A new study released by financial services company Sallie Mae found that the way Americans pay for college has changed over the past few years. Families spent 5% less on college and college-related expenses in 2011-2012 than they did last year.
According to the study, “How America Pays for College 2012″, which includes survey data from 801 college students and 800 parents of college students, 90% of families took at least two actions to cut college costs. The most common, in order, include: reducing student spending; moving in with a roommate; living at home; reducing parent spending; increasing student work load; and taking an income tax credit or deduction.
The cost of college has played a large role in many college decisions, according to the study. Nearly one-third of students, or 29%, chose to attend a community college, which costs less than half of the average four-year public school. Two years ago, only 23% of students attended a community college. Four-year private schools cost the most, and are attended by 23% of students, while four-year public schools are attended by 45% of students. The remaining 3% did not answer or attend another type of post-secondary school.
Nearly seven in 10 students eliminated potential schools solely based on cost, the highest rate in the study’s five-year history; 77% of students were solely responsible for choosing a school, and 42% of parents were solely responsible for determining how to pay for school. Parents played a big role in paying for college as well: for 37% of students, parents covered the entire cost of college through income, savings, and borrowing. According to a University of Michigan study released in May, more than 60% of adults between 19 and 22 years old receive financial help from their parents.
Student income, savings, and borrowing covered full costs for 30% of students; grants and scholarships covered entire costs for 29% of students; and relatives and friends covered college costs for 4% of students. Student contribution is up from 24% four years ago, according to the study. Research published by the State Higher Education Executive Officers in March came to a similar conclusion that students at public colleges are footing more of the bill now than ever.
While 73% of students earned scholarships from their college or university, 27% received scholarships from community groups or non-profit organizations, and 26% received scholarships from their state governments.
Though 65% of students did not borrow to pay for college at all, the majority of students, 81%, completed the Federal Application for Federal Student Aid. One-quarter of students borrowed only federal loans. Of the 10% of students who borrowed private loans, 9% borrowed private loans in addition to federal loans, and 1% borrowed only private loans.
Finally, the study found that students have a much more positive outlook on college than parents do, as 89% of students feel it is an investment in the future; 77% of parents agree. While 61% of students feel college is worth stretching financially, only 53% of parents feel the same.
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