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Families Struggle with Skyrocketing College Costs

Tuesday, August 17th, 2010

If you think college costs are on a rapid ascent, recent statistics released by Sallie Mae and Gallup support your belief. According to reports, the average cost of college attendance rose a staggering 17 percent in 2010.

Just how much are costs rising? Sources indicate that the average costs of college attendance increased roughly 30 percent for families making between $100,000 and $150,000. In addition, those in the $35,000 to $100,000 income bracket experienced a 20 percent jump in college costs.

In order to pay college tuitions, parents and students are borrowing an increasing amount of money, as well as using more of their personal income.

How are Students Paying for College?

The survey revealed some interesting figures on how Americans are paying for
college:

  • In order to pay for school, 73 percent of Americans say they have reduced other spending, 48 percent have increased their hours at work, and 43 percent of families say their student has lived at home in order to reduce housing costs.
  • According to the report, which polled more than 1,600 parents and students, parents paid for 37 percent of the total cost of college attendance. Of this total, 10 percent was through loans, and the rest was given from current income.
  • On the other side, loans secured by students covered 14 percent of the cost of college, and student income and savings accounted for 9 percent of spending.
  • The second largest source of college payment came from grants and scholarships, which accounted for 23 percent of overall college funding.

These numbers show that most families have to dip into numerous sources to cover the cost of higher education.

Consequences for Personal Finances

The statistics above show how college costs are apportioned among various parties. What they don’t reveal is the impact rising costs have had on the personal finances of both parents and students.

  • Last year, the average amount of money parents paid from their personal income and savings rose 26 percent to $8,752, up from the previous year’s total of $6,934.
  • Further, while the average amount parents took out in college loans this year rose 27 percent to $2,261, up from $1,775 in 2009.
  • The amount of income and savings students had to use for college costs jumped 16 percent to an average of $2,314.
  • Student loan borrowing jumped 25 percent to an average figure of $3,396.
    In order to secure financial aid, experts advise that all families should fill out a Free Application for Student Aid form each year. Surprisingly, 13 percent of families were not aware of this form, according to the survey.

If college costs have sunk your personal finances, filing bankruptcy may help you recover from collegiate sticker shock.

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