Cassie Luna, a recent high school graduate, will be joining many other American students this fall in saving money while going to college.
“It was my dream to go away to college and live the college experience,” says Luna. “But looking ahead on how much debt I will be in, I [would] much rather live at home with less debt than spend years paying off the luxury of living in college. I can live in luxury later once I’ve earned it. I had to refocus and remember I’m in college to get my degree.”
A new study released by Sallie Mae and Ipsos Public Affairs reveals that college costs are gradually shifting to students rather than families― a trend that will continue to rise. Outstanding student loans topped $1 trillion last year, that’s more than the total amount of credit card debt in America.
Like Luna, more than 50 percent of students lived at home while going to college this year in order to save money. Students have also implemented other cost-effective measures into their college life. Some actions include adding a roommate, reducing spending by parents, using a debit card rather than a credit card, working more hours and utilizing income tax credits or deductions, according to the study.
“Campus financial aid staff have reported higher numbers of students asking for recalculation of their ‘expected family contribution’ because of declines in their families’ financial condition,” says Judith Heiman, Principal Analyst at California Legislative Analyst’s Office.
The Sallie Mae study demonstrates that students are grabbing hold of a greater portion of their college costs by using their own savings and income, contributing up to about 12 percent of the total cost of attending college. The amount families spent on college declined by 5 percent this year alone. In addition to using their own funds, students took out more loans in 2012 than in the past few years. The study adds that parents are leading the “decline in spending on college education.”
“My father lost his job not so long ago, so I refuse to burden my parents by asking them to help me when I’m able to help myself,” says Luna.
Luna is one of numerous students who chose their college based on the total cost of attendance. A mere 15 percent of parents and students collaborated in deciding on which college to attend while 79 percent of the students or 6 percent of the parents acted as “the sole decision maker” when deciding what college to attend, results showed. The study also included analysis on college spending based on racial background. It revealed that Latino students were among the top two groups to eliminate colleges based on the cost and not use parent income and savings to help pay for tuition.
Dr. David P. López, president of The National Hispanic University, has witnessed students doing whatever is necessary to achieve their goals, particularly Latinos. “Students everywhere are feeling the pressure of rising tuition costs,” says Dr. Lopez. “I know first-hand that Latino students are committed to higher education and that they will do whatever it takes to graduate. It may often take longer for them to complete their degree, due to financial resources or stop outs, but those who want to go to college, will go to college.”
With this increasing trend, the need to educate students in making good financial decisions is at an all-time high. Students borrow money for other costs of attendance and living expenses, and some do so without completely understanding the consequences of borrowing more than needed, says Heiman. As a result, some students find themselves unable to repay their loans. In the past five years, the study states the amount of students who borrowed from federal loans rose by 55 percent.
“Bottom line: Debt is not bad in itself. Education is an investment, and it is reasonable for students to borrow funds for this investment, says Heiman. ”Too much debt or too little debt, however, can be detrimental. Students need more financial education to make good decisions about student debt,” adds Heiman.
Dr. Lopez agrees it is essential for the school to inform students, throughout their college process, about the financial commitment that is tied to pursuing a degree in order for them to make the best decision possible. The National Hispanic University sets up financial literacy sessions twice a year in both English and Spanish with their students as well as their parents, to discuss financial aid and billing.
A driving force behind students’ active role in paying for their studies is the high value for education they hold up. The study found that 89 percent of students in 2012 strongly agree college is an investment in their future and 62 percent agree they would rather borrow to attend college than not be able to go at all. “The students who come to The National Hispanic University come with desire. They are typically first-generation college students, but there is a driven spirit in them that they want and need this education. They work hard and often struggle, but at the end of the day they achieve their goal of a college degree,” says Dr. Lopez.
Luna, who aspires to become a civil rights attorney one day, understands the unavoidable debt that lies ahead of her but is content with the opportunity to achieve that dream.
“It’s really not where you come from, but where you want to go and how you decide on getting there,” says Luna to students about their future. “But remember to explore the best options for your situation before taking on unnecessary ones. I’m determined to do all that I can to make my dream come true.”