Higher education expenses have reached unprecedented levels, with numerous colleges and universities charging more than $100,000 per year. A recent survey by the Lumina Foundation and Gallup found that only 12% of surveyed Americans believe four-year colleges are affordable, based on responses from over 22,000 participants. Cost remains the primary obstacle preventing prospective students from pursuing higher education.
To manage these expenses, families have adopted diverse financing strategies. Nearly half of families with college-age students borrowed money during the 2025-26 academic year, according to data from Sallie Mae. For most families, personal income and savings cover less than half of total college costs. Grants and scholarships provide over a quarter of funding, while student loans comprise the remainder. A separate survey by College Ave revealed that average parental savings designated for education declined from $51,310 to $37,897 between 2025 and 2026, resulting in only 16% of saving families feeling adequately prepared to cover degree costs through savings alone.
The financing landscape has shifted as federal policy changes take effect. New legislation caps the amount students can borrow through federal programs, though two-thirds of families surveyed support borrowing limits. Education experts caution against excessive borrowing and emphasize the importance of repayment planning.
The escalation in college costs stems from structural changes in higher education funding. Decades of reduced state investment have transferred financial responsibility from government to students and families. Between 2008 and 2018, tuition at private institutions rose 26% while public university tuition increased 35%. Currently, tuition generates approximately half of college revenue, compared to roughly a quarter historically, with state and local governments now providing the remaining funding. Tuition increases average 5.5% annually, exceeding general inflation rates and wage growth, according to analysis by J.P. Morgan Asset Management.
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