Despite rising tuition prices, more students are just saying "No" to loans

http://www.savingforcollege.com/articles/despite-rising-tuition-prices-more-students-are-just-saying-no-697

40 million Americans are currently living with student loan debt, and 7 million of these borrowers have already defaulted on their loans. The total amount of student debt in our country has topped a record breaking $1.2 trillion, preventing many recent graduates from getting on with their lives after college. But last week, the College Board released its annual "Trends in College Pricing" report, which revealed some much needed positive news regarding student borrowing.

According to the study, total education borrowing to pay for the 2013-14 school year dropped eight percent from the previous year, and has declined a whopping 13 percent over the last three years. Borrowing per student is also down by six percent. But just because students are borrowing less doesn't mean they are paying less. Average published tuition and fees for post-secondary education have continued to rise across all sectors, as well as the net price that students actually pay. The good news is that the rates of the price increases are lower than they've been in the past five, 10 and 30 years.

So just how much does college cost these days? The average published tuition and fees for a public four-year in-state school for the 2014-15 school year were $9,139 ($31,231 for a private, nonprofit four-year school). However, many full-time students received grants and tax deductions or credits, which brought the average net price of a four-year public school down to around $3,030 ($12,360 for a private, nonprofit four-year school). Those planning to live on campus add on another $9,804 for public school room and board costs and $11,188 for private.

While the lower rates of tuition increases are certainly a good thing, families need to keep in mind that the cost of going to a public four-year school is still three times more than it was during the mid-eighties. Graduating without taking on debt is a considerable challenge for many, and almost impossible if you don't have any savings.

One of the most effective and simplest ways to save for college is with a 529 college savings plan. Similar to a retirement account, your earnings will grow tax-free and you won't be taxed when it's time to withdraw the funds as long as they are spent on qualified education expenses. Your home state's plan may even offer an additional benefits such as a state tax credit or deduction on your contributions. With over 100 plans available and thousands of different investment options, families can choose the best plan to suit their college planning needs.