As “we’ve entered into a different era with regard to how families approach paying for college“, parents are contributing less toward their kids’ college education. This is one of the findings of How America Pays for College 2013, a Sallie Mae study that was released earlier this month.
Parents are giving their children less cash to pay for college amid continued economic weakness, adding to pressure on students to borrow money, rely more on grants and scholarships—and in many cases, live at home.
Parents shelled out an average of $5,727 from their income and savings for each child’s college costs in the 2012-2013 academic year, down more than a third from $8,752 in 2009-2010, according to an annual report on college funding by student loan provider Sallie Mae to be released on Tuesday. The share of college costs paid by parents out of income and savings fell to 27% from 37% three years ago. The figures don’t include borrowing by parents, which also declined slightly in the period.
This strikes me as a significant change, given the high priority parents place on providing for their children’s higher education.
… Being able to pay for a child’s education is an important long-term financial goal for most parents of school-aged children. Among all parents with at least one child under age 18, eight-in-ten say this is an extremely important (35%) or very important (45%) goal.
HOW THE TYPICAL FAMILY PAYS FOR COLLEGE, YEAR-OVER-YEAR
“Parents are still willing to stretch themselves financially, but their incomes just haven’t kept up,” said Sarah Ducich, senior vice president for public policy at Sallie Mae.
More students are living at home to save money.
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 ‘new world of higher education’
“I think we’ve entered into a different era with regard to how families approach paying for college,” said Ms. Ducich. “They are now approaching it with a cost consciousness they didn’t have prior to the recession. This is the new world of higher education.”