How America Pays For College (New Sallie Mae Report)
Sallie Mae’s 7th annual study on how Americans pay for college expenses revealed some interesting changes to the financial landscape of college preparation. One of the most surprising findings was that, for the 2013-2014 school year, both student and parent borrowing declined by about 5%.
Many of the families surveyed had increased their contributions from income and existing assets, rather than increasing borrowing to keep up with rising tuition. Obviously student loan debt is still astronomically high, but this is a positive sign perhaps reflecting a turnaround in the economy.
According to the study, 98% of families still believe that a college education is a worthwhile investment, and feel that having a college degree is a necessity in today’s world.
The study also revealed that families are becoming more strategic in planning for college costs, and using multiple strategies to manage the high cost of college and make it more affordable for them.
Some useful strategies that were employed included:
- Students living near or at home
- Adding additional roomates
- Opting for available tax credits
- Choosing a more marketable major
- Taking accelerated course loads
- Working while in school
- Going to a 2-year college
- Reducing personal spending
However, while all of these strategies may help, the study points out that when it comes down to it, most families still don’t have an actual financial plan in place to pay for college, which can put parents in a tough spot later on when it comes time to retire. More families have been dipping into their retirement savings to help cover college expenses, which means less money is available and growing for their own future use.
With the baby boom generation retiring in increasing numbers every day, and government programs like Social Security in real trouble, this trend is especially disturbing, and the parents that have tapped into their retirement savings for college costs may find themselves in a world of hurt come time for retirement.
This is why we are so passionate about helping families develop a real, solid plan to pay for college, and put this plan in place ahead of time, so they are not forced to borrow, or to deplete their own retirement savings to put their children through college.
If you are not sure how you are going to pay for college, and you don’t already have a plan in place, please contact us today to schedule a free one-on-one session with one of our qualified college funding advisors! Call 614-536-0246.