A new national study finds that American families are spending more on college than ever before, averaging $30,837 in the 2024-25 academic year.
The 18th annual “How America Pays for College” study from Sallie Mae and Ipsos finds that families use a mix of savings, scholarships, grants, and loans to pay for higher education. The survey reveals that hurdles related to the Free Application for Federal Student Aid (FAFSA) and a reliance on borrowing were big challenges to college affordability. The study's findings come ahead of sweeping reforms in the federal financial aid landscape scheduled to take effect in July 2026.
“College is a significant investment, and families need a clear understanding of what it's going to cost,” says Rick Castellano, a Sallie Mae spokesperson. “That starts with better awareness of available financial aid options, simpler access to scholarship information, and easier-to-understand financial aid offers. When families have the right information at the right time, they can make more confident and informed decisions about how to pay for college.”
Here are some key takeaways from this year's survey.
Average college spending is higher than last year
In the 2024-25 school year, families spent an average of $30,837 on higher education costs — up 9% from $28,409 last year. However, the sticker price doesn't tell the whole story. Nearly half of families paid less than the advertised sticker price for college.
Income and savings were the primary source of funding
Nearly half of the average family's total college spending came from income and savings. Other sources included:
- Scholarships: 16%
- Grants: 11%
- Loans taken out by students: 12%
- Loans taken out by parents: 11%
- Help from family and friends: 2%
Many families relied on scholarships, but there are common misconceptions
Sixty percent of families used scholarships to help cover education costs, receiving an average award of $8,004 per student. However, among families who did not use scholarships, 70% said they did not apply. Families cited the following reasons for not applying for scholarships:
- Lack of awareness (34%)
- Assumption that the student wouldn't receive the scholarship (28%)
- Belief that scholarships are only for students with excellent grades or abilities (46%)
- Misconception that you can only apply before the first year of college (36%)
- Belief that the family earns too much money to receive a scholarship (32%)
Federal student loans remain the most popular borrowing option
More than a quarter of families used federal student loans to pay for college. Parent PLUS loans accounted for 11% of borrowing. Meanwhile, only 12% used private student loans. Among families that took out student loans, 54% said that only the student borrowed, 32% said only the parent borrowed, and 14% reported that both the student and parent borrowed.
The FAFSA submission rate declined
For the 2024-25 academic year, 71% of families submitted the FAFSA, down 3% from the previous year. In addition, only about half of those who filed the FAFSA received the amount of financial aid they expected; 21% received less than they expected, and just 6% received more than they expected.
However, Castellano stresses it's always worthwhile to complete the FAFSA.
“Completing the FAFSA should be a priority for any family planning for college, and the good news is most families found the new form easier to complete,” he says.
“But 30% of families are still bypassing the FAFSA altogether, and only 21% knew the FAFSA opens in October,” Castellano adds. “That could mean families who delay may miss out on aid that is limited or offered on a first-come, first-served basis. We need to keep spreading the word about key dates and how to complete the FAFSA.”
The Sallie Mae/Ipsos study sheds light on how borrowers are engaging with federal student loan programs at a time of major policy change. Starting in July 2026, President Donald Trump's “One, Big, Beautiful Bill Act,” now enacted as law, will bring sweeping changes to repayment plans, forgiveness programs, loan limits, Pell Grant eligibility, and other government education assistance. This makes it more important than ever for families to understand the kinds of federal aid available to them and plan ahead.
The new FAFSA improved the application experience overall, but it's not without problems
The Department of Education rolled out a new version of the FAFSA for the 2024-25 school year and made even more updates for the 2025-26 academic year. While 64% found the 2025-26 FAFSA easier to complete than previous versions, 20% found it more challenging, and 58% of filers needed help while completing the application, the survey found.
AI was used by a large percentage of college applicants
Almost a quarter of students used AI tools like ChatGPT and Gemini to help with college applications and decision-making. The two main tasks students used AI for included researching colleges and estimating the cost of college.
Families still believe college is worth it
Even as college costs rise and financial aid challenges persist, the survey shows families aren't giving up on higher education. Despite missed opportunities, from unclaimed scholarships to skipped FAFSA applications, the belief in college's long-term value remains strong.
“Families continue to see higher education as a worthwhile investment, and they are primarily using income and savings to cover college costs,” says Castellano. “At the same time, too many families are skipping the FAFSA or passing up scholarship opportunities that could keep more money in their pockets. Starting conversations early and focusing on planning with outcomes in mind can really help set students up for success after graduation.”
