As of Thursday, July 25, 2013
WASHINGTON (AP) — Grants and scholarships are taking a leading role in paying college bills, surpassing the traditional role parents long have played in helping foot the bills, according to a report from loan giant Sallie Mae.
Since the recession, more college-bound students have eliminated schools from their searches based on costs and have relied less on their parents once they get to campus, said the report released Tuesday. Worries such as tuition increases and job losses seem to have faded as the economy has improved, yet parents and students still make decisions on schools, majors and work schedules based on the price tag.
“We have moved into a post-recession reality in how people pay for college,” said Sarah Ducich, Sallie Mae’s senior vice president for public policy.
College spending per student per year was about $21,000 during 2012, down from a peak of $24,000 in 2010, according to the Sallie Mae-Ipsos Public Affairs report.
The annual survey of student financial aid found students earned about $6,300 in grants and scholarships to pay for college costs, taking the top spots from parents. Student loans were the third most common source to pick up the bill for courses, housing and books.
The average student borrowed $8,815 that year in federal loans.
The rate for those loans was the subject of debate in the Senate last week, as lawmakers considered a compromise that would offer some students lower rates for the next few years but would prescribe higher rates for future classes. The Senate is expected to vote on that compromise this week.
Last year, the average family turned to grants and scholarships to cover 30 percent of college costs. Parents’ income and savings covered 27 percent of the bill and student borrowing covered 18 percent. The other 25 percent is mostly covered by students.
“Parents are willing to stretch themselves,” Ducich said “It’s not that they’re not willing to pay. It’s that their income is not keeping up.”
Parents’ enthusiasm for college has not shriveled, though. The survey found 85 percent of parents saw college bills as an investment in their children’s future.
“We’re in a new normal where big ticket items like college, families will pay for them but won’t stress about them too much,” said Cliff Young, managing director at Ipsos.
One-fifth of parents added work hours to pay for college and half of students increased their work hours, too. The report found 57 percent of families said students were living at home or with relatives, up from 41 percent last year and 44 percent in 2011.
One-fifth of students from low-income families chose to transfer to less expensive schools. About one-fifth of students said they changed majors to fields that were expected to be more marketable upon graduation. In all, 67 percent of students and their families eliminated colleges because of costs, up from 58 percent in 2008.