Despite an improved economy and record-high stock market, parents are chipping in less for their kids’ college tuition than they have in the past.
That is according to a new study published by Sallie Mae, “How America Pays for College,” its tenth annual report.
Parents’ share of the tab for college fell to 23 percent, down from 29 percent of the average amount an ordinary family pays for college. In dollars that comes to $5,527 out of an average $23,757 yearly cost.
That number is the lowest its been since 2009, the smallest figure since the launch of the yearly study.
So where is the rest of the money for higher education coming from? Student loans have climbed to pay for 19 percent of the cost, compared to 13 percent in the past. The Sallie Mae report does not address the reasons for the changes, but there is some speculation.
“It could be price sensitivity,” says Mark Kantrowitz, publisher of Cappex.com, a college financing resource. “Parents may be telling students, if you want to go to that more expensive school, you’ll have to pay for it.”
Sallie Mae’s population seems to be lacking in planning ahead for college fees. The report reveals that 9 out of 10 respondents expect their kids to go to college, but only 4 of 10 budget for it.
There was some good news in the study. The report showed that 69 percent disregarded some colleges from their list under consideration because of the high price, a number significantly higher than the 58 percent of ten years ago.
Clearly, families that did plan for college for their kids, with savings plans like the 529 plan, getting to college is less troublesome.
Parents who save a little bit each month over time have a reasonable, fixed amount available to spend on college. If their kids want to spend more, then they will have to face larger loans when they graduate.