American families are digging deep to pay for college
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In the wake of the housing bust and a sagging economy, American families are scrambling to pay for college, according to the latest research from Sallie Mae, which was conducted by Gallup.
With the cost of private universities now topping $35,000 for tuition, fees, room and board each year, Americans are tapping retirement accounts, asking extended family members to help out with college costs and keeping kids at home for the first few years of school to cut down on living expenses. One worrisome trend: Parents who took money from their retirement accounts withdrew an average of $8,554 in 2010 compared to $5,318 in 2009.
To pay for college, families are also borrowing more heavily from traditional sources including financial aid. And usage of 529 college savings plans is on the rise. ”Families are digging deeper and taking a number of measures to make college more affordable,” says Bill Diggins, senior consultant with Gallup. “They see great value in college. It’s an investment in the future. Most strongly agree that a college degree is more important now than ever.”
The findings of Sallie Mae’s study are different from another study conducted by Country Financial which shows that fewer Americans think college is a good investment. The Sallie Mae study found that 83 percent strongly agree (by rating 5 on a scale of 1 to 5) that college is “an investment in the future,” virtually unchanged over the past three years.
Why the discrepancy? The Sallie Mae study focused on families with kids who are actually in college or college-bound (families of undergraduate students aged 18 to 24) as opposed to the general population. “These are actual consumers of a college education,” says Sarah Ducich, Sallie Mae’s senior vice president of public policy.
In the coming weeks, Reuters will examine the trends emerging from this report, including some important demographic shifts among ethnic groups.
Do you have a college-bound kid? How do you plan to pay for it?
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Why is college so expensive in the first place?
Colleges have become expensive because the priorities have changed. Colleges were first established for the benefit of the society at large. Now, it has become a channel for corporate profit. The result is that less and less people are going to college, thereby creating the unequal-gap-society that affordable college education was supposed to eliminate.
And yet, many countries in Europe are still offering free college education to their citizens. America is dying, slowly. We can spend a million dollars to send a soldier to Afghanistan for 1 year, but not $10,000 for a student to go to college. This is the world we live in today. Very shameful indeed!
I’m refinancing the House and pulling out Equity. I’m lucky, I still have that! I’ll also take the Extra money and invest in the 529′s as well. We don’t qualify for student loans.. At least no reasonable rate ones. I can finance my car for 3.5% but my sons education at 8%? Right now rates are low 4 and 3/8ths fixed 30 year.
P.S. my kids ate going to State School!
There’s absolutely nothing wrong with state universities, and many states have good programs to help those students who have good grades (lottery funding, etc).