (FAFSA) the year before you plan to attend college. This step helps schools know if you qualify for need-based grants.

Grants for Military Families

If you or a family member is an active service member or veteran of the military, you could qualify for certain aid for military families.

  • Each military branch offers tuition assistance for active service members completing education programs.
  • The Department of Veteran Affairs offers grants to veterans and their families.
  • The Post-9/11 GI Bill® covers some college tuition and fees for veterans. It covers all tuition and fees for in-state students at public schools and up to $26,381.37 per year at private and international schools.[8]

Student Loans

Student loans have become an increasingly popular way to pay for college over the past few decades. There are different types of student loans: federal loans borrowed by students, loans borrowed by parents, and private loans.

Federal Student Loans

In the 2019-2020 school year, about 41% of first-time, full-time undergraduate students received federal student loans.Note Reference [3]

Federal student loan borrowing was most common among students at private for-profit schools.Note Reference [3]

  • 34% of public school students borrowed federal student loans.
  • 56% of students at private nonprofit schools borrowed.
  • 73% of students at private for-profit schools borrowed.

The average federal loan amount in 2019-2020 was about $7,600.Note Reference [3] But these amounts vary by school type.

Students at two-year schools typically receive smaller average federal loans. Remember that the numbers in the chart below apply to just one year of school.

Private and Parent Loans

Private student loans and federal Parent PLUS loans are less common than federal student loans. Even so, millions of students have used these to pay for college.

  • Almost 9% of bachelor's students used private loans to help pay for college in 2015-16.[9]
  • Their average private loan amount was about $9,800.[10]
  • In 2017-2018, nearly 13% of graduates with bachelor's degrees used Parent PLUS loans to help pay for college.[11]
  • By the time they completed their degrees, their parents had taken out an average of $34,930 in Parent PLUS loans.Note Reference [11]

Did You Know…

A 2021 report by The Institute for College Access and Success found that over half of the students who take out private student loans haven't taken full advantage of the federal loans available to them.[12]

Federal student loans may have lower interest rates than private ones. They also offer more flexibility in repayment terms and options for loan forgiveness, such as Public Service Loan Forgiveness and Income-Driven Repayment.

Complete the FAFSA to determine what federal student loans you qualify for before committing to a private loan.

Student Savings or Getting a Job

In the Sallie Mae/Ipsos survey, the average student paid $508 against their college costs from their personal savings.Note Reference [4] That doesn't even cover the average cost for a year of textbooks and supplies.[13]

Some students work while in college to help pay for their education or other living expenses. In 2020:Note Reference [5]

  • 40% of full-time students were employed.
  • One-quarter (25%) of full-time students worked at least 20 hours a week.
  • 74% of part-time students were employed.
  • Two-thirds (66%) of part-time students worked at least 20 hours a week.
  • 40% of part-time students worked at least 35 hours a week.

Work Study

The Federal Work-Study Program (FWS) helps place students with financial aid in jobs to earn some money while attending college. You'll find out if you qualify by completing the FAFSA.

According to the most recent data from ED:[14]

  • Over 3,000 schools participated in FWS in 2017-2018.
  • About 613,000 students received FWS earnings.
  • On average, students earned about $1,650 for the school year.