Families Spent $34,019 On College Last Year, Up 10%

American families spent an average of $34,019 on college during the 2025-26 academic year, a 10% increase from $30,837 the year before, according to the annual Salie Mae and Ipsos study How America Pays for College 2026.

The increase far outpaced published tuition increases, yet families are not backing away from higher education: 91% call college a valuable investment in their student's future, and 84% say they are confident they made the right financial decisions to pay for it.

The 19th edition of the study, based on online surveys of 1,000 undergraduate students and 1,000 parents, arrives at a turning point for college finance. New federal borrowing caps began phasing in for new borrowers this summer, and the survey suggests most families have no idea what's happening with these higher ed reforms.

Spending Jumped 10%, But Most Families Paid Less Than Sticker Price

Parent and student income and savings remained the backbone of college funding, covering 49% of costs, or $16,624 out of pocket for the typical family. Scholarships and grants covered another 27%, borrowing covered 22%, and gifts from relatives and friends made up the final 2% - a mix that roughly follows the recommended order of operations for paying for college.

Costs varied widely by school type. Families with students at two-year public colleges spent $21,388 on average, compared with $31,886 at four-year public schools and $47,032 at four-year private colleges. Those figures reflect what families actually pay out of pocket, not published prices.

The advertised price is a starting point rather than the final number. Just 39% of families paid the full sticker price, consistent with record tuition discounting across higher education.

Among savings tools, 529 plan usage increased to 34% from 32% last year, with an average distribution of $9,506.

"While household budgets may be feeling some pressure, families are still choosing to invest in higher education," said Dan O'Leary, Senior Research Manager at Ipsos. "They continue to see college as worth the cost and remain confident in how they are paying for it, even if that means stretching financially to make ends meet."

Scholarship And Grant Dollars Grew, Yet Most Non-Users Never Applied

Six in 10 families (61%) used scholarships this year, receiving an average of $8,291, up from $8,004 last year. Grant use rose to 59% from 57%, and the average grant grew to $7,108 from $6,180. Finding scholarship money remains one of the highest-return moves a family can make.

The bigger story is who is missing out. Among families that did not use scholarships, 74% simply never applied.

Misconceptions appear to be driving the inaction: 48% of families believe scholarships are only available to students with exceptional grades or abilities, 41% think they are only for incoming freshmen, and 35% assume they are not worth pursuing if parents earn higher incomes. None of those beliefs is accurate, and each one costs families real money.

FAFSA completion moved in the right direction. About three-quarters of families (74%) completed the form for 2025-26, up from 71%, and 81% of filers found the process easy, a marked improvement from 72% last year.

Timing remains a weak spot, though: only 25% of families know the FAFSA opens in October, which matters because some financial aid is awarded on a first-come, first-served basis. Among families that skipped the form, the most common reasons were believing their income was too high to qualify (26%) and not knowing about the FAFSA at all (19%).

One underused tool stands out in the data: 33% of families who received a financial aid offer appealed for more aid, and 70% of those appeals resulted in additional money.

Borrowing Held Steady As New Federal Loan Caps Arrive

Just under half of families (47%) borrowed to pay for college this year, and for 68% of them, borrowing was always part of the plan. Student loans also shaped where students enrolled: 38% of borrowing families said access to loans let them consider a higher-cost school (maybe not the best decision and one worth running through a student loan calculator).

Federal student loan use slipped to 25% of families from 27%, with borrowers taking an average of $9,186. Parent PLUS loan use edged up to 13% from 11%, but the average amount borrowed dropped sharply, to $7,735 from $10,286 last year, as federal borrowing limits tightened.

That backdrop makes the awareness numbers striking. As of July 1, 2026, Parent PLUS loans for new borrowers are capped at $20,000 per year and $65,000 per student over a lifetime. When surveyed, only 47% of families said they were aware of the change, and just 22% were fully aware.

At the same time, families broadly agree with the direction of the policy: 66% support limits on federal student borrowing, and 58% believe unlimited federal lending has contributed to rising college costs. Among parents, only 13% said they were concerned about the new limits.

Families also have clear opinions on how schools should respond: 53% want colleges to lower tuition and fees, 38% want more scholarships, and 36% want more generous financial aid.

Families facing a shortfall have options for closing a financial aid gap, but 74% say the responsibility for affordability sits with colleges and universities themselves, ahead of the federal government (67%) and state governments (64%).

What This Means For Your Family

The report shows families planning more than they used to, but still having gaps that carry real costs. While 58% of families created a plan to pay for all years of college before enrolling, fewer than half (44%) discussed what all years of college would cost, only 38% discussed expected starting salaries after graduation, and just 31% discussed who would be responsible for repaying student loans.

The optimism gap is measurable, too. About 84% of families are confident their student will earn a bachelor's degree within four years, but only 61% of students actually complete a degree within six years, according to National Student Clearinghouse data. Every extra semester adds to the total bill and often to average student loan debt that payment plans never accounted for.

Analyzing the cost of college is becoming more common. Nearly eight in 10 families (79%) eliminated at least one school based on price, and cost (40%) essentially tied proximity to home (39%) and academics (38%) as the top factor in choosing a school, making the net price of each college the number that matters most.

Families are also bringing new tools to the process: 26% used AI tools such as ChatGPT or Gemini for college research and decisions, most often to research colleges (42%), majors and careers (36%), and to estimate costs (33%).

Families should start with outcomes in mind, said Rick Castellano, Vice President at Sallie Mae. "Talking early and often about the full cost of a degree, career paths, and life after graduation can help families compare options, avoid missing out on aid and scholarships, and ultimately choose a path that fits their goals and budget."

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