Families Borrowing More for College as Costs Rise
A survey by Sallie Mae and Gallup says that American families are borrowing more and spending more savings to cover college costs, which rose 17 percent on average in the 2009-10 school year.
The survey of over 1,600 college students and parents conducted last spring revealed that while more families were implementing cost-cutting measures, like students living at home and eliminating college choices based on cost.
Other findings included:
Parents pay over 37 percent of a student’s college expenses by tapping into savings, using current income or taking out a loan. The second biggest contributor is grants and scholarships, which covered 23 percent of college expenses.
The number of parents who said they borrowed money to pay for college rose to 46 percent, from 42 percent one year earlier. Parents paying from income and savings rose 26 percent.
Students borrowing to pay college expenses jumped from 16 percent to 25 percent in the past year.
For families with annual household incomes of $100,000 to $150,000, the average cost of college increased as much as 30 percent. For those with annual household incomes of under $100,000, costs rose almost 20 percent.
Most financial experts agree that parents who take money from savings and current income or borrow heavily face a greater risk for financial problems of their own in the future. If spending for college has had a negative impact on your personal finances and you are considering filing bankruptcy to recover, contact our Jacksonville, Florida bankruptcy law firm.
Greg Gilbert
Keith Maynard
