College Costs Are Skyrocketing—Here’s How Savvy Families Are Beating the System

The tuition bubble keeps inflating—but some households are finding cracks in the system.

Scholarship Hacks: Forget begging for merit aid. Top students now game algorithm-driven awards like pros.

Community College End-Runs: Two years at $3.5k/year before transferring? That’s not frugal—that’s financial warfare.

Crypto-Savvy Parents: While boomers cling to 529 plans, Gen Xers are staking Ethereum to outpace 7% annual tuition hikes.

The Dark Art of Appealing Aid: Financial aid officers hate this one trick—renegotiating packages after ‘sudden’ income changes.

Meanwhile, Wall Street still peddles student loan ABS like they’re not subprime 2.0. Some lessons never stick.

KEY TAKEAWAYS

• For the average family, college costs for their undergraduate student were $31,000 during the 2024-25 school year. That's a 9% increase from the year before.
• More than half of the college costs were paid out-of-pocket by the family for the typical student.
• The other half was covered by scholarships and grants, which are not required to be paid back, as well as borrowed funds like federal student loans or credit cards.

College costs keep climbing, but most families still pay for about half of it using their income or savings.

During the 2024-25 school year, the average cost of college for undergraduate students was $30,837, according to a recent survey by Sallie Mae, a private student loan lender. That was up by 9% compared to the 2023-24 year, the survey found.

For the average student, families paid for more than half of college out of pocket using their income and savings.Instead, many received more in scholarships and grants, and parents borrowed more, such as Parent PLUS loans.

For the 2024-25 school year, nearly three-quarters of undergraduate families used parents' savings income and savings to pay for college, spending $15,754 on average. However, it has become harder for many families to afford higher education costs as the cost of living climbs. As a result, parents are cutting back on spending or dipping into their retirement savings to pay for college.

Many families relied on scholarships during the last school year, with 60% receiving an average of $8,004. Three-quarters of families who received awards said scholarships made it possible for their student to attend college.

Additionally, 57% of families used grants to pay for college last year, with the average amount being $6,180. Grants are similar to scholarships in that they don't need to be paid back, and are typically awarded by the federal government.

Given that a college degree still considered to be a lucrative investment, almost three-quarters of families said they WOULD rather borrow money than have their student skip college.