College choices increasingly driven by money, says survey

Parents are no longer footing the bill for college. Scholarships, grants, and loan packages are covering tuition now, leading to choices based more on finances than academics, like less expensive colleges and more marketable majors.

Jacquelyn Martin/AP/File
Prospective students tour Georgetown University's campus in Washington, July 10. 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.

College costs are driving decisions about which schools to attend, what to study and even where to live, according to a report from loan giant Sallie Mae.

Parents no longer foot the largest portion of the bill, according to the lender's annual survey. That role goes to grants and scholarships, with student loans coming in third as fewer students borrow money for school.

While the recession has largely passed, economic worries have not, and many families are making college choices driven by fears of tuition hikes and job losses, according to the survey.

"Parents are willing to stretch themselves," said Sarah Ducich, Sallie Mae's senior vice president for public policy. "It's not that they're not willing to pay. It's that their income is not keeping up."

College spending per student 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 in 2012, taking the top spot from parents. Parents chipped in $5,727 on average, a decrease of 35 percent since 2010.

In terms of percentages, the typical family relied on grants and scholarships for 30 percent of college costs and parents' income and savings for 27 percent. Student borrowing accounted for 18 percent while the remainder came from student income and savings, parent borrowing, and relatives and friends, according to the Sallie Mae report.

Student loans were the third most common source to pick up the bill for courses, housing and books with the average student borrowing $8,815 in federal loans. The Sallie Mae report said that while slightly fewer students borrowed to pay for college, those who did took out larger 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 White House-backed compromise on Wednesday.

"Rates on every single new college loan will come down this school year, offering relief to nearly 11 million borrowers," Education Secretary Arne Duncan said Tuesday.

The White House estimates the average undergraduate student would save $1,500 in interest charges if Congress acts before leaving town for the August recess.

"We have moved into a post-recession reality in how people pay for college," Ducich said.

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.

Among other strategies employed to deal with costs:

- 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 at some stage during the application process because of costs, up from 58 percent in 2008.

"It forced them to adopt new behaviors of savings and ways to find nickels and dimes," Young said.

The tuition sticker price at public four-year colleges is up 27 percent beyond overall inflation over the last five years, according to the latest figures from a separate study from the College Board. This past year it rose nearly 5 percent to an average of $8,655 nationwide. Including room and board, the average sticker price at public colleges is now $17,860, and students pay on average $12,110. At private four-year colleges, the average full tuition price is now just under $40,000, with the average student paying $23,840.

What does that mean for the average college student?

About two-thirds of the national college class of 2011 had loan debt at graduation, and their debt averaged $26,600, according to the most recent figures from the California-based Institute for College Access and Success. That was an increase of about 5 percent from the class before them.

The Ipsos telephone poll was conducted between April 10 and May 9 with 802 parents of undergraduate students aged 18 to 24, and 800 18- to 24-year-old undergraduate students. The survey has a margin of error of plus or minus 2.5 percentage points.

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.