Families are spending more on college but are less worried about economic factors affecting their ability to pay for it, according to a new report by student lender Sallie Mae.
Parent income and savings are the top source of college funding, covering 32 percent of the costs, surpassing scholarships and grants (30 percent) for the first time since 2010, The “How America Pays for College” report found. Parents spent 16 percent more money on college, for an average cost of $24,164 in tuition, room and board, living expenses and other costs during the 2014-2015 academic year, compared to $20,882 the previous year. The change was fueled largely by a 25 percent spending increase by high-income families.
The report released Monday was compiled from the results of phone interviews in April of 800 undergraduate students between ages 18 and 24, and 800 interviews with parents of undergraduate students conducted by Ipos market research firm for Sallie Mae.
While college spending increased, parents were less worried about paying for the expenses. Five years ago, 33 percent of parents had been extremely worried that declining income due to a job loss would hurt their ability to afford college. The worry dropped to 23 percent in 2014 and to 17 percent for the most recent academic year. Concerns about the job market for students and increasing student loan rates also declined.
But while most families surveyed, 97 percent, agreed college was a worthwhile investment, only 40 percent have a plan to pay for it. In families with a plan in place, the report found that students were more likely to pursue a bachelor’s degree, there was more willingness and ability to spend on college and students borrow 40 percent less than families with no college funding plan.
“College remains a priority for parents, and they are feeling more confident as they reach into their own pockets and put their money where their values are,” Sallie Mae Chairman and CEO Raymond Quinlan said. “It’s gratifying to see families are borrowing responsibly and making efforts to reduce costs. Still too few plan for their college investment.”