27 Feb Majority of Families Have a Plan to Pay for College – or Do They?
When a student or family reaches out to the Financial Aid Office to schedule an appointment, or wants to talk with a staff member on how they can take care of the remaining balance due for an upcoming year, we are usually encouraged by their initiative and assume they have SOME SORT of plan. However, that encouraging feeling and assumption drops off drastically as the final days prior to the start of the term become filled with appointments and/or phone calls from students, from mothers, or from fathers, who ask the same questions others were asking months ago. But now you hear the desperation in their tone and the worry in their voices. Then in some miraculous way, it becomes someone else’s fault or problem to “solve” for them, and that SOMEONE is usually a FA staff member. I remember back to the beginning of my financial aid career thinking this only happened at the first institution I worked for, but to my surprise, it happens almost everywhere! We could call these people “procrastinators” or people that just do things last-minute, but in reality, they are most likely non-planners. Unfortunately, as frustrating as this scenario always is, it is not going to change…not any time soon, anyway!
In the most recent study (2016) of How America Pays for College, conducted by Sallie Mae, only 40% of families are “planners” with a strategy to pay for all four years of college. That is only 2 out of 5 families that have a plan in place. These planners are: significantly more confident they made the right financial decision about paying for college, able to spend 31% more on college, and contribute 2.5 times more in income and savings. The biggest gain for the planner’s children is that they borrow a third less than those of non-planners.
It is scary to think that 60% of families with college-bound students are non-planners. Hopefully with time, we will begin to see that percentage drop by promoting the great financial literacy programs available on college campuses, as well as in-person outreach to high school counselors, presentations to high school families, and the useful (and free for everyone) college toolbox website content we are working on at Sallie Mae. In the long run, we may not be able to inform every student or family. But those who are just a little more informed, I am very confident to say, will NOT be knocking on financial aid’s door as time begins to wind-down on an owed bursar bill. And maybe, just maybe, we can turn the planners into the majority.
For more information on the How America Pays for College and How America Saves for College studies, visit:
https://www.salliemae.com/research/how-america-pays-for-college/
https://www.salliemae.com/research/how-america-saves-for-college/
Shawn Murphy
Director, Business Development
Sallie Mae
CAFAA Service Organization Representative
