As families retrench, they are getting more creative in how they pay for tuition, student loan provider Sallie Maefound in a study that it's releasing today. "Two years ago, families went into their piggy banks and took dollars out of different reserves" for college spending, says Clifford Young, managing director of Ipsos Public Affairs, the market research firm that conducted the study. "Now they are counting pennies with much more vigor."
That penny-counting cut the amount parents contributed for college by 11% during the past year and by 32% the past two years, the study says.
A college degree has traditionally been the ticket to a better life, and that is why Americans consider student loans worth the cost. But it is harder than ever to pay for.
The average tuition at a four-year public university climbed 15% from 2008 to 2010, the U.S. Department of Education says. And outstanding student loans topped $1 trillion last year.
To help address the problem, Rep. Hansen Clarke, D-Mich., has introduced the Student Loan Forgiveness Act, which would forgive student loans after 10 years of income-based repayment. "But it has just been sitting in committee, with no consideration and no hearings," says Robert Applebaum, founder of ForgiveStudentLoanDebt.com, who has delivered more than 1 million petitions in support of the bill to Congress.
A drop-off in college scholarships has added to the financial stress. This year, 35% of students received scholarships, vs. 45% in 2001. "That is a pretty big pullback," says Sarah Ducich, senior vice president for public policy at Sallie Mae.
Families are finding more cost-saving measures, such as shifting toward lower-cost colleges. This year, 29% of students are attending two-year communtity colleges, vs. 21% in 2010.
And this year, 51% of students are living at home, compared with 43% in 2010. That does not only include middle- and lower-income families Ducich says. This year, 47% of students from high-income families, those making more than $100,000, are living at home, nearly double the 24% who did two years ago.
While it's good that families are being more creative about paying for college, Ducich is worried about the decline in the percentage of families who have a plan to pay for four years of college. "Families are figuring out how to pay for college, kind of one year at a time," she says. "But we'd like them to be a little smarter about planning and looking at the whole picture."