Feeling Flush, More Parents Open Their Wallets for College Spending
As lingering financial fears from the recession fade, more parents are willing and able to open their wallets to pay for their children’s educations.
Parents have become the top source of college funding for the first time since 2010. According to a new report from private student loan lender Sallie Mae’s, parental income and savings covered 32 percent of college costs in the academic year 2014-15, while scholarships and grants covered 30 percent.
Families spent an average of $24,164 on college this year, a 16 percent rise in spending from the previous year and the largest increase since 2009-10. The money spent covers costs of tuition, books, and living expenses.
Related: Average Family Has Saved Enough to Send One Kid to College for Half a Year
The report details how fewer parents fear the worst when it comes to the risks associated with college. Fewer parents are worried that their child won’t find a job after graduation, that their income will decline because of layoffs, and that there will be an increase in student loan rates. As confidence has increased, fewer families are using cost-saving techniques, such as having students live at home.
Another factor contributing to the willingness of parents to spend on education is the improving stock market. The average size of a 529 account, the popular college savings investment plan, continues to grow after the recession caused a downturn, hitting a balance of $20,474 as of December 1, 2014. That figure tumbled to $10,690 at the end of 2008, according to data from the College Savings Plan Network.
Although parents may be feeling better about paying for college, the basic trend of increasing prices continues, and loans are still a big part of the funding picture. Between 2001 and 2012, average undergraduate tuition almost doubled, causing an average real rate increase of 3.5 percent each year. Nearly 71 percent of college graduates left school with student loan debt this year, up from 54 percent 20 years prior. The average debt was $35,000 in 2015, an increase of 34 percent from 2010, student loan-tracker Edvisors has found.
Why Craft Brewers Are Crying in Their Beer
It may be small beer compared to the problems faced by unemployed federal workers and the growing cost for the overall economy, but the ongoing government shutdown is putting a serious crimp in the craft brewing industry. Small-batch brewers tend to produce new products on a regular basis, The Wall Street Journal’s Ruth Simon says, but each new formulation and product label needs to be approved by the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau, which is currently closed. So it looks like you’ll have to wait a while to try the new version of Hemperor HPA from Colorado’s New Belgium Brewing, a hoppy brew that will include hemp seeds once the shutdown is over.
Number of the Day: $30 Billion
The amount spent on medical marketing reached $30 billion in 2016, up from $18 billion in 1997, according to a new analysis published in the Journal of the American Medical Association and highlighted by the Associated Press. The number of advertisements for prescription drugs appearing on television, newspapers, websites and elsewhere totaled 5 million in one year, accounting for $6 billion in marketing spending. Direct-to-consumer marketing grew the fastest, rising from $2 billion, or 12 percent of total marketing, to nearly $10 billion, or a third of spending. “Marketing drives more treatments, more testing” that patients don’t always need, Dr. Steven Woloshin, a Dartmouth College health policy expert and co-author of the study, told the AP.
70% of Registered Voters Want a Compromise to End the Shutdown
An overwhelming majority of registered voters say they want the president and Congress to “compromise to avoid prolonging the government shutdown” in a new The Hill-HarrisX poll. Seven in ten respondents said they preferred the parties reach some sort of deal to end the standoff, while 30 percent said it was more important to stick to principles, even if it means keeping parts of the government shutdown. Voters who “strongly approve” of Trump (a slim 21 percent of respondents) favored him sticking to his principles over the wall by a narrow 54 percent-46 percent margin. Voters who “somewhat approve” of the president favored a compromise solution by a 70-30 margin. Among Republicans overall, 61 percent said they wanted a compromise.
The survey of 1,000 registered voters was conducted January 5 and 6 and has a margin of error of 3.1 percentage points.
Share Buybacks Soar to Record $1 Trillion
Although there may be plenty of things in the GOP tax bill to complain about, critics can’t say it didn’t work – at least as far as stock buybacks go. TrimTabs Investment Research said Monday that U.S. companies have now announced $1 trillion in share buybacks in 2018, surpassing the record of $781 billion set in 2015. "It's no coincidence," said TrimTabs' David Santschi. "A lot of the buybacks are because of the tax law. Companies have more cash to pump up the stock price."
Chart of the Day: Deficits Rising
Budget deficits normally rise during recessions and fall when the economy is growing, but that’s not the case today. Deficits are rising sharply despite robust economic growth, increasing from $666 billion in 2017 to an estimated $970 billion in 2019, with $1 trillion annual deficits expected for years after that.
As the deficit hawks at the Committee for a Responsible Federal Budget point out in a blog post Thursday, “the deficit has never been this high when the economy was this strong … And never in modern U.S. history have deficits been so high outside of a war or recession (or their aftermath).” The chart above shows just how unusual the current deficit path is when measured as a percentage of GDP.