Parents are paying less of kids' college bills
A new survey says parental contributions dropped 35% in the past 3 years. Grants and scholarships -- and smarter choices -- are filling the gap.
The average annual college cost was $21,178, about the same as last year. But parents are paying a smaller share.
A lot smaller: The average parental contribution has dropped 35% since 2010.
Not because they're stingy, but because they don't have the money, study authors say. Salaries are stagnant. The costs of food, fuel, insurance and other basics keep rising. People's sense of overall net worth has dropped (thanks, housing bubble!), causing them to cut back on many types of spending.
So who's picking up the slack?
Grants and scholarships -- many from the colleges themselves -- are now "the largest contributor" toward total costs. There's also a trend among families to keep costs down from the start:
- 67% of families rejected potential colleges based on price.
- 57% of students live at home or with relatives.
- 27% of students are accelerating their coursework to graduate faster.
Not that all students are looking for handouts. Just over half are putting savings and current income toward tuition, and about the same number increased their work hours. Nearly one-third of students also borrow money, an average of $8,815.
Released today, the sixth annual survey was conducted last spring, i.e., during the second half of academic year 2012-13. This means that families are reporting actual amounts spent versus what they thought they might spend.
Surprises in store?
While some smarter choices are being made, not everyone’s keeping an eye on the big picture.
Forward thinking is too often absent. Half the families interviewed don't have contingency plans in case of illness, job loss or other emergency. Two-thirds don't have a specific blueprint for paying for college from year to year.
Some parents aren't even clear on the total price, or how long they'll be expected to contribute. About four in 10 report being surprised by the costs of textbooks and other equipment, and 92% of parents assume their students will graduate within five years. But other national studies indicate that for up to 70% of students, it will take a full six years to get a bachelor's degree.
"We think there will be some surprises for families during that fifth or sixth year," Ducich says.
Sallie Mae's Education Investment Planner tool lets families compare costs at 5,500 colleges around the United States. It also gives a reality check by comparing estimated monthly loan payments with the starting salary you'd need in order to afford them.
Know before you go
Use that planner, or any other tool you can find, to get a clearer idea of the true cost of college. Explore your plan from every angle. For example, if you plan to get Junior through by working overtime and trimming the budget ruthlessly, don't forget to factor in the impact on the rest of your family -- and on your own physical and emotional health.
Have you planned for transportation costs like airline tickets or a shuttle service from airport to campus? What about repairs and insurance for your commuting student's vehicle, or the inevitable rise in gas prices?
This kind of talk isn't gloomy. It's practical. If you want gloomy, try this: More than half of all student loans are currently deferred.
It's encouraging that families are getting smarter about cutting costs. But here's my advice: Don't get too comfortable.
Having your student stress out over every dime isn't conducive to an optimum college experience. However, a "don't worry, be happy" attitude might lull them into a false sense of security about the debt with which they might be graduating.
Belief in the value of college is unwavering: 85% of parents "strongly agreed" that it is a good investment in the future. I think so, too. Just know going in what it's going to cost. Hope for the best, plan for the worst and don't forget the extra-long mattress pad.
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