Survey Shows Families Borrowing Less for College
August 25, 2009
by Scholarships.com Staff
A new study offers surprising news in an uncertain economy: families are actually borrowing less money to cover college costs.
The study, titled "How America Pays for College," shows that about 58 percent of families did not borrow money for college for the 2008-2009 school year. Despite rising tuition prices of up to 5 percent over the last year, according to the College Board, high unemployment rates and deep budget cuts at schools across the country, it seems more families are relying on their own savings, scholarships and grant funding. While parents paid for about 36 percent of college costs, about 25 percent of students' costs in the year surveyed were covered by grants and scholarhips, and more than half of the respondents received some form of free aid, according to the study. The reliance on grants and scholarships increased by 15 percent over the last year, which could show more of an awareness by students to money available outside of lending in a struggling economy.
The same survey last year showed that about 53 percent of families chose not to take out loans for college. According to the New York Times, the numbers do not suggest that students would rather skip college than take out loans. In fact, fewer students than last year said taking out loans would stop them from pursuing an undergraduate degree, according to the article.
Other highlights of the study showed that:
- 67 percent said they were confident in their ability to continue to meet the cost of college in the current economy.
- 5 percent used credit cards to pay for college expenses.
- 10 percent of costs were covered through students' own savings and employment.
- 6 percent of costs were covered through students' relatives and friends.
- 91 percent said that pursuing higher education led to a better life.
Of those who did borrow for the last school year, 25 percent took out federal student loans and 12 percent borrowed private education loans. Those who did borrow also spent about 30 percent more on their educations than those who did not, suggesting a higher cost of education for those who took out federal and private loans.
The study was conducted by Gallup for Sallie Mae last spring with more than 1,600 college-going students and parents of undergraduates responding.