COLLEGE SAVINGS 101

Savingforcollege.com

Study shows 2/3 of families consider price when selecting a college
http://www.savingforcollege.com/articles/study-shows-2-3-of-families-consider-price-when-selecting-a-college-985

Posted: 2016-10-13

by Kathryn Flynn

With the price of a college education rivaling that of a mid-sized home, many families are facing the harsh reality that their savings are either non-existent or coming up short. Only 16 percent of families used savings from a 529 plan to pay for college in 2015-16, down from 17 percent in the prior year, according to education lender Sallie Mae's "How America Pays for College 2016 report". But instead of stressing out about not having enough money to pay tuition, families are starting to consider less expensive schools.

While students of previous generations primarily focused on getting into certain colleges and universities no matter the cost, todayís students are committed to staying out of debt and are heavily influenced by the price tag. In fact, Sallie Mae reports that 67 percent of families who were deciding between colleges took price into consideration. Whatís more, over half of families surveyed said they chose not to apply to certain schools because the cost was too high, and 44 percent waited to see how much financial aid they would get before they applied.

Yet when asked about their primary reason for choosing a school, parents had slightly different answers than students. For parents, the academic programs offered by the school had the biggest influence on their decision, but students said that personal choice and financial considerations, including cost and financial aid, had the biggest impact on their choice of school. This comes as little surprise, since in most cases itís the student who will ultimately be responsible for paying back any money thatís borrowed to pay for college.

RELATED: The biggest college planning mistake parents make

Source: Sallie Mae "How America Pays For College 2016"

Many of those who factor price into their college decision consider attending a community college for two years before transferring to a four-year school. Savingforcollege.comís 2016 Annual College Savings Survey found that more than half of parents were open to sending their child to a community college as a way to keep overall costs down. And data from Sallie Mae is confirming that two-year public colleges are a growing trend, with community college enrollment increasing from 23 percent in 2009-10 to 31 percent in 2015-16.

The study also found that students enrolled in community colleges were generally first generation college students, came from lower-income families, worked year-round and did not have a plan to pay for college. However, almost all of these students and their parents (94%) believed that college is an investment in the studentís future, and one-third of the students were planning to pursue a bachelorís degree in the future.

Tuition prices also continue to influence students after the application period. Data from the National Association of for College Admission Counseling shows that one third of college students transfer to other schools before graduation, according to The Washington Post. Reasons for transferring vary, but Sallie Maeís study revealed that high costs are one of the biggest drivers. In fact, 28 percent of students who left the college they planned to attend, either before or after enrollment, did so because of financial reasons, according to Sallie Mae. Students who worked were more likely to cite cost as the main reason for transferring, as were middle-income families.

RELATED: Considering community college? Here are the pros and cons

With the price of a college education rivaling that of a mid-sized home, many families are facing the harsh reality that their savings are either non-existent or coming up short. Only 16 percent of families used savings from a 529 plan to pay for college in 2015-16, down from 17 percent in the prior year, according to education lender Sallie Mae's "How America Pays for College 2016 report". But instead of stressing out about not having enough money to pay tuition, families are starting to consider less expensive schools.

While students of previous generations primarily focused on getting into certain colleges and universities no matter the cost, todayís students are committed to staying out of debt and are heavily influenced by the price tag. In fact, Sallie Mae reports that 67 percent of families who were deciding between colleges took price into consideration. Whatís more, over half of families surveyed said they chose not to apply to certain schools because the cost was too high, and 44 percent waited to see how much financial aid they would get before they applied.

Yet when asked about their primary reason for choosing a school, parents had slightly different answers than students. For parents, the academic programs offered by the school had the biggest influence on their decision, but students said that personal choice and financial considerations, including cost and financial aid, had the biggest impact on their choice of school. This comes as little surprise, since in most cases itís the student who will ultimately be responsible for paying back any money thatís borrowed to pay for college.

RELATED: The biggest college planning mistake parents make

Source: Sallie Mae "How America Pays For College 2016"

Many of those who factor price into their college decision consider attending a community college for two years before transferring to a four-year school. Savingforcollege.comís 2016 Annual College Savings Survey found that more than half of parents were open to sending their child to a community college as a way to keep overall costs down. And data from Sallie Mae is confirming that two-year public colleges are a growing trend, with community college enrollment increasing from 23 percent in 2009-10 to 31 percent in 2015-16.

The study also found that students enrolled in community colleges were generally first generation college students, came from lower-income families, worked year-round and did not have a plan to pay for college. However, almost all of these students and their parents (94%) believed that college is an investment in the studentís future, and one-third of the students were planning to pursue a bachelorís degree in the future.

Tuition prices also continue to influence students after the application period. Data from the National Association of for College Admission Counseling shows that one third of college students transfer to other schools before graduation, according to The Washington Post. Reasons for transferring vary, but Sallie Maeís study revealed that high costs are one of the biggest drivers. In fact, 28 percent of students who left the college they planned to attend, either before or after enrollment, did so because of financial reasons, according to Sallie Mae. Students who worked were more likely to cite cost as the main reason for transferring, as were middle-income families.

RELATED: Considering community college? Here are the pros and cons

 

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