3 On Your Side: Parents Out-Of-Pocket Spending Is #1 Source Of College Funding
By Jim Donovan
PHILADELPHIA (CBS) -- An annual report finds families spent a lot more to send students to college this past academic year. Yet most didn't borrow money to pay for it. So how'd they do it? It appears that out-of-pocket spending by parents became the number one source of college funding.
The report from student lender Sallie Mae found families spent an average of $24,164 including tuition, room and board, living expenses, and other direct and indirect costs, that's an increase of 16 percent from last year. On average, more than $10-thousand came from family income and savings, an increase of 17 percent.
Obviously, the rising cost of college was a factor in the increase, but parents also seemed more willing to shell out more dollars, crediting greater confidence in the U.S. economy and in their own financial health. The report found fewer families concerned about such possibilities as a job loss, a drop in the value of their home, a hike in loan rates, or their child struggling to find a job after receiving a degree.
At the same time, families have also adopted more responsible financial habits while paying for a college education, especially those relying on loans. The report found 35 percent of families starting to make loan payments, while still in school, in an effort to reduce interest payments later on.
In addition, of those families that did take out loans, 68 percent of student borrowers surveyed said they had trimmed their personal expenses, and 73 percent are holding down a job while attending school.
For more information visit: http://news.salliemae.com/files/doc_library/file/HowAmericaPaysforCollege2015FNL.pdf