Paying Less for College, New Study

Notice the positive trend.

From Forbes.com, 7/24/13, by Susan Adams

Parents Are Paying Less For College, Says New Study

I'm just back from a round of college touring in California with my son, who will hopefully be starting as a freshman in the fall of 2014. As I looked at the other parents on the tours, I kept asking myself, where are you all going to come up with the $60,000 a year to pay for this? At the rate tuition and costs are rising, I’m guessing the annual bill will hit $75,000 by the time my kid graduates. I know we could send him to a community college for two years and then he could transfer, or have him attend a State University of New York school, where tuition and fees come to a much more reasonable $23,000. But still, who has $92,000 to spare?



How the typical family pays for college 2013: Average percent of total cost from each source.

Fewer and fewer of us, says a new study released yesterday by loan giant Sallie Mae and Ipsos Public Affairs, a market research firm. According to the study, families are tapping grants and scholarships to pay for more of the cost of higher education and they are coming up with ways to cut expenses for students.

According to the report, average college spending came to $21,000 per student in 2012, down from a high of $24,000 in 2010. Of that $21,000, the amount families pay from their own savings and income has shrunk to $5,700 of the total cost, while payments from scholarships and grants has increased to 30% of the cost, or $6,400, up from $4,900 in 2009. The peak year for parent funding was 2010, when families covered 37% of college costs, an average of $8,700.

 Today, the remainder of college payments come from student borrowing (18%), parent borrowing (9%), student income and savings (11%), and relatives and friends (5%).

“What we’ve seen in the last year is families moving to a post-recession reality in how they approach their decision-making about college,” says Sarah Ducich, senior vice president for public policy at Sallie Mae. “We’re seeing an increasing cost consciousness among families.”

According to the report, average college spending came to $21,000 per student in 2012, down from a high of $24,000 in 2010. Of that $21,000, the amount families pay from their own savings and income has shrunk to $5,700 of the total cost, while payments from scholarships and grants has increased to 30% of the cost, or $6,400, up from $4,900 in 2009. The peak year for parent funding was 2010, when families covered 37% of college costs, an average of $8,700.
Today, the remainder of college payments come from student borrowing (18%), parent borrowing (9%), student income and savings (11%), and relatives and friends (5%).
“What we’ve seen in the last year is families moving to a post-recession reality in how they approach their decision-making about college,” says Sarah Ducich, senior vice president for public policy at Sallie Mae. “We’re seeing an increasing cost consciousness among families.”

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Some of the ways that cost-consciousness plays out:
Some 67% in the survey said they cut a number of colleges from their list of possible schools at some point during the application process because the schools were too expensive. More students—57%– are now living at home instead of paying for expensive campus dorms, and greater numbers of students are choosing schools close to home, to cut down on travel costs. They are also taking in roommates if they live in off-campus housing. Students are pushing to finish college in fewer years to cut tuition costs.

Other ways families are paying for college: One fifth of parents boosted their work hours or earnings this year and half of students, 47%, also worked longer hours. Some 27% of students are cramming their schedules full of classes so they can graduate in less time. Most families aren’t transferring students to less expensive schools, though one fifth of low-income families are taking that step.

Despite steadily-rising college costs and parents’ dwindling contributions, more parents than ever reported that they believe in the value of a college education. Some 85% said they strongly agree that college is an investment in their child’s future. That’s the highest percentage in the last five years, up from 80% in 2009.

Though families said that going to college is a priority, many families lack a clear plan for how they will fund all four years. “The worst thing a family can do is decide they can fund the first year or two of college and then discover that they can’t pay for all four,” says Ducich. “Students need to get that degree.” According to the survey, only 40% of families have a four-year plan.

The report also contains some interesting numbers about the cost of different kinds of college degrees. Social science and engineering majors are paying the most for college this year, at an average of $29,000 and $26,000 respectively. In the middle are math and science majors, visual and performing arts majors, and business majors, at $20,400, $20,000 and $19,000. Students who plan to go into professional and vocational jobs paid the least, at $18,000 and $16,000.

The report also pulls in some numbers from the National Association of Colleges and Employers, which tracks starting salaries for students graduating in a variety of disciplines. The Sallie Mae study uses those numbers to find that a social science degree costs the most and has one of the lowest starting salaries, while engineering majors pay a greater amount for their degrees but earn starting salaries that are $18,000 greater than the average graduate. Business majors also do well, paying $2,600 less per year for their degrees and making $9,400 more in starting salaries.

Ipsos conducted the survey by telephone between April 10 and May 9 with 802 parents of undergraduates ages 18-24 and 800 undergrads in that age group.

[Many other pertinent articles were linked on the same page.]

http://www.forbes.com/sites/susanadams/2013/07/24/parents-paying-less-for-college-says-new-study/