Students and their families have been worrying for years about the rising cost of college and the amount of debt many graduates will have to repay. But a new report from student loan provider Sallie Mae suggests that families may be rethinking the way they pay for higher education -- and colleges are responding.
The Wilson family of Colfax, Iowa, is bracing for two tuition bills before long. Tim Wilson, 46, will have two sons -- a freshman and a senior -- going to Simpson College in Indianola, Iowa, this fall. The sticker price at the liberal arts college is around $39,000 a year for tuition, room and board.
Wilson works in sales and his wife is a teacher's associate. They've been putting aside money for college every month since the kids were small. Between that and financial aid, he says they've covered about 90 percent of their oldest son's costs. But he says the recession cut into their savings.
"And we fell a little bit short of my second son, just because of the markets they way they were over the past few years with the savings account," Wilson says. "So we're kind of scrambling."
Many parents are struggling to keep up. The Sallie Mae report finds they're contributing about 35 percent less than just a few years ago -- from $8,700 per year in 2010 to $5,700 now.
Sallie Mae senior vice president Sarah Ducich says before the recession, parents used to pull out all the stops to pay for college if they could. "They really reached into every single pocket and basically broke the piggy bank," she says.
But that's changing.
"I think the shift is that parents and students are approaching paying for college with a greater cost consciousness than they've ever had," she says.
They're now relying more heavily on students working, looking for less expensive degree options, or living at home. The report also finds that scholarships and tuition discounts are covering more of the costs than parents' spending.
Mark Kantrowitz is the publisher of edvisors.com, which offers advice on paying for college. He says institutions are responding to families' inability to pay by knocking down the price.
"The colleges are reacting to supply and demand," he says. "There are some colleges that have had trouble filling their classes."
But Kantrowitz points out, even with a big scholarship, private school students still tend to pay more than their state-school counterparts.