American parents are borrowing less for college than they have in the past few years. Instead, they’re more carefully picking colleges to help reduce costs, a Sallie Mae study released Thursday found.
This year, parents used income or savings to cover 42 percent of college costs, up 5 percent from 2013 and breaking a three-year trend of decreasing out-of-pocket spending.
“This year’s report reiterates families’ strong commitment to college and their belief in the value it brings,” noted Sallie Mae in press release. “At the same time, the report highlights that the way families meet the cost of college has changed as students and parents make more deliberate decisions to afford college.”
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Here are four steps families adopted this year to make the cost of college more reasonable:
Attend in-state colleges. Nearly 70 percent of those surveyed opted to benefit from in-state tuitions, which is typically lower than out-of-state. The average in-state college tuition and fee in the U.S. was $8,893 in the 2013/2014 school year, according to the College Board.
Skip the dorm. Fifty-four percent said they decided students would continue to live at home or would live with relatives, helping save both on housing and on travel costs. Even if there’s no college within commuting distance and your child won’t stay at home, you can pick a school closer to home to reduce travel expenses, as 61 percent did.
Get tax credit. Forty-two percent of those surveyed filed for education tax credits, which help reduce the amount of tax owed on your tax return. Keep in mind that you can’t claim a credit for education expenses paid with tax-free funds such as 529 education funds. Room and board, insurance, medical expenses, transportation and other living expenses don’t qualify either.
Cut the time in half. Thirty-four percent said that they chose a two-year institution such as a community college to cut costs, up from 30 percent in last year’s survey. This is the highest enrollment in two-year public colleges since the survey began in 2008. You can also reduce the time your kids spend in college by accelerating the pace of coursework, as 28 percent of those surveyed did.
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The study was based on a survey of 1,601 undergraduate students and parents of undergraduate students.
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