SLM Corporation (commonly known as Sallie Mae; originally the Student Loan Marketing Association) is a publicly traded U.S. corporation that conducts consumer lending services. It has changed dramatically since it was set up in the early 1970s. Initially, it was a Federal entity that serviced Federal student loans. Later, it became a private corporation that made and serviced its own private student loans. 

In 2014, Sallie Mae spun off its loan servicing operation and most of its loan portfolio into a separate entity called Navient Corporation. Navient is the largest servicer of Federal student loans and acts as a payments collector for the U.S. Education Department. Navient manages more than $13 billion in assets. Currently, Sallie Mae’s primary business is creating, servicing, and collecting private student loans. It also provides free online tools and resources for planning. 

“How America Pays for College”

Among Sallie Mae’s resources for college planning is its annual “How America Pays for College” Study (the Study). Sallie Mae partners with Ipsos, an independent analytics company, to conduct the Study and prepare the annual report. 

Sallie Mae surveys undergraduates and their parents about their attitudes toward college education and the ways by which they pay for it. The Study explores college funding sources, including family income and savings, scholarships, grants, and loans. It also tracks perceptions and attitudes related to the value of a college education. 

Key Findings of the 2022 Study

Families reported paying slightly less for college in academic year 2021–22 than in the previous year. They continued to use the same funding sources, but in different ratios. Families reported spending an average of $25,313 for college in 2021–22, a 4% decrease from 2020–21, marking the second year of lower average college spending by families.

The largest portion of college costs was paid from the parent’s income and savings (43%), the second-largest was covered by scholarships and grants (26%), followed by student’s income and savings (11%), student borrowing (10%), parent borrowing (8%), and funds from relatives and friends (2%). 

A significant 10-year trend tracked by the Study is that families are covering an increasing share of college spending out-of-pocket. In 2012–13, a family’s out-of-pocket contributions covered the largest share (38%) of college spending compared to scholarships and grants (30%), borrowed funds (27%), and money from relatives and friends (5%). Ten years later, in 2021–22, families are still covering the largest portion of college spending out-of-pocket, but the share of costs covered by parent and student income and savings has grown to 54%, while other funding sources covered smaller shares; scholarships and grants covered 26%, borrowed funds 18%, and funds from relatives and friends 2%. 

Steps to Make College More Affordable

Most families took steps to make college more affordable. Nearly 90% of families agreed that college is an investment in the student’s future (88%) and that earning a degree creates opportunities that the student would not have otherwise (88%). Most college families (78%) are willing to stretch themselves financially to make those opportunities available to the student. At the same time, families are mindful of the cost of college: 81% say they eliminated a college from their list due to its cost, and 89% reported taking one or more of the steps below to make education more affordable. 

54% of families report taking at least one action that would help reduce the overall cost of college, such as: 

  • 31% of students are earning a degree in a shorter period of time, 
  • 30% are starting at a less-expensive school before continuing their education at a more-expensive one, 
  • 25% enrolled only part-time or take less than a full course load, and 
  • 16% changed their final college choice to reduce educational expenses. 
  • 70% of families reduced their overall spending by: 
  • 49% reduced student’s personal spending by cutting back entertainment, vacations, and non-essential items, 
  • 41% reducing parent’s personal spending by cutting back entertainment, vacations, and non-essential items, 
  • 36% participated in a campus meal plan to reduce spending on food. 
  • 76% of families took steps to obtain more money to help pay for college by: 
  • 48% continued to search for and apply for scholarships during the year, 
  • 43% increased the student’s work hours by 33%,
  •  33% filed for higher education tax credits and deductions, 
  • 13% used military benefits available under ROTC or National Guard, and
  • 31% sought to increase the earnings of parents.

Trends in Grants and Scholarships

In 2021-22, 30% of all college students that enrolled in undergraduate programs received a Federal Pell Grant award. This percentage was unchanged from 2020-21.

Sixty percent of families were able to use scholarship funding in 2021-22. The most common source of scholarships was the college that the student attended. This source was used by 62% of families who relied on scholarship funds. Scholarships covered an average of $6,335 of college costs. 38% of scholarship recipients said they received funds from their state, with an average amount of $2,362, or from private companies or non-profit organizations, with an average amount of $2,189. 

FAFSA Submission Rates 

College families used the Free Application for Federal Student Aid (FAFSA) to obtain $112 billion in Federal financial aid for college in 2021-22. Some states and many colleges also rely on information from the FAFSA to determine need-based aid and merit scholarships. Yet FAFSA submission rates in 2021-22 were lower than those in 2016-17.

68% of college families reported that they had submitted the FAFSA for 2020-21, while 70% submitted it for 2021–22. These results represent the first time since 2016-17 that FAFSA submission rates did not decline. Many families have been missing the greatest opportunity to make college more affordable by not filing a FAFSA. 

Students and parents across races and ethnicities filed the FAFSA at similar rates: 72% of Hispanic families, 71% of White families, and 67% of Black families. These FAFSA submission rates come at a time when many states are implementing or considering the implementation of a requirement that all high school seniors must file the FAFSA. 

When asked about their support for a FAFSA-filing requirement, 49% of families supported it, while only 13% were opposed. 38% didn’t know enough about the issue to have an opinion. Families from the West are more likely to support a FAFSA requirement (55%) than those from the South (49%), Midwest (46%), or Northeast (43%). 

Below are the reasons given by families for not submitting a FAFSA: 

  • 36% thought their income was too high,
  • 17% had problems with the application or felt it was too complicated, 
  • 13% did not have the information required to complete the application,
  • 13% did not know about the FAFSA, and
  • 11% missed the deadline. 

Sallie Mae’s Conclusions

At the end of the Study, Sallie Mae summed up its findings as follows:

“Families continue to value higher education, with most willing to stretch financially to obtain the best opportunities for themselves or their children. In this changing environment—whether due to a pandemic or economic uncertainty—a college degree is an asset that can soften the impact of a downturn. Planning, including saving for college, researching and applying for scholarships, and applying for Federal financial aid by completing the FAFSA, can help make higher education more affordable, while giving students and families more confidence along their journey.”