You can still rely on mom and dad to give you a lift to school and drop you in front of your dorm, but more and more often, when it comes to college, you can’t rely on them for much beyond that. Parents are spending less money on their kids’ college education, according to a report by student-loan provider Sallie Mae.
The report shows that the share of college costs paid by parents fell to 27 percent from 37 percent three years ago. Instead they are relying more on scholarships. Americans are also trying to cut costs by forgoing dorms: 57 percent of families said a student was living at home or with a relative, up from 43 percent three years ago. The drop in spending was particularly sharp among African-Americans, partly because fewer are enrolling in four-year private schools: 14 percent of students in African-American families were enrolled in four-year private schools this year, compared with 30 percent last year.
In its coverage of the Sallie Mae findings, The Wall Street Journal reports that, to defray the cost of college, families are leaning more heavily on university scholarships, even as many schools are struggling with their own financial difficulties. Last year, 30% of college costs were covered by institutional grants, up from 23% in 2009-2010, the new report said. For the third year in a row, that was the largest source of funds for college costs.
At the same time, more students are rejecting college dormitories. In 2013, 57% of families reported a student living at home or with a relative, up from 43% three years ago. Students from low-income households have traditionally lived at home in larger numbers, but among families with incomes over $100,000, the share of students staying at home has doubled to 48% since 2009-2010.
The Sallie Mae report also reinforced evidence that families are increasingly choosing where to apply for college based on cost. Last year, 67% of families eliminated colleges based on cost during the admissions process, up from 56% in 2009.
While parents are not paying as much out-of-pocket for college today and families are approaching paying for college more realistically, a Sallie Mae report found that the recession may have had an impact on their ability to save. Since 2010, fewer families are saving in preparation for college, largely due to the “protracted, weak economy” and “more urgent” financial priorities.
“Families are focusing on ‘rainy day’ savings, general non-dedicated savings, and retirement rather than college-specific savings,” the report says.
In a survey of 1,600 parents with children under the age of 18, researchers found that half of all families are not saving at all. Just two years ago, in 2010, 60 percent of families were saving for college.
And many of those that do save are not on track to meet their expected savings goals. Most families that are saving set average goals of $39,000 for each child’s college costs, the report found. But in reality, these families’ current savings patterns will leave them with “about half their goal amount.”
For those families not saving, nearly half said they faced hardships other than money that have prevented them from preparing for the financial burden of college. Some said they expected their children to receive enough in financial aid to cover the cost of college. Others said their children were either too young or too old for them to start saving, and some simply felt it was up to their children to find a way to pay.
Still, 80 percent of parents agreed that college is an important investment and that a college degree is more important today than in previous years.
“The concern here is not that families are not willing to save and not willing to pay,” Sarah Ducich, Sallie Mae’s senior vice president for public policy, said in an interview with U.S. News & World Report. “Parents are actually a little more willing this year to stretch financially. It’s just about whether they have the resources to do that.”
According to Ducich, because families cannot control many factors associated with the cost of college, many are eliminating institutions with high tuition in the application process. As another way to keep costs down, a higher percentage of students are also living at home, rather than paying for room and board on campus.
Another report that surveyed students and parents shows that families’ average total spending for college per year has mostly leveled out in recent years, at $21,178 in 2012. Average college spending reached a low of $19,435 in 2008 and a high of $24,097 in 2010. But spending for college varies between different socio-economic classes. Middle-class families, the report found, have been spending more overall for college, while high- and low-income families have seen downward trends in the last few years.
And while the rate of parent borrowing remains low, at 9 percent in 2012, students’ out-of-pocket costs and loans now account for a higher percentage of overall college spending. And the average amount for those types of aid has also gone up: students paid about $2,000 from their own income and savings in 2008, and nearly $2,300 in 2012.