As the new academic year begins, a growing number of students and their families are facing the daunting task of financing a college education.
A recent study has revealed that student loans are now making up a larger share of the financial resources used to cover these escalating costs.
Traditionally, families have relied on a mix of income and savings, scholarships and grants, and student loans to pay for college. These numbers tend to be different for Black families who typically don't have as much savings as their white counterparts.
Accordingly, Black college graduates carry an average of $25,000 more in student loan debt compared to white graduates. This disparity is even more pronounced four years after graduation, with black students owing an average of 188% more than the initial amount borrowed by white students.
The latest data from Sallie Mae's annual "How America Pays for College" report indicates a shift towards increased borrowing. On average, families spent $28,409 on education costs last year, but this year, parents are spending less out of pocket and turning more to borrowed funds.
The report also found that the share of parents taking out federal parent PLUS loans to help cover their children's college education has grown. "We've really seen that in times of economic hardship, [families] are falling back on borrowing for college," said, Jennifer Berg, vice president of public affairs for market research firm Ipsos.
The Free Application for Federal Student Aid (FAFSA) is a critical component in accessing financial aid, including loans, work-study programs, and grants. Despite its importance, the introduction of a new FAFSA form this year has been met with challenges. Only 29% of families who filled out the new form found it easier to complete, according to Sallie Mae. "The vast majority said the new simplified FAFSA was anything but," said Rick Castellano, a spokesperson for Sallie Mae.
The difficulties with the new FAFSA form have discouraged many students and families from submitting an application, potentially limiting their access to financial aid. Completing the FAFSA is essential, as it not only serves as the gateway to federal aid but also increases a student's likelihood of attending and graduating from college.
As college costs continue to rise, the burden on students and families to find ways to finance their education grows heavier. The trend towards increased reliance on student loans raises concerns about the long-term financial implications for borrowers and the potential impact on the economy.
For many, the dream of a college education is becoming a reality only through the acceptance of significant debt.