American families are relying less on loans to foot the bill for college. Instead, they’re using more income and savings to cover college costs.
That’s according to an annual study by Sallie Mae, which said student loan borrowing is at its lowest level in five years. College students and their parents took out loans to pay for 22 percent of college costs for the 2013-14 school year, down from 27 percent in the previous two years .
“Financial aid experts say that even a small reduction in borrowing can help students save thousands of dollars in future interest payments, and make it more likely that they will be able to afford those payments come graduation,” CNN Money said.
Parents and students paid 42 percent of college costs out of pocket in the last school year, either using income or savings, according to The Wall Street Journal. That’s an increase from 38 percent the previous school year.
Families are spending about $20,882 per year on college, Reuters said. That figure has remained steady for the past three years. College costs peaked in 2010 at $24,097.
Sarah Ducich, a co-author of the report, told the WSJ that cost-conscious families “are not going to write a blank check” for college. “They are making a lot of decisions to control the cost,” she said.
In an effort to make college a more affordable option, more students are attending two-year colleges (34 percent), choosing in-state schools (60 percent), living at home (54 percent) and working more hours while in school (48 percent), CNN Money said.
“Families are committed to college and are making deliberate decisions to reduce how much they pay for it,” Raymond Quinlan, Sallie Mae’s chief executive officer, said in a statement.
Are you surprised to hear that students and their parents are borrowing less to pay for college? How did you pay for your education? Share your thoughts below or on our Facebook page.