College is Expensive. Here’s How Families Are Managing To Pay

College costs keep climbing, but most families still pay for about half of it using their income or savings.

During the 2024-25 school year, the average cost of college for undergraduate students was $30,837, according to a recent survey by Sallie Mae, a private student loan lender. That was up by 9% compared to the 2023-24 year, the survey found.

For the average student, families paid for more than half of college out of pocket using their income and savings. Yet, the average family spent less out of pocket during the 2024-25 school year than the pre-pandemic school year. Instead, many received more in scholarships and grants, and parents borrowed more, such as Parent PLUS loans.

For the 2024-25 school year, nearly three-quarters of undergraduate families used parents’ savings income and savings to pay for college, spending $15,754 on average. However, it has become harder for many families to afford higher education costs as the cost of living climbs. As a result, parents are cutting back on spending or dipping into their retirement savings to pay for college.

Many families relied on scholarships during the last school year, with 60% receiving an average of $8,004. Three-quarters of families who received awards said scholarships made it possible for their student to attend college.

Additionally, 57% of families used grants to pay for college last year, with the average amount being $6,180. Grants are similar to scholarships in that they don’t need to be paid back, and are typically awarded by the federal government.

Given that a college degree still considered to be a lucrative investment, almost three-quarters of families said they would rather borrow money than have their student skip college.