NEWARK, Del.--(BUSINESS WIRE)--Eighty-three percent of college students and parents strongly agreed that higher education is an investment in the future, and the majority found multiple ways to cut college costs, according to a new national study from Sallie Mae and Ipsos Public Affairs.
Students now foot an expanding share of the college tuition bill, while parents scale back compared to four years ago. Drawing from savings, income, and loans, students paid 30 percent of the total cost of attendance last academic year, up from 24 percent four years earlier, while parents covered 37 percent, down from 45 percent in the same time period.
“Once again, we see that families recognize the value of a college education and that they are taking steps to keep college costs in line with their financial resources,” said Albert L. Lord, vice chairman and CEO, Sallie Mae, the nation’s No. 1 financial services company specializing in education. “Data confirms again and again that the investment carefully made significantly enhances the lives and livelihoods of those who complete their education.”
The percentage of families who eliminated college choices because of cost rose to the highest level (69%) in the five years since the study began and virtually all families exercised cost-savings measures. The most common cost-savings strategies included living at home (51%), adding a roommate (55%), and reducing spending by parents (50%) and students (66%). In 2012, families continued the shift toward lower cost community college, with 29 percent enrolled, compared to 23 percent two years ago. In fact, overall, families paid 5 percent less for college compared to one year ago.
“This is really a tale of the resilient American family who still see the extreme value of a college education and are finding new and creative ways to pay for it,” said Clifford Young, managing director, Ipsos Public Affairs and a principal author of the report.
In response to new survey questions, American families reported that students make college selections largely on their own while parents played a much greater role in deciding how to pay for it. For the first time this year, the study examined student loan borrowing by student course of study. The field with the highest percentage of borrowers was visual and performing arts (53%), followed by liberal arts (42%).
More than two-thirds of students and parents strongly agreed that college is needed now more than ever (70%) and the path to earning more money (69%). The number of students willing to stretch themselves financially to pay for college (61%) is higher than each of the previous five years of the survey, while parents’ willingness held steady from last year (53%). Less than half of parents strongly agreed that they would rather borrow than not send their child to college (47% vs. 51% in 2011), whereas the percentage of students who preferred to borrow rather than not attend remained unchanged (62%).
Grants and scholarships declined from last year’s peak, but were still higher than previous years, financing the largest portion of college bills (29%). Student borrowing funded a larger percentage of costs (18% vs. 15% in 2010), with federal student loans accounting for 13 percent, private student loans 4 percent and other types of borrowing 1 percent.
Thirty-five percent of students borrowed education loans to pay for college: 25 percent borrowing federal loans only, 9 percent using a mix of federal and private loans, and 1 percent tapping private loans only. The high usage of federal loans among students with private education loans reflects their nearly universal use of the FAFSA (98% compared to 81% overall).
Credit card ownership by college students has dropped two years in a row. Overall, 35 percent of undergrads carried a credit card, down from 42 percent in 2010, with the sharpest drops among sophomores and juniors. Of those with a card, the average balance was $755. Thirty-three percent reported carrying no balance on their credit card.
The 2012 nationally representative study, “How America Pays for College,” is the fifth in the series. Interviews with 801 undergraduate college students, ages 18 to 24, and 800 parents of undergraduates were conducted by telephone spring 2012. The margin of error on percentages from this survey using the whole sample is +/-2.5 percentage points with a confidence level of 95 percent. The full study and a related infographic are available at www.SallieMae.com/HowAmericaPays.
Sallie Mae (NASDAQ: SLM) is the nation’s No. 1 financial services company specializing in education. Whether college is a long way off or just around the corner, Sallie Mae turns education dreams into reality for its 25 million customers. With products and services that include college savings programs, scholarship search tools, education loans, insurance, and online banking, Sallie Mae offers solutions that help families save, plan, and pay for college. Sallie Mae also provides financial services to hundreds of college campuses as well as to federal and state governments. Learn more at SallieMae.com. Commonly known as Sallie Mae, SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.
Ipsos is an independent market research company controlled and managed by research professionals. Founded in France in 1975, Ipsos has grown into a worldwide research group with a strong presence in all key markets. In October 2011, Ipsos completed the acquisition of Synovate. The combination forms the world’s third largest market research company. With offices in 84 countries, Ipsos delivers insightful expertise across six research specializations: advertising, customer loyalty, marketing, media, public affairs research, and survey management. Ipsos researchers assess market potential and interpret market trends. Ipsos has been listed on the Paris Stock Exchange since 1999 and generated global revenues of €1,363 billion (1.897 billion USD) in 2011.