Richer Families Get More College Scholarships for Their Kids
NEW YORK (TheStreet) -- Sallie Mae has rolled out its annual report on How Americans Pay For College, and it shows a surprising trend in how student financial aid is doled out: The wealthier the family, the more scholarship money the student gets from colleges and universities.
Looking at families who used scholarships to pay for college, the Sallie Mae study compared a family's annual income levels by how much average scholarship money they got this year. This is how it broke down:
More Than $100,000: $10,213
Between $35,000 and $100,000: $8,384
Less than $35,000: $7,237
Government grants were a different story, as that middle tier of families got the most money on average: $7,037, compared with $6,170 for families earning less than $35,000 and $5,757 for families that earn more than $100,000 annually.
Are the scholarship figures surprising? Yes. Fair? Not particularly, as the Sallie Mae data show that grants and scholarships are the most common way families pay for college.
The study breaks it down like this:
How the typical family pays for college
Grants and scholarships: 30%
Parent income and savings: 27%
Student borrowing: 18%
Student income and savings: 11%
Parent borrowing: 9%
Relatives and friends: 5%
The good news for all families is that, despite reports of soaring tuitions and fee hikes nationwide, the average annual amount spent on college has trended down over the past three years, according to Sallie Mae data -- from $24,097 in 2010 to $21,178 this year.
What's troubling is the eye-opening drop in financial contributions from parents to their children's higher education. According to Sallie Mae, parental contributions to college costs are down 35% since 2010, to $5,727 from $8,752 -- or, percentage-wise, down 37% to 27% of all college spending in the past three years.
The Great Recession, apparently, was a real game changer for parents. "Affordability" is the watchword for college-bound families.
"In this post-recession environment, families overwhelmingly believe in the dream of college, yet they are more realistic when it comes to how they pay for it," says Jack Remondi, president and chief executive of Sallie Mae. "The study found that the majority of families do not have a financial plan to pay for college. We recognize that having a plan, however, increases the likelihood of success. That is the ultimate goal, for students, families, schools and for us."