So I’m really confused because I’m looking at the average amount of student debt that people have as soon as they graduate and for almost every school it’s around 30k. But how is this possible if the school costs 40k-50k a year…? I get that there are scholarships and financial aid but how is it possible to go from 200k for 4 years to only 30k? Someone please explain!
Student debt PLUS parent debt can equal more than $30k
That is an average for loans. Many students get other funding - scholarships, grants from the school, Pells grants or SEOG. Some families have been saving for years. Many choose schools that don’t cost $50k per year, so the total cost is much less than $200k.
You aren’t going to be working with ‘average’ borrowing, you are going to be working with your chosen schools, your situation.
Some low income students receive federal Perkins loans in addition to Federal subsidized and unsubsidized loans.
The overwhelming majority of schools in the country do not meet 100% demonstrated need, leaving a gap that is on the student and his/her family to fill.
Parent loans are not student loans and are not part of the student loan calculations, because it is the parents debt.
Some parents co-sign for their children to take loans, which then drives up the student debt.
People cover the $200k in various ways…
Aid from the school - grants, scholarships, work study, fed student loans
Parent contribution - parents could be paying $5k-60k per year
Parent loans
Financial gifts from grandparents
College funds that parents have been saving for years.
Student earnings over the summer.
You seem to think that everyone is borrowing most/all costs. They’re not. Their parents are paying or they got financial aid/scholarships.
Are private student loans in the student name included in those numbers? I am guessing no since the school has no way of tracking where the payments come from expect for student federal loans. So is it correct that these numbers only include student direct loans, perkin loans and loans from the school?
A private student loan could be paid through the school’s bursar’s office (check cut to the school), so the school could keep track. Not sure they do, but they could.
From NYTimes: “Save a quarter of the cost over a child’s first 18 years. Pay another quarter out of current income over the next four years. Borrow the rest, split among the family.” See “How to Pay for College With Less Stress” http://www.nytimes.com/2016/09/24/your-money/paying-for-college/how-to-pay-for-college-with-less-stress.html
@mb2233 That is the average debt the school can report from information they have available to them. The data basically comes from the federal FAFSA system. It basically captures the 5500, 6500, 7500, + 7500 that each student borrows at a $200K school. The thing to remember is that it does not capture parent loans outside the system. Like home equity, 401K loans, etc. Some of the cost is paid with merit scholarships and parental cash from 529 or savings. As mom2collegekids pointed out, it is a mishmash of funding sources. The figure you looked at is only the average federal portion.