Will Rising Costs Make College Unattainable?
By Christina Camara
As summer wears on, some Americans are losing confidence in their ability to send their children to college.
According to a recent Country Financial Security Index survey for which 3,000 American households were contacted, 61 percent were "very" confident" or "somewhat confident" that they had the resources for college costs in April, but two months later, only 54.2 percent felt that way. This is its lowest level since August 2010, County Financial said. For those who feel "not very confident" or "not at all confident," the numbers rose from 36.2 percent to 42.7 over the same period.
"The summer can be a stressful time for your finances," says Keith Brannan, Country Financial's vice president of financial security planning. "Summer travel expenses, college tuition payments, and weekend outings make saving a challenge." However, Americans as a whole are more optimistic than they were a year ago. The company measures Americans' attitudes about their financial security every two months by surveying at least 3,000 people.
Survey data also shows that fewer Americans, at 57 percent, believe a college education is a good investment. That figure was 81 percent in 2008. More are feeling that student loan debt is burdensome as well. America's average student graduates with debt of between $23,000 and $27,000, according to the New York Times. "Much like the mortgage brokers who promised pain-free borrowing to homeowners just a few years back, many colleges don't offer warnings about student debt in the glossy brochures and pitch letters mailed to prospective students," the newspaper said.
Last year, 31 percent thought more than $20,000 in student loan debt was too much. In 2012, that number jumped to 42 percent. Student loan debt is now at $1 trillion, a figure that is growing faster than any other kind of debt.
A survey released July 30 by the Consumer Federation of America and Certified Financial Planner Board of Standards that looked back fifteen years, shows fewer Americans are saving for college now. The survey says 48 percent of families with college-bound children are saving for their education, down from 56 percent in 1997. Also, 38 percent of Americans live paycheck to paycheck, versus 31 percent in 1997, USA Today reported.
And earlier this month, the Federal Reserve said May marked the biggest increase in credit-card debt in almost five years. The increase was $17.1 billion, exceeding expectations. As borrowing picked up, hiring slowed down, Bloomberg reported. The jobless rate is at 8.2 percent.
PC World recommended the following online sites for information:
- studentaid.ed.gov: The U.S. Department of Education offers a way to set up a personal account to research schools and scholarships. It has advice on avoiding scams. Users can apply for federal loans.
- fafsa.ed.gov: FAFSA (Free Application for Federal Student Aid) is the starting point for all federal student aid; all students applying for aid must submit a FAFSA form.
- finaid.org: This site provides a simple explanation of the financial aid process.
- meritaid.com: Merit aid lists grants, scholarships, and discounts that hundreds of U.S. colleges offer to admitted students based on individual achievements.
Also - check out AccountingWEB's comprehensive list of accounting student scholarships.
Paying for College
As the school year approaches, families are preparing to write out large checks to colleges and universities.
The Wall Street Journal reported that at least 123 institutions charged $50,000 or more for tuition, fees, and room and board during the 2011-2012 academic year. The Chronicle of Higher Education said 58 colleges charged that much in the 2009-2010 academic year.
With interest rates on federal loans at 5 percent to 7.9 percent, and rates on private student loans as high as 16 percent, families are looking for ways to limit the damage.
College cost experts in The Wall Street Journal urged consumers to consider the pros and cons of all methods of payment, which include:
- Home equity lines of credit at about 4 percent interest.
- Tuition installment plans, which often charge no interest but an enrollment fee, which can vary.
- Zero-interest loans offered by the school, although not everyone is eligible and not all schools offer them.
- Credit cards with 0 percent introductory rates.
- Student Loans + Credit Card Debt = Stress
- College Grads Share Goals, Concerns as They Prepare to Enter Workforce
- Is a College Education Worth the Money?
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