Parents Shell Out Less for Kids in College

Associated Press

University of Washington students study in the school's Suzzallo Library in Seattle.

Parents are giving their children less cash to pay for college amid continued economic weakness, adding to pressure on students to borrow money, rely more on grants and scholarships?and in many cases, live at home.

Parents shelled out an average of $5,727 from their income and savings for each child's college costs in the 2012-2013 academic year, down more than a third from $8,752 in 2009-2010, according to an annual report on college funding by student loan provider Sallie Mae to be released on Tuesday. The share of college costs paid by parents out of income and savings fell to 27% from 37% three years ago. The figures don't include borrowing by parents, which also declined slightly in the period.

"Parents are still willing to stretch themselves financially, but their incomes just haven't kept up," said Sarah Ducich, senior vice president for public policy at Sallie Mae.

To defray the cost of college, families are leaning more heavily on university scholarships, even as many schools are struggling with their own financial difficulties. Last year, 30% of college costs were covered by institutional grants, up from 23% in 2009-2010, the new report said. For the third year in a row, that was the largest source of funds for college costs.

At the same time, more students are rejecting college dormitories. In 2013, 57% of families reported a student living at home or with a relative, up from 43% three years ago. Students from low-income households have traditionally lived at home in larger numbers, but among families with incomes over $100,000, the share of students staying at home has doubled to 48% since 2009-2010.

Among that group are the three sons of the Pawlisz family of suburban Chicago. All three, now aged 20 to 27, pursued post-secondary education while living at home, said Christine Pawlisz, their mother. The youngest recently finished his fourth semester at community college.

Along with 17% of families putting children through college, the Pawlisz family has leaned heavily on the 529 accounts they set up for each son. But during the economic downturn, the accounts took a beating, and any possibility of living on campus disappeared.

In 2009, Ms. Pawlisz's husband, Mel, lost his job as a fleet supervisor at a water company. The family appealed to Elmhurst College, where their oldest was studying history, for additional help. The school came through with a larger scholarship. "It made a big difference for us," said Ms. Pawlisz.

The family is emblematic of another trend: the relative importance parents place on their children getting a college degree continues to tick up. In 2013, 85% of parents said a degree was an investment in the future, up from 80% in 2008.

"We tell our youngest there's no guarantee you'll find what you want to do, but eventually, down the road, it will help," said Ms. Pawlisz. "As long as you have a college degree, it'll help, that's all employers look at."

The Sallie Mae report also reinforced evidence that families are increasingly choosing where to apply for college based on cost. Last year, 67% of families eliminated colleges based on cost during the admissions process, up from 56% in 2009.

"I think we've entered into a different era with regard to how families approach paying for college," said Ms. Ducich. "They are now approaching it with a cost consciousness they didn't have prior to the recession. This is the new world of higher education."

Write to Douglas Belkin at doug.belkin@wsj.com

A version of this article appeared July 23, 2013, on page A4 in the U.S. edition of The Wall Street Journal, with the headline: Parents Shell Out Less for Kids in College.

Source: http://online.wsj.com/article/SB10001424127887324144304578622343932131354.html?mod=rss_US_News

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