No gap year after all — students opt to stay in school, lender Sallie Mae finds

Personal Finance

Whether colleges reopen their campuses or remain online, students are sticking with school. 

After weighing the options, the vast majority of undergraduates plan to continue their college education as planned, a report finds.

Just 2% of students said they would take a gap year and only 5% considered switching to a school closer to home, according to Sallie Mae’s annual “How America Pays for College” report, which polled nearly 2,000 students and parents in April.

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Although families are concerned about Covid-19, most students remain committed to their higher-education plans, said Martha Holler, a senior vice president at the education lender.

“They are determined to make this investment in their future because they know that it pays off,’ she said. “And they’re willing to do that even if their courses are going to be online.”

Families are also paying more for college than ever before, Sallie Mae found.

On average, families spent roughly $30,00 on school over the last year, a 14% jump from the year before. Most of that came from parents’ own income and savings. 

In addition to what they spent out of pocket, families covered about a quarter of the bill by tapping scholarships and grants — money that does not have to be repaid – and an additional 25% by borrowing, or taking out loans, the education lender said.

Since the survey was conducted in the spring, millions of Americans have experienced a financial shock due to the coronavirus crisis, such as a job loss or furlough. Even many who remain employed are working fewer hours and for less pay.

It’s important to take advantage of the financial aid that’s out there.

Martha Holler

senior vice president at Sallie Mae

That is likely to impact their ability to afford college in the years ahead, Holler said. “They may rely more on other sources of funds to help them pay for college,” she said. “They might borrow a little bit more, they may pursue more scholarships than they have in the past.”

And yet, fewer families have applied for financial aid.

The Free Application for Federal Student Aid, or FAFSA, serves as the gateway to all federal money, including loans, work-study and grants, which are the most desirable kind of assistance.

This year, just 71% of families completed the FAFSA, down from 77% in 2018-19 and 83% the year before that, Sallie Mae found.

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