Students shouldering more of their college costs
Students in the survey paid 30 percent of the total college tab for the 2011-12 school year through a combination of savings, income, and loans. Four years ago, students were covering 24 percent of the cost.
Parents are still picking up a larger share of the costs than their children, but their ability to pay seems to have hit a wall. Moms and dads paid for 37 percent of the bill, including loans), down from 47 percent in 2010. Parents significantly ratcheted down what they tapped from their own wealth, covering 28 percent of the costs with income and savings for the latest school year, compared with 39 percent a year ago.
On average, parents contributed $4,025 from their income to fund their children's higher education, compared with $4,975 two years earlier. Middle-income families reduced their spending the most. Parents in this income segment made an average contribution from savings of $1,930, versus $2,482 the previous year.
To offset parents' smaller contributions, a growing number of students are taking out college loans. This was particularly apparent for high-income students. Twenty-seven percent of affluent students surveyed took out student loans, compared with 19 percent the previous year.
Although parents have roughly 18 years to save for their kids' college education, most are woefully unprepared for these costs. According to Sallie Mae, only 39 percent of families had a plan for paying for college before their children enrolled.
By contrast, more families than ever are looking at price when shopping for colleges. The percentage of families who chose schools based on their cost has risen to 69 percent, the highest level since Sallie Mae began the annual survey five years ago.
Eliminating schools based on sticker price is not wise. Price tags are meaningless because colleges price their bachelor's degrees like airline tickets. Everybody pays a different price. Sometimes an expensive school will sport the lowest price for a family after financial aid is subtracted.
Parents can determine what the price of any college would be for their family by using a school's net price calculator. To learn more about net price calculators, see "How to find out what college will really cost you."
Image courtesy of Flickr user 401(K) 2012
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