3 Key Take-Aways from How America Pays for College 2013
Aug. 5, 2013 at 08:00 AM | By Emily Kissane | Comment Count
Sallie Mae’s latest version of their How America Pays for College report has interesting information about how families are covering higher education costs—particularly how choices and financial strategies are changing as the country slowly recovers from the recession.
The entire report is worth a look. Here are some key points to pique your interest:
Parents are paying a smaller amount of college costs, but more are using 529 savings plans. This year, parents spent an average of $5,727 from their income and savings to pay for their college student; a 35% decline from 2010. The charts below illustrate how grants and scholarships now account for most of the difference with the share covered by student borrowing inching up.
How the Typical Family Paid for College in 2010
How the Typical Family Pays for College in 2013
As the way families pay for college shifts, greater use of 529 college savings plans is evident . A record 17% of families will use 529 plans to pay for college this year. All income groups show an increase in use, but keep in mind that the likelihood a family takes advantage of a 529 plan tends to increase with income.
Proportion of Families Using 529 Plans, by Income
African-American families are spending less on higher education. During the 2012-2013 academic year, African-American families spent an average of $18,871 on college, a 10% drop from the $20,943 figure from last year and considerably lower than the $21,178 average for all families in 2012-2013.
What accounts for this decline in spending? The Sallie Mae report indicates that fewer African-American students are selecting private four-year institutions—14% this year versus 30% last year.
Families are still taking steps to reduce college costs and to make those costs more affordable.
- One in five parents worked extra hours, as did 47% of students.
- Just over a quarter of students reported they plan to finish college in fewer terms than the usual length of their degree programs.
- Two years ago, 44% of students lived at home or with other relatives to save money; this year, the number has jumped to 57%. The figure increases to 62% for low-income students.
Cost continues to be a major factor in deciding which college to attend. Sixty-seven percent of families eliminated colleges from consideration at some point in the search and admission processes due to cost. This year, 62% of students say they are willing to stretch financially to attend college, a number that has been increasing since 2009, when just half were willing to make a financial stretch.
We want to hear from you. What other interesting figures have you taken note of from the How America Pays for College 2013 report?
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