After many families carefully mapped out a plan to pay for college costs, the economy’s downward spiral forced them to rip it up, writes Jahna Berry at USA Today.

“Parents are desperate,” said April Osborn, executive director of the Arizona Commission for Postsecondary Education, which administers several federal and state grants that go to Arizona college students.

Two federal grants, including one that provided up to $3,000 for awardees, were eliminated and won’t be available starting this fall, she said.

While the economy has taken a toll, many parents are struggling to pay for college costs because they were too optimistic early on, Osborn added.

When children are young, many parents assume that they will have higher salaries when it’s time to pay tuition bills or that their child will be an “A” student who’ll get scholarships. But when high school rolls around, “the fact is their kid is a solid ‘B’ student, not a super athlete and they have no savings,” Osborn said.

Yet many parents still yearn to foot the entire bill — or most of the bill — for college so their kids can avoid a lot of debt.

That’s a natural urge, but it’s also unrealistic, said Lynda Elley, financial adviser for CopperWynd Financial in Scottsdale.

“We need to start dialing back our expectations,” Elley said. “Everybody wants their kids to have the very best, but we’re not teaching them anything about fiscal responsibility if we are giving them the best of everything and they haven’t done anything to earn it.”

She added, “It sounds very cold, I know. But it’s reality.”

This comes as a new study shows that families are increasingly relying on grants and scholarships to pay for spiraling tuition at colleges and universities in the aftermath of the recession, writes Michael Cohn at Accounting Today.

The study claims that grants and scholarships covered 33 percent of college costs in 2010-2011. That’s an increase of 23 percent the previous year according to a study by student loan provider Sallie Mae and the research firm Ipsos Public Affairs.

“The percentage of families who received grants and scholarships grew substantially, from 55 percent in 2009-2010 to 67 percent in 2010-2011. More families filed the Free Application for Federal Student Aid, jumping from 72 percent in the 2010 report to 80 percent in the 2011 report. Most of the increase came from middle- and high-income families.”

The study found that virtually all the 1,600 families interviewed said they were adopting cost-savings measures, such as attending lower-cost colleges, living at home, or going to school part time. On average, families reported paying 9 percent less for college than in the previous year, writes Cohn.

Over the past four years, families have shifted away from four-year public schools towards less-expensive two-year public schools. Even high-income families pulled back from their 2010 levels of spending, with a sharp decline in how much parents pay from income and savings this year, writes Cohn.