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The Dark Side of College in 1 Chart The Dark Side of College in 1 Chart

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The Dark Side of College in 1 Chart

Student borrowing accounts for 18 percent of how the average family pays for college.

(Sallie Mae)

A new report out Tuesday from Sallie Mae and Ipsos shows how Americans pay for college. And the breakdown of sources is startling:

 

(Sallie Mae)

Grants and scholarships pay for more of college than any other individual source, according to Sallie Mae. Nearly two thirds—65 percent—of families used grants and scholarships in 2013, up from 51 percent in 2009. It may feel obvious that "parent income and savings" isn't carrying most of the cost weight, but the contrast is still stark. 

 

Student borrowing, though, may be the most alarming component of Sallie Mae's findings. Fewer students actually borrowed to pay for college in 2013—32 percent, versus 36 percent in 2012—but those who did borrow took out larger loans, for an average of $8,815 through federal loans as opposed to $7,874 in 2012. Only 29 percent of students borrowed to pay for college costs in 2009, with an average federal loan of $5,327. Five years ago, student borrowing only made up 14 percent of college funding. The study also found that college juniors and seniors are more likely to borrow money than freshmen and sophomores.

The broader picture on student borrowing debt is even bleaker. Total student-loan debt, at nearly $1 trillion, has surpassed total credit-card debt. According to a study from Fidelity, the average 2013 graduate left college with $35,200 in college related debt, including about $26,000 on average in federal loans. And while deliquency rates for other debts have fallen in recent years, the rates have risen for student loans.

Not all college costs are equal, though. College costs paid across different income levels have converged some in recent years:

 

(Sallie Mae)

In 2010, the spending gap between high-income and middle-income families was 28 percent. In the most recent academic year, high-income families are only paying 7 percent more than the average middle-income family.

That convergence isn't purely good news: it means that middle-income families are paying more to catch up. In 2012-2013, middle-income families paid 10 percent more than they did in 2011-2012, bringing the spending amount close to its 2010 peak. According to Sallie Mae, this increase was due to the greater use of grants of scholarships among middle-income families, which rose $859. Student borrowing among middle-income families grew by an average of $380.

The report also took a look at just what Americans are paying for. The most expensive major on average? Social sciences, which on average cost $28,776 for 2012-2013. Engineering, environmental science, and mathematics came in second with a $25,639 price tag. But there is a huge gulf in starting salaries for the two tracks: $36,988 for social-science majors, and $62,655 for people who majored in engineering, environmental science, or mathematics. Only visual and performance-arts majors make a lower starting salary than social-science majors, but it's not by much. And at $19,849 a year in average annual college cost, they also pay a lot less.

But not all is lost: American families still have hope in education, according to Sallie Mae. In the last year 85 percent of parents felt strongly that college was an investment in their child's future. That number is at a five year high. With growing student debt and a slow economic recovery, at least most families are still finding something to feel optimistic about.

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