Sallie Mae's Report Indicates Parents Adjusting to Educational Costs

A Sallie Mae Report entitled How America Pays for College 2013 brings to light some important changes occurring in the financing of education. Parents and students are finding new strategies to adjust to increases in cost which include opting out of dorms, applying for grants, working more hours, and cutting back on things that are not necessary. Despite the growing cost of education students and parents still believe in the power of education and the ability to afford a better life. 

Even though a general trend of college costs has been increasing, over the last few years it has leveled out to $21,178 which is down from 2010. Yet parents and students are being more frugal and this could have some influence on the plateau and how long that plateau lasts. Wealthier families are spending a little more than middle class families while lower class families are pulling back on their expenses while attending school. 

How Students Are Paying for College:

Student Borrowing 18%

Parent Borrowing 9%

Parent Income & Savings 27%

Grants and Scholarships 30%

Relatives & Friends 5%

Student Income and Savings 11%

Parental spending on college declined a significant 35% from 2010 leaving children to find alternatives. On a positive note the 529 educational plans have been increasing for longer term savings. The information may indicate that the ability to pay cash for education is declining and there is a shift toward longer-term saving plans. It does help indicate a level of adjustment and sophistication in decision making as a direct adjustment to the educational and economic market. 

Parents from middle and upper class families were less worried about paying for their kid’s college. Lower income parents were still worried about the availability of financial aid, grants, and their incomes. The majority of people still see college as a way to work in an occupation they are interest in as well as the possibility of earning more money due to their educational achievements. 

The report provides a strong overview of current educational perceptions and they methods people are using to pay for their college education. It is full of information, charts, and graphs. Americans are finding ways to work around the difficult costs and choices they have to make. The report, as well as other reports this year from other organizations, indicates there may be a large shake up in higher education in the years to come. Good or bad the people will continue to adjust and change. 

How America Pays for College Report

Parents Finding New Ways to Pay for College

The cost of education has been hitting national airways for some time. Tuition and boarding costs are rising and parents are trying to find new ways of paying for their kid’s education. Changes have occurred over the past decade indicating additional reliance on tax benefits and grants. A 2013 report entitled Trends in Higher Education by the College Advocacy and Policy Board helps highlight how parents and students are paying for education and making ends meet. 

The report outlines the results of a study analyzing trends of how parents and students are paying for college. An average of 2002/03 fees and tuition for full-time students were $8,760 and rose to $11,960 in 2012/2013 marking a 37% increase. The addition of room and board raised the cost from $16,480 to $21,030 respectively.

In 2012/1013 tax benefits and grants covered 36% of total charges, 26% were covered from student loans, 38% of the costs were covered from other sources. Over the past decade their out-of-pocket costs raised $1,330 and loans covered an additional 2% of costs.  The use of federal unsubsidized loans increased while the use of private loans decreased.

The cost of public four-year public colleges increased dramatically over the past decade. With 40% of students enrolling in public four-year colleges the costs of tuition and fees raised $5,210 in 2002/2003 to $8,660 in 2012/2013 marking a 66% increase. Room and board costs increased 45% over this period. The report indicated that public four-year colleges had the largest increase in cost when compared to 2-year colleges, private colleges and for-profit colleges.  

The study summarizes its findings by indicating that parents and students are relying more heavily on grant aid and tax benefits to pay for most of their college expenses when compared to a decade ago.  The use of loans increased slightly but was not the main source of funding. By understanding the trends it helps to make adjustments to ensure that college education is within affordable reach for most students. It is this access to higher education and the use of that knowledge in beneficial ways that help society create new knowledge for advancement and growth. 

You may Read the Report HERE