The federal higher education financing system is doing too much for too many and not enough for those who need the most support. The government lends a staggering $126 billion in federal student loans each year. With some programs allowing students and families to borrow virtually unlimited amounts, without considering the ability to repay, it’s no surprise families are overextended and too often overborrowing to pay for college

This system as it currently stands compounds two harms: First, it causes tuition inflation —particularly in areas like graduate school — and then saddles families with debt they cannot reasonably be expected to repay. In fact, recent data shows that in the past 20 years, college costs have grown twice as fast as the consumer price index (CPI). Similarly, a study by the Federal Reserve Bank of New York found that increases in federal lending cause higher tuition.

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Reforming the System

Polling shows Americans overwhelmingly believe addressing the unlimited nature of federal loan programs would be an important step both in protecting students and making college more affordable. Reform should start with the unremarkable yet often forgotten principle that borrowing should not be the first option when it comes to paying for college. That means connecting more students to grants and scholarships. Meaningfully increasing Pell Grants, which don’t need to be repaid, can also increase college enrollment and retention rates.

Those who qualify for Pell Grants should also be able to apply for them more easily. In 2023, more than $4 billion in Pell Grants went unclaimed — that’s billions of dollars that could have put higher education within reach for the students with the greatest financial need, students for whom another loan is simply not the answer. Our research also consistently finds that many families are not applying for scholarships because they either don’t know how to access them or incorrectly believe they won’t qualify. That’s why we created a free resource — Scholly Scholarship Search by Sallie — that puts more scholarships within reach for college-going families.

Focusing on Completion

We also need a renewed focus on college completion, not just college access. Those with a college degree earn $1.2 million, or 86% more over their lifetime, than those with a high school degree. Public-private partnerships can play a role in supporting college completion. Sallie Mae has partnered with Delaware State University (DSU),  endowing $1 million to research barriers to degree completion and re-engage hundreds of near-completer students to get back on the path to graduation. The program will also develop and advance policy recommendations and best practices to foster student re-engagement nationwide. We’re also removing barriers to completion through our Completing the Dream Scholarship. Together with Thurgood Marshall College Fund, we’ve eliminated nearly $2 million in unexpected costs for students.

The federal student aid system can and should be simpler and work better for students and families. That will require sensible federal student aid reforms, greater transparency and clarity around college costs, connecting students with demonstrated need to grants and scholarships before borrowing and supporting college completion, not just college access. It’s well past time we go beyond quick fixes and focus on meaningful and lasting reform to address these broader issues.

To celebrate National Scholarship Month, Sallie Mae announced the latest recipients of its Bridging the Dream Scholarship for High School Seniors. For the fourth consecutive year, The Sallie Mae Fund has awarded deserving students up to $10,000 each in scholarships to support their higher education goals pursuing a diverse range of degrees, including business, engineering, fine arts, humanities, and more.

Since 2021, Sallie Mae has awarded over 900 scholarships worth nearly $4 million in partnership with Thurgood Marshall College Fund through the Bridging the Dream Scholarship programs, which also include the Completing the Dream Scholarship and the Bridging the Dream Scholarship For Graduate Students. These scholarships are part of the company’s continued mission to help students access and complete higher education—especially those from underserved communities.

Applying for scholarships is critical in helping students and families responsibly pay for higher education, and an important part of the planning process. In 2024, 88% of students attending HBCUs relied on scholarships and grants to cover the cost of college, according to our How America Pays for College 2024 report. In addition to the Bridging the Dream scholarships, Sallie Mae provides Scholarship Search by Sallie, a free resource that connects students and families to hundreds of scholarships, helping them navigate the process easily with no registration required.

Meet This Year’s Bridging the Dream Scholarship Recipients

Education solutions company and responsible private lender Sallie Mae and research firm Ipsos® released How America Pays for College 2024, which provides key insights into how current undergraduate students and parents of undergraduates view higher education and how they plan and pay for it. This industry-leading research considers education funding sources – from parent and student income and savings to scholarships, grants, and borrowed funds – and evaluates trends in payment strategies over time.

From planning to paying, learn how families are navigating their unique higher education journeys.   

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Surveyed:

• 1,000 parents of undergraduate students (ages 18-24)
• 1,000 undergraduate students (ages 18-24)
• 349 undergraduate students (ages 18-24) from Historically Black Colleges and Universities (HBCUs)

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College Spending Holding Steady

Families reported spending $28,409 on average this past academic year – in line with $28,026 in 2022-23.  Students attending HBCUs spent an average of $28,545 in the academic year 2023–24.

The majority — 48% — of college costs were covered by family income and savings, followed by scholarships and grants (27%), borrowing 23% and funds from friends and family (2%).

Impact of FAFSA® delays

Seventy-four percent of families submitted the Free Application for Federal Student Aid (FAFSA®) for the 2023-24 academic year — marking a steady increase year over year. However, for those who reported completing the new FAFSA for the 2024-25 academic year, just 29% found the new application easier to complete.

Of those who experienced a delay, 44% reported experiencing stress waiting for financial aid decisions, 21% sought out additional financial aid options, 14% considered switching to a lower-cost school, and 10% transferred schools. 

Borrowing is up for students and families.

Parents of HBCU students reported significantly higher balances for Federal Parent PLUS loans on average than families at non-HBCU schools: $14,207 vs. $5,795.

Roughly half of students who borrowed (48%) expect their federal loans to be forgiven; Just 40% of families who borrowed discussed who would be responsible for paying back student loans.

Scholarships can drive college access but misconceptions persist.

Scholarships were used by 64% of families, most of whom cited that scholarships made it possible for their students to attend college. On average, families reported receiving $8,250 in scholarships from their schools.

More than half of families (52%), however, believe scholarships are only available for students with exceptional grades or abilities. 50% of families who didn’t apply for scholarships cited lack of awareness.

To connect more students and families to scholarships, Scholarship Search by Sallie easily finds and sorts through hundreds of available scholarships.

Having a plan to pay makes a difference and boosts confidence.

Nearly 6 in 10 (59%) of families had a plan for how to pay for all years of college before enrollment — a more than 10% increase in 5 years — with higher income families more likely to have a plan.

More than half (54%) of planners felt completely confident in their college financing decisions, compared to just 32% of non-planners.

HBCU students agree earning a degree will create more opportunity.

Historically Black Colleges and University (HBCU) families received $14,217 from scholarships and grants. The largest funding source was grants and scholarships, covering 44% of costs while family income and savings covered 29%, borrowed funds covered 26%, and friends and relatives contributed 1%.

88% of HBCU students agree that earning a college degree will create opportunities they wouldn’t have had otherwise, and 81% believe it will translate to a higher earning potential.

These findings confirm families are increasingly recognizing the importance of financial planning for college. That said, the system can be improved by providing more clarity around the actual costs of college, offering greater transparency in federal lending programs, and further connecting students to grants and scholarships.

While getting into college is no small feat, it’s getting the degree that will really help students achieve their dreams. But, as many students are realizing, graduation is not a given.

To better understand barriers to college completion and what helps students graduate, Sallie Mae and Ipsos released the latest research report How America Completes College 2024. The report also serves as a companion to How America Pays for College, the company’s annual research on how families plan and pay for higher education.

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Surveyed:

1,029 adults (ages 18-30) currently enrolled in a two- or four-year program

427 adults (ages 18-30) who started two- to four-year programs but did not complete them

The study categorizes students into three distinct groups: those “on track” for graduation; those who have never contemplated leaving school; those “at risk” of leaving or facing dismissal; and “non-completers,” adults under the age of 30 who started college but left without obtaining a degree or completing their program.

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Non-Completers

One in four current undergraduate students say they are at risk of non-completion, and 57% of students at risk of not completing come from low-income households.

At-Risk Students

73% of on-track students were always committed to attending college, compared to 44% of at-risk students. At-risk students are nearly three times more likely to have transferred schools compared to on-track students and are also more likely to come from diverse backgrounds.

Having a plan to pay for all four years of college before enrolling is linked to student graduation rates. See how Sallie Mae helps students plan for college. Students who know what degree or career path they want to pursue are more likely to stay in school.

There is a strong link between mental health and leaving college, and increased mental health challenges highlight the need for more support and resources for all students.

First-Generation Students

First-generation students are twice as likely (41%) to have seriously considered leaving college compared to students from families with college experience (18%). Although 88% of first-generation college students believe college is an investment in the future, they face significant barriers to college completion.

*compared to just one quarter (25%) of on-track students who are working while in school.

Students need support not only to access, but complete higher education. Especially for first-generation students and those from underserved communities, early college planning is critical. By developing programs and resources that support college completion, simplifying the college transfer process and expanding Pell Grants to apply to short-term training programs, policymakers, institutions and higher education stakeholders can help more students finish their degree.

Without question, higher education opens doors of opportunity. Americans with some form of college degree typically earn significantly more in their lifetime than those without a degree.

The median lifetime earnings of an American with a bachelor’s degree is $2.8 million; for an associate degree, it’s $2 million. In contrast, those with a high school diploma have $1.6 million in median lifetime earnings, according to a report from Georgetown University.

In the more than five decades since it launched, the Pell Grant has helped low- and middle-income students unlock a path to economic prosperity by providing critical need-based funding that does not have to be repaid. Since 1980, the Pell Grant has helped more than 211.8 million students access — and complete — higher education.

Nearly seven million undergraduate students receive a Pell Grant each year.  At the same time about $3.6 billion in Pell Grant awards went unclaimed last year, meaning students are missing out on millions of dollars of free aid that could support their higher education. 

It’s time to increase awareness of the Pell Grant and enhance it to meet the needs of 21st-century students, many of whom are first-generation college students, from underserved communities, or exploring non-traditional paths to higher education.

Reforms — such as meaningfully increasing the size of the Pell Grant or allowing it to be applied to more programs — could increase access to higher education and limit the potential for overborrowing, as would informing families about the importance of completing the Free Application for Federal Student Aid (FAFSA). A modernized Pell Grant could put more students on a path to long-term success.

Raising Awareness About FAFSA Completion

To receive a Pell Grant, students must first complete the FAFSA. Our research shows that only 20% of families with a student planning to pursue higher education feel very prepared to complete the FAFSA, and only a third of first-generation families plan to submit the form — even while 42% of them agree that more grant aid would make college more affordable.

Recent updates to simplify the FAFSA application have made the application more streamlined. The updated FAFSA may help significantly more students from low-income backgrounds receive Pell Grants and potentially 1.5 million more students receive the maximum amount than previous years, according to recent data from the U.S. Department of Education. Raising awareness about completing the FAFSA is key to helping families unlock more aid for higher education.

Meaningfully Increase Funding

A study from the Center for Budget and Policy Priorities found that boosting the size of the Pell Grant would increase college retention and enrollment rates for low-income students. A separate analysis from the Urban Institute concluded that doubling the Pell Grant maximum amount would lead to higher grant awards for underserved students.

The Pell Grant was increased by $500 last year, but with inflation and higher costs of living, the increase isn’t significant. Sallie Mae supports meaningfully increasing the Pell Grant to meet the needs of students today.

Policymakers should also consider allowing the Pell Grant to be used for short-term skills training programs, such as coding boot camps or trade schools. Expanding the Pell Grant would help students start a new career more affordably while simultaneously addressing skills gaps.

Supporting Those With The Most Need

Our federal student loan program has been broken for far too long, often impacting those who need the most support. Meaningfully expanding the Pell Grant, and increasing awareness of its benefits and the associated application process, are critical to ensure that the federal higher education financing system does what it was intended to — facilitate access to education for those with the greatest need.

Sallie Mae, through The Sallie Mae Fund, announced a $1 million research endowment to Delaware State University (DSU) to help close the college completion gap. The grant will support a comprehensive three-year “Persistence and Completion Pilot Program” that will identify and study barriers to degree completion, help students return to school and complete, and help develop policy recommendations and best practices to enhance student re-engagement at DSU, HBCUs, and institutions across the country.

The program will create a student-centered and data-focused co-branded white paper that lays out higher education policy solutions to increase degree completion. Research findings and learnings will be presented at a future DSU HBCU Philanthropy Symposium to offer outcomes and recommend solutions for degree completion that can be broadly considered and implemented at HBCUs and institutions nationwide.

Part of the funding will also scale DSU’s current Near Completer program—created in partnership with Thurgood Marshall College—which identifies students with only some college experience and supports their re-enrollment and degree completion. DSU and Sallie Mae have identified over 900 near-completer students, hundreds of whom the program will look to re-engage. The program will also offer $125,000 in scholarships to help cover financial barriers, such as food and technology insecurities, in addition to tuition, fees and books.  

This partnership reflects Sallie Mae and Delaware State University’s shared commitment to close the college completion gap at HBCUs and provide critical support through research, policy recommendations, and financial aid. 

The partnership was celebrated in December at the 13th Annual Delaware State University Scholarship Ball. At the ball, Sallie Mae CEO Jon Witter noted, “Our mission is to power confidence as students begin their unique journey. We are all about helping students with that journey to, through, and immediately after their higher education experience. This builds community and a culture of dedication to the university, and that lasts for years.”

To commemorate National Scholarship Month, Sallie Mae announced the latest recipients of its Bridging the Dream Scholarship for High School Seniors. The Sallie Mae Fund, the company’s charitable arm, has partnered with Thurgood Marshall College Fund for the last three years to award scholarships to deserving under-resourced and underserved students. 

This year’s 27 deserving high school students were awarded up to $10,000 each to access higher education.

They are pursuing a diverse range of degrees, including criminal justice, musical theater, social work, engineering, and more.

Meet this year’s outstanding students.

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2023-2024 Bridging the Dream Scholarships Recipients

Milan Rothe

Hometown: Lakeway, Texas

College: Howard University

Major/Minor: Herbal Medicine, African Studies and Business Marketing

The promise of higher education comes from earning a degree, not from merely earning a few college credits. Still, far too many students begin college and fall short before reaching the finish line. In fact, the number of students who have some college experience, but no degree has reached a staggering 40 million.

Read more from Nicolas Jafarieh, Sallie Mae Executive Vice President, on how common-sense reforms to address the college completion gap can help more students not only access college, but successfully earn their degrees.

Higher education lays the foundation for future success, but between applying for scholarships and grants, to decoding financial aid offers, paying for college can be a complex undertaking.  

As an education solutions provider and responsible private lender, Sallie Mae is doing its part to power confidence in students and families as they navigate to, through, and immediately after college. Through tools and services that connect students to scholarships and planning resources, we help families make informed decisions so they can confidently achieve their higher education goals. Sallie Mae, through its charitable arm, The Sallie Mae Fund, also awards scholarships to help students from all backgrounds access and complete their higher education.

Here are three other organizations that help students effectively plan for higher education.

1. Reach Higher Helps First-Generation Students Access College

Reach Higher, founded by former first lady Michelle Obama, supports and guides high school students who are the first in their families to attend college.

Its free UpNext tool sends personalized text messages — from peer and professional advisors— to high school students with information about the application process, which has led to higher rates of FAFSA completion, and college enrollment after high school and sophomore year returns, according to data from Reach Higher. Mentors also answer questions and provide reminders about upcoming deadlines, setting students up for success.

2. The Posse Foundation Graduates 90% of its Scholars

For more than 30 years, the Posse Foundation has helped thousands of students from underserved communities apply for — and complete — college. Today, the organization works with more than 60 partner colleges and universities, and recruits students from cities nationwide, including Atlanta, Boston, Chicago, Miami and more.

Posse students start meeting with staff and peer mentors during their senior year of high school to best prepare them for college. Once on campus, the scholars meet regularly with mentors and each other, helping to build a support system and boost retention. As graduation approaches, the Posse Foundation helps students find internship and career opportunities.

The organization reports a 90% graduation rate, and its alums include Shirley Collado, the president of Ithaca College, the general manager of the Cleveland Cavaliers Koby Altman, and Erica Spatz, a cardiologist and professor at the Yale School of Medicine.

3. Generation Hope Supports Teen Parents

Through its Scholar program, Generation Hope provides teen parents in D.C. and New Orleans with tuition assistance, tutoring, mental health support, child-care assistance and more, so they can complete their degrees. The students’ young children can receive early literacy support so that they’re ready to start kindergarten.

While less than 2% of teen parents earn a college degree by age 30, 62% of Generation Hope scholars graduate in six years, roughly the same as the national graduation rate. More than 80% of graduates have full-time jobs or are in graduate school within six months of finishing school.

Generation Hope also draws on its experience to help colleges and universities better support student parents.

Building a stronger, student-centered higher education financing system that prioritizes the best interests of students will require groups like these and all stakeholders – private sector, federal programs, colleges and universities – to come together.

Sallie Mae CEO Jon Witter penned an op-ed for The Hill that highlighted a variety of common-sense solutions to constructively address the broken federal higher education system in need of significant and lasting reform that supports students and limits overborrowing.

“If we fail to make significant structural reforms to the federal higher education system, another generation of students and families will inevitably face the same hurdles so many face today. The Supreme Court’s decision is a call for us to come together and work toward meaningful reform,” he wrote.

Read the full piece here.