Tuesday, August 10, 2010

More Families Struggling With College Costs, New Study Finds


More Families Struggling With College Costs, New Study Finds

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Now that my two kids are in college, my family has to reevaluate our spending. For instance, we have eliminated away-from-home vacations to help pay for college expenses. Also, a larger share of college costs is coming from our current income, rather than our savings, as my kids take on extra jobs to help cover expenses. They also took out student loans for the first time this year.

Obviously, my family is not alone in facing the steep costs of college educations. Indeed, colleges are pricing themselves out of the market for a fast-growing proportion of families, says a new Gallup and Sallie Mae survey of 1,624 students and parents. Some 63% of families surveyed last spring said they eliminated schools at some point during the college selection process because they simply cost too much, up from 56% the previous year. And three-fourths were reducing personal spending to meet college bills, which rose an average 17% over the previous year among those surveyed.

Parents are clearly willing to delay their kids’ launch from the nest in order to help. A surprising 43% of families said their student lived at home during the latest academic year, to reduce costs. (This was the first time the question was asked.)

Soaring community-college enrollments are another sign of these pressures. More families are having their college-age kids fulfill basic-education requirements at relatively inexpensive two-year colleges near home, then transfer onto campus to finish their junior and senior years. Other students are speeding through four-year colleges in three years. Still others are borrowing more; borrowing covers 46% of college costs, up from 42%, the Sallie Mae study says.

Also, enrolling a child in college seems to be at least partly a year-to-year financial gamble for most families, who aren’t entirely sure how they will pay for it. Only one-fourth of those surveyed said they had a plan to pay for their child’s entire college education before allowing them to enroll.

Still, there is no sign that families are lowering the value they place on a college education. Even though students in this survey started their freshman year after the recession had hit, about 83% of families still say college is a worthwhile investment in the future, about the same as in past years, Sallie Mae says.

Readers, what sacrifices are you making to cover the rising cost of a college education? Do you believe colleges and universities are pricing themselves out of the market? If so, what alternatives do you see families turning to in your locale? If not, how are families you know covering the cost?

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