How Families Are Keeping a Lid on College Costs
Despite the rising sticker price for a college education, American families are keeping higher education spending in check, according to Sallie Mae's annual study of how students and their parents pay for college. One key reason: families are working hard to keep costs down.
This past academic year, families devoted an average of $20,882 toward a college degree, about the same amount they've paid for the past three years, and well below the 2010 high of $24,097.
"Even though we read stories about tuition going up, families are really holding the line on how much they're spending," says Sallie Mae's Sarah Ducich, co-author of How America Pays for College. "They’re just not willing to write a blank check, and they are taking determined steps to make college affordable for them."
They also relied less on debt. Borrowed funds covered an average of 22% of college costs this year, down from 27% the previous two years and the lowest level in five years. One of the main reasons for that, says Ducich, is that more students, especially low-income ones, were awarded grants and scholarships.
Overall, families are employing a number of cost-cutting measures, with the average family taking five different steps to bring expenses down, the report found. Among the biggest ways to trim education budgets:
- Enrolling in two-year schools: In 2014 34% of students were enrolled in two-year public colleges, vs. 30% last year. That let them spend $10,060 less than four-year public school students did on average, and $23,843 less on average than their peers at four-year private schools.
- Shopping by price: Two thirds of families reported eliminating colleges because of high costs. "This cost curve is something we saw jump post-recession, and it's stayed at this high since," Ducich says. Another 12% transferred to a less expensive school, up from 9% who did so last year. (For help finding a good education at the right price, check out our new ranking of the best college values.)
- Changing majors: One in five families admitted to swapping majors to pursue a field that is more marketable, a trend that's been steadily rising since 2012.
- Lowering "fun" spending: Two-thirds of students said they cut personal spending to help shoulder college costs, vs. 60% who said the same last year.
- Staying local: A full 69% of students opted for in-state tuition to save, and more than half chose to live at home or with relatives to cut down on housing bills.
More on how to save on college:
- Money 101 Guide to College Savings
- Nab More Cash for College
- Get Your Kid to Graduate in 4 Years