Paying for College Tough for Parents, Says Sallie Mae

Paying for College Tough for Parents, Says Sallie Mae

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How families pay for college.

We have long heard stories about how difficult it is to pay for college. Those costs continue to rise at a pace that is faster than the rate of inflation, putting added pressure on American families.

Annual National Study

A national study conducted by Sallie Mae and published this week — How America Pays for College 2013 — reveals that families are adjusting to the current economic realities by relying more on college scholarships and less on parental contributions. Its an annual study Sallie Mae undertakes in cooperation with Ipsos, a global market research company.

The current study reveals that grants and scholarships account now cover 30 percent of college costs, up from 25 percent in 2009. Parental funding has fallen, dropping from 36 percent in 2010 to 27 percent in 2013. Average family spending on college has fallen too from $24,097 in 2009 to $21,179 today.

Making College Affordable

Families are taking several steps to make college more affordable. The study revealed that 67 percent of colleges and universities were removed from consideration based solely on cost. Families are also saving by encouraging students to live at home while attending college, accounting for 57 percent of college students. Additional savings are being realized by accelerating coursework with 27 percent of students taking on a stepped-up pace.

To make ends meet, Sallie Mae and Ipsos found that 48 percent of college parents have reduced their overall spending. That corresponds to a 60 percent drop in what students are spending. Parents are working more, too, with 20 percent of parents reporting taking on an extra job or increased hours to earn more money. Their children are getting into the act as well with 47 percent of them working more.

How College Costs Are Covered

With 30 percent of college costs now covered by so-called “free money” the remaining 70 percent of college costs are paid through five other means: 27 percent comes from parent income and savings, 18 percent from student borrowing, 11 percent from student income and savings, 9 percent from parental borrowing and the remaining five percent is contributed by relatives and friends.

Interspersed with its study, Sallie Mae offered several tips to help families save money, reduce their costs or both.

Tips and Support

One tip advised families to anticipate all the “extras” related to college including books, supplies and equipment. Sallie Mae found that 40 percent of families reported an unexpected expense. A second tip encouraged families to seek out free money including Sallie Mae’s database of three million scholarships worth more than $16 billion. A third tip advised families to make a plan, one that covers college costs for several years, not just one year at a time.

Despite the high cost of higher education, 85 percent of parents surveyed believe that college is a smart investment in their child’s future. Parents also believe at a 92 percent rate that their children will earn their bachelor’s degrees in five or few years. That’s encouraging as many schools have been reporting difficulty with students finishing their education within six years, a trend that may finally be reversing.

See AlsoSayCampusLife College Scholarship Search Section

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Categories: Campus News