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Families Paying More, Borrowing Less to Cover College Costs

More families are paying for college out of their own pockets—and paying more by tapping into their savings or working extra hours, a new Sallie Mae survey finds.

About 35 percent of families took out loans last year to pay for school, with the student as the sole borrower most of the time. But the report found that, overall, borrowed funds paid for 22 percent of costs in 2013-14, a drop from the prior year when the portion was 27 percent.

The rest of the tuition puzzle is met with financial aid. Sallie Mae reports that most families (81 percent) applied for federal financial aid and 61 percent received some form of help. Overall, about one-third of college costs are covered with grants or scholarships.

This is the seventh year that the financial services company conducted the "How America Pays for College" national poll of 1,600 undergraduates ages 18 to 24 and their parents. The results were released July 31.

The new findings highlight an important misconception about the high price of college, which can keep some high school students from considering higher education. The published, sticker price is typically not what families end up paying. 

The average spending on college this past academic year was $20,882, according to Sallie Mae. To keep costs down, students are making cost-saving choices, such as enrolling in two-year, rather than four-year schools, commuting and accelerating coursework to finish sooner. Two-thirds of families polled said they eliminated colleges based on cost

Three in five families think that colleges expenses are a shared responsibility between the parent and student, Sallie Mae reports. Student income and savings paid for 12 percent of college costs this year and parents covered 30 percent.

In low-income families, the student is relied upon more heavily to help with expenses, compared to those from middle- or upper-income households, the poll revealed.

This year, Sallie Mae identified four approaches to saving, based on an analysis of its polling data. Americans with college-age children generally fall equally into one of these categories.

1. Proscrastinators: These families have not saved much for college, rely more on their students to pay, and might not enroll because of the expense.

2. American Dreamers: Often from minority or disadvantaged backgrounds, these are often families with first-generation college students that highly value college.

3. Reluctant Borrowers: Most in this group are trying to cover college expenses without taking out loans, but they are willing to borrow if necessary to complete a degree.

4. Determineds: These families have saved regularly to cover four years of college and contribute about half of their child's expenses.

Overall, about 20 percent of families meet the entire cost of college with their own funds, the survey found.

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