For Tyler Powe, a fourth-year student at Mississippi State University, taking out student loans wasn’t for covering tuition—it was for covering everything else.
Despite earning significant scholarships, Powe, a business information systems major, said he still needed to borrow to pay for basic needs, even while working part-time in his campus IT department.
“I’m blessed to have had multiple options and actually very big scholarships, but it still wasn’t enough to cover college entirely,” Powe said. “Like gas and groceries and really anything else that isn’t tuition.”
Powe is one of many students who say the rising cost of living—not just tuition—is pushing them to take on debt, according to a new report from Trellis Strategies.
The postsecondary research and consulting firm analyzed more than 14,000 responses from its fall 2024 Student Financial Wellness Survey, spanning 104 institutions nationwide.
The findings illustrate the financial stresses today’s students are under. About 46 percent identified as independent students—meaning they do not report parent income or assets for federal financial aid—while 67 percent worked while enrolled and 19 percent were caregivers, with borrowers overrepresented among working students and caregivers.
Those responsibilities can consume a significant share of time. Roughly 36 percent reported that their combined work and caregiving commitments exceeded 40 hours a week, limiting the time available for their studies.
May Plumb, senior research associate at Trellis Strategies and lead author of the report, said that balancing act underscores the difficult choices students make to attend college.
“The big thing I think about there is the opportunity cost of going to college,” Plumb said. “This choice to go to college for these students is not just about how much tuition they’re going to pay, or even just how much housing they’re going to pay. It’s about the trade-off of working less, spending less time with their kids or increasing childcare costs.”
She added that the findings point to an opportunity for institutions to better engage students about their actual expenses and how they use their financial aid.
“They don’t realize that that’s something their institutions are interested in helping them with, and a lot of that comes down to how college costs are presented to students,” Plumb said. “Is transportation and childcare listed in estimated costs of attendance? And on the advising side, are people proactively asking what are these other things in a student’s life that they might not think to bring up when they’re sitting down with a financial aid adviser?”
Key findings: Against that backdrop, about 34 percent of respondents reported taking out loans to pay for college—45 percent at four-year institutions and 23 percent at two-year colleges. Borrowers often relied on multiple sources of support, including 63 percent who used grants such as Pell and 54 percent who drew on their own income.
With the overall cost of living on the rise, many students said their borrowing is driven as much by basic needs as by tuition. About 66 percent of loan borrowers reported worrying about their ability to cover monthly expenses, citing higher rates of food and housing insecurity than their nonborrowing peers.
Many borrowers said they felt they had no real choice. More than 2,400 responses reflected a sense that taking on debt was unavoidable, while others described taking out loans without fully understanding the terms; some confused them with grants, while others relied on guidance from parents and advisers without clear information.
Bryan Ashton, chief strategy and growth officer at Trellis Strategies, said recent efforts to standardize award letters will require that loans and other aid that must be repaid be clearly defined.
“We do get a lot of that confusion in the learner voice around ‘There was a scholarship, a grant and a loan all mixed together, and I really didn’t understand which ones needed to be repaid,’” Ashton said. “There are some policy solutions out there, too, that could be helpful for some of the communication challenges.”
The report also found that grant aid isn’t reaching everyone who needs it. Students with nonlinear academic paths—those who transfer, stop out or return for a second credential—often become ineligible for Pell Grants and other aid programs designed for a traditional, continuous college trajectory.
Plumb said the findings highlight a need for financial aid systems that better account for how students actually move through college.
“How can we lay out and anticipate in advance what roadblocks might come up and how to fit the pieces together?” Plumb said. “And then along the way, look at any of these individual financial aid programs that a student might be using, and ask, is it sensible that this timed out after three years? Or would it make more sense to allow students to spread that support over a longer period so they can better balance their work responsibilities with their educational goals?”
Limits on federal loans: Federal student loans remain the primary borrowing option for many students. The government offers Direct Unsubsidized Loans to those enrolled at least half-time, with Direct Subsidized Loans available to undergraduates who demonstrate financial need.
While federal loans typically carry more favorable terms than private options, they are capped. Annual limits have not changed since 2008, eroding their value over time as tuition and living costs have risen, the report said. As a result, many students turn to other sources—including grants, institutional aid and private loans—to fill the gap.
That gap has real consequences for students like Powe, who said navigating different loan types added to his uncertainty about how to pay for college.
“This last semester, I almost didn’t have enough funding,” Powe said. “If I could go back, I would either take out more student loans, because I’m gonna have to pay them anyway, or I wouldn’t have taken out any and kind of just found all my money from a different source.”
Still, he said he’s not confident about the repayment process.
“I don’t really know how that works,” Powe said. “I have an internship and the internship pays pretty good, [but] if I need to start paying my loans, which I think I do because I got some unsubsidized loans, I wouldn’t be able to start making minimum payments on it.”
His uncertainty reflects a broader trend: 70 percent of borrowers reported low confidence in their ability to repay their loans, while 55 percent said they had taken on more debt than they expected.
“What they were seeing was a lot of different options for how to pay for college, and there was confusion among those options,” Plumb said. “A lot of students, when they’re talking about their student loans, are not really distinguishing between these different sources, even though they come with very different repercussions and restrictions.”
Beyond the cost: Even as debt burdens grow, most students still see college as worth the cost. About 73 percent of respondents—including 71 percent of borrowers—said a degree is a worthwhile financial investment. Another 84 percent said they believe a college education will lead to a higher quality of life.
“There were a lot of stories in this data about students who were going to college as a way of opening up their lives,” Plumb said. “Some talked about wanting to show their children what it looks like to do something hard. Others described college as a path out of domestic violence and toward financial independence.”
“What comes across is that quality of life means many things to students—it’s financial, but it’s also independence, self-confidence and the chance to do work that feels more fulfilling,” she added. “For higher education, that’s a reminder that the goal is not just access or affordability in isolation, but making sure those things actually work together so students aren’t trading opportunity for financial stress.”
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