Families expect college, but have no plan for costs

Students, scholarships paying more expenses as parents put less income toward support

The responsibility for paying for college has gradually shifted over the past decade, and now parents and students typically share the cost equally, a new national study suggests.

Through a combination of work, savings and borrowing, students covered 30% of college costs for the 2016-’17 academic year, while parents picked up 31%, according to the 10th annual Sallie Mae “How America Pays for College” survey of undergraduate families.

The report also says that while 9 in 10 families always knew their child would go to college, fewer than 4 in 10 actually created a plan to pay for it by saving, researching costs and identifying sources of funding, the survey found.

Those who have a plan to pay for college save more and borrow less, according to Sallie Mae surveys through the years.

Scholarship and grant support covered the largest share in a decade, accounting for an average 35% of the total cost, or $8,390, as colleges work harder to compete for cost-conscious students.

Just one year prior, in the 2015-’16 academic year, students contributed 25% and parents picked up 36%.

Parents paying less of their annual income toward college is chiefly responsible for the overall drop in parent support — from $4,341 in 2015-’16 to $3,192 in 2016-’17, according to the study Sallie Mae conducts annually with Ipso, a global, independent market research company.

“Families are more cost- and value-conscious,” Rick Castellano, spokesman for Sallie Mae said in an interview Wednesday. “It’s more of a family responsibility than a parent responsibility.”

That means “the talk” that used to focus on sex and drugs now includes “how will we pay

for college,” Castellano said.

As a result of more conversations about cost, 98% of survey respondents said they took steps to make college more affordable. Threefourths eliminated colleges from their prospects list due to cost, half said the student decided to attend a nearby college and live at home, and one-fourth took accelerated programs to finish college faster.

Students generally are stepping up their work efforts, too. In the Sallie Mae survey, a majority — 76% — worked to help pay costs. Fifty-five percent worked year-round, while 15% worked only during school breaks and 6% worked only during the school term.

The study found regional differences in work patterns among students and family attitudes toward paying for college. Families in the Midwest were least likely to be willing to stretch themselves financially for college, and Midwestern students were most likely than those in other regions to work more hours to make college affordable.

Fewer Midwestern students also plan to attend graduate school, the survey found.

Unlike previous generations, it’s impossible for students today to work enough hours to cover all college costs.

The average cost of room and board at a public university last year was $9,814 — up 4.6% in one year — while tuition and required fees combined were an additional $8,173 for in-state residents of public universities — also up 4.5% in a year, according to data released this week by the U.S. Department of Education.

Students are paying a much higher share of the cost of college than students 40 years ago, when a family could have sent three children to the University of Wisconsin-Madison for what it costs to send one kid today, adjusted for inflation.

Public university tuition has steadily risen above the rate of inflation since 1987, while state support has lagged below inflation since 1980 in Wisconsin and elsewhere. The diverging curves reflect a national trend of a dramatic shift in who covers the majority of cost for a college education: students and their families, instead of taxpayers. Over the past 10 years of the Sallie Mae survey, whenever parents contributed less, students borrowed more, said Marie O’Malley, senior director of consumer research for Sallie Mae.

In 2016-’17, families who borrowed also spent an average $31,082 for college, nearly twice as much as families who did not borrow, the survey found.

More students from families who borrowed (36%) than those who didn’t borrow (11%) attend four-year private colleges.

Sensitivity to cost is prompting more families to fill out and file the Free Application for Federal Student Aid (FAFSA) — the gateway to federal grants, loans and workstudy funds for college students, O’Malley said.

“Is it because there’s a rise in awareness of what filing a FAFSA means — it’s how you get financial aid — or is there a rise in need?” O’Malley asked.

More families are eliminating college options because of cost than a decade ago, up from 58% to 69%, she added.

“When families evaluate the value of college, slightly more now say there’s little correlation between cost and quality,” O’Malley said.

“But overwhelmingly, nearly everybody says college is a worthwhile investment.”