For the 2014-2015 academic year, families paid an average of$24,164 for college, says the annual How America Pays for College report from Sallie Mae — a 16% increase from the year before.
Based on tuition, room and board, transportation and all other related school expenses, CNN Money says the main reason is the rising cost of college, but it is also because parents’ confidence increased in the economy and their personal financial well-being.
According to the report, parents chose to pay more toward the cost of higher education because they had collectively breathed a sigh of relief over economic factors for the first time since the recession. There were, the study reported, fewer parents who were worried about income declines linked to job loss, falling home values, loan rate increases, or the fact that their child would not find a job after graduation.
For the first time since 2010, the contribution from parents was greater than from student scholarships and grants. The average college student this academic year received 32% of the total cost of college from their parents’ income and savings compared to 30% from scholarships and grants.
Even though parents took some money from their savings, they used 40% more money from their current income than in 2013-2014.
“Parents do seem to feel more secure about their income,” said Marie O’Malley, Sallie Mae senior director of consumer research. It’s the lowest level of worry since the report started eight years ago.
College spending increased across the board, but it was 25% higher for the top income bracket parents from last year, meaning that high income parents paid $12,000 more for college in 2015 than middle- and low-income families.
The study included 800 parents and 800 undergraduate students ages 18-24 who were surveyed in April of this year by the Ipsos marketing firm in conjunction with Sallie Mae. Michael Gross, who leads the higher education practice at Ipsos, believes that parent willingness to spend more has to do with a change in mindset, writes Zoe Henry for Inc.
“There is a much brighter sense of optimism that the money they spend educating their child is really an investment that’s going to pay off in the end,” he said in an interview with Time.
There are still parents who are feeling the pinch. Tom Goldstein, a professor at the University of California at Berkeley, has a son who just finished his freshman year at Princeton University. “I’m delighted that he’s there, but it takes up all my money.” Goldstein’s income is right at the cutoff point that disqualifies him from receiving financial aid for his child. He says he is not certain his son’s chances of getting a job after graduation are any higher than they have been in the past several years.
“I’m pretty old fashioned in that I think of college as a place to get a broad education, where people have an opportunity to become better critical thinkers and develop intellectually and spiritually,” says Andrea Lingenfelter, a professor of literature who plans to send her two teenagers to college in the coming years.
Her children have college funds that will allow them to attend state schools. Still, Lingenfelter says she does not trust the economy and, as a result, is very conservative when it comes to financial decisions.
Danielle Douglas-Gabriel of The Washington Post writes that increased parental out-of-pocket contribution to their children’s college expenses is striking since tuition has increased faster than the rate of inflation and wages have not kept up with the cost of college. The number of families who borrowed to pay for children’s college expenses rose from 35% to 38%.
This is still well below the high point of 46% in 2010, but the families who took out loans this year also spent an average of 34% more in total than those who did not take out a loan. Of the families who did take out loans, students took on most of the responsibility by signing for almost three-fourths of the amount that was borrowed.
Children are also working, at least part-time, with almost three-quarters helping to carry the burden of their college costs, reports the survey. Mandi Woodruff, reporting for Yahoo! Finance, says student income and savings covered 11%, an increase of 5% from the prior year.