Amid Rising Costs, Families Pay Less For College
NEW YORK (7/30/13)--The cost of college is up, but the average American family is spending less on higher education, according to a report by Sallie Mae (ABC News July 23).
The reason? Families are making smarter financial decisions.
According to the annual survey released last week by the student-loan company, since the recession more American families are making decisions about their children's education based on its price tag--most likely out of necessity.
Tuition continues to rise. Over the past five years the cost of tuition at public four-year colleges is up 27% above overall inflation, with the average sticker price at public universities now a whopping $17,860 (Associated Press July23).
Student loan debt is also climbing. Members of the national college class of 2011 had 5% more debt at graduation than the class before them with an average debt load of $26,600, according to the Institute for College Access and Success, Oakland, Calif.
Despite--or because of--these trends, Sallie Mae found college spending per student dropped to $21,000 during 2012 from its 2010 peak, when families were paying $24,097.
Here are some strategies families are using to cut the cost of college:
Live at home. The report found 57% of students live with their parents or relatives, up from 41% last year.
Cut the pricey top picks. Nearly 70% of families eliminated colleges during the application process due to their high price tags, up from 58% in 2008. About one-fifth of low-income students chose to transfer to less-expensive schools.
Take a student job. Nearly half the students surveyed reported increasing their work hours in 2013.
Finish quicker. Nearly 30% of students accelerated their course work to pay for fewer semesters.
Use grants and scholarships. Families reported covering about 30% of their school bills with grants and scholarships--the biggest portion of their payment sources.
Start a college-savings plan. Low-income, middle-income, and high-income families all increased their use of 529 plans, with 17% of families overall using the tax-advantaged college-savings plan--up from 12% the previous year.
Begin paying back your loans immediately. Twenty-two percent of students reported they were paying back their loans while still enrolled in school to reduce the overall cost.
For more information, read "June Financial Fitness Challenge--Get New Grads Off to a Smart Financial Start" in the Home & Family Finance Resource Center.
Choose a more lucrative major. About 20% of student reported changing their majors to more marketable fields.