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Financial Planning > College Planning

Parents Are Now Paying More Than Half of Their Kids’ College Costs

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What You Need to Know

  • This is the case even though college costs fell during the pandemic, Sallie Mae reports.
  • More families are starting to plan for college costs earlier.
  • Fewer families are filling out the FAFSA.

Parents in the U.S. are paying a larger percentage of their children’s higher-education expenses, even as costs for college dropped during the pandemic.

Through a combination of savings, borrowing and putting aside some of their current paychecks, parents are now footing about 54% of the bill for tuition, room, board and other expenses, according to a survey out last week from Sallie Mae, the student lender, and Ipsos, the polling company. That’s up 2 percentage points from the year before.

In 2012-13, the survey showed that parents said they covered 36% of the cost of college.

Families paid an average of $26,373 in the 2020-21 school year, according to the survey, “2021: How America Pays for College.” That was down from $30,017 the previous year, as the Covid-19 pandemic forced universities to shut their residential dormitories — decreasing or eliminating the residential costs. In some cases, colleges reduced tuition.

Average tuition, room, board and other expenses at a four-year private university in the last academic year was $50,770, while a four-year public college for out-of-state students would run families $38,640 a year, according to the College Board.

Over the past few decades, as college costs have skyrocketed, some parents have begun planning and saving for university even before their children are born. In 2021, 58% of respondents said they created a plan to pay for college before their kid enrolled.

Billions of dollars have been put into so-called 529 plans, which allow people to invest on behalf of someone else. The gains are generally tax-free, as long as they are used to pay for educational expenses. The definition of what counts as a qualified expense varies by state.

“Families are doubling down on their commitment to higher education, and that may be why we’re seeing parents kick back more of their income and savings to cover the costs,” Sallie Mae spokeswoman Ashley Boucher said. According to the report, 89% of families believe a college education will open more opportunities for their children, while 81% believe it will lead to better earning potential.

Parents and students are potentially leaving free money on the table. Fewer people have been filling out the FAFSA — or Free Application for Federal Student Aid. Many families who don’t bother to fill it out wouldn’t qualify, but some didn’t know it was an option.

“In the midst of the pandemic, we would have expected more families looking to keep their hard-earned dollars in their pockets and rely on resources like scholarships, grants and money that doesn’t need to be repaid,” Boucher said.

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