Congress this week rolled back a student loan interest rate hike, but families have already been preparing for higher costs.
Sallie Mae‘s annual report on how families pay for college shows “a new cost consciousness since the recession.” Sixty-seven percent of families cross colleges off their child’s prospective list based on price, up nearly 10 percentage points from 2008. Here are the other most common cost-cutting measures:
- Student spending less — 60 percent.
- Student living at home — 57 percent.
- Student working more — 47 percent.
- Parent spending less — 47 percent.
- Accelerating coursework — 27 percent.
- Parent working more — 20 percent.
We’ve got some college cost-cutting strategies of our own in the video below. Check it out:
The average amount families spent for the 2012-2013 academic year, including loans and all other sources, was $21,178, the study says. That’s about the same as a year ago, but down from a peak of $24,097 the previous year. College sure hasn’t gotten cheaper; families are getting smarter.
“That decline does not reflect lower college costs; students saved by choosing less-expensive schools, living at home or hustling more for scholarship and grant money,” Reuters says.
Scholarships and grants now cover 30 percent of costs, compared with 25 percent four years ago, Sallie Mae says. Parents’ income and savings now account for 27 percent, down from a 2010 peak of 37 percent — or about a $3,000 difference for a school year.
Even wealthier families are scaling back college expenses. Families with an annual income of $100,000 or more spent an average of $23,913 in the most recent academic year, only 7 percent more than the average middle-income family.
The study says slightly fewer families are borrowing money to cover college costs — 32 percent – but those who do are borrowing more. The average amount borrowed through federal student loan programs was up from $5,327 in 2009 to $8,815 this year.