Parents' share of US college cost burden declines

As families continue to face economic hardships in the aftermath of the 2008 financial crisis, grants and scholarships have overtaken parental financial assistance as the leading source of assistance for paying college bills, according to a new report.

Since the start of the crisis, more college-bound students have eliminated schools and majors from their searches based on costs and have relied less on their parents once they get to campus, said the report released Tuesday by loan giant Sallie Mae.

College spending per student was about $21,000 during 2012, down from a peak of $24,000 in 2010, according to the report.

"We have moved into a post-recession reality in how people pay for college," Sarah Ducich, Sallie Mae's senior vice president for public policy, told The Associated Press.

The annual survey of student financial aid found students earned about $6,300 in grants and scholarships to pay for college costs, taking the top spots from parents. Student loans were the third most common source to pick up the bill for courses, housing and books.

The average student borrowed $8,815 in federal loans.

Although parents have been spending less, tuition costs continue to rise.

The price at public four-year colleges is up 27 percent over the last five years, according to the latest figures from a separate study from the College Board.

Despite students relying more on grants and scholarships, and economic struggles, parents continue to show investment in their child’s education. One-fifth of parents worked more hours to pay for college and half of the students increased their work hours, too.

"It forced them to adopt new behaviors of savings and ways to find nickels and dimes," Cliff Young, managing director at Ipsos, a global market research firm, told the AP.

Even when the economy has improved, parents and students stuck to their new behaviors making decisions on schools, majors and work schedules based on the price tag.

Last year, the average family turned to grants and scholarships to cover 30 percent of college costs. Parents' income and savings covered 27 percent of the bill and student borrowing covered 18 percent.

Students entering the Fall 2013 semester could see their tuition costs increase even higher if a deal is not reached in government. The Senate plans to vote this week on a compromise over federal Stafford loan rates that doubled for students on July 1, from 3.4 to 6.8 percent.

Lawmakers considered a compromise that would offer some students lower rates for the next few years but would prescribe higher rates for future classes. 

The Senate deal pegs interest rates on new loans to the financial markets. Under the deal, undergraduates this fall could borrow at a 3.9 percent interest rate. Graduate students would have access to loans at 5.4 percent, and parents would be able to borrow at 6.4 percent. Those rates would climb as the economy improves and it becomes more expensive for the government to borrow money.

If a deal is not reached, about 7.4 million students with federal Stafford loans will be affected and could end up paying up to $4,000 more in interest rates for a four-year degree program.

The Ipsos telephone poll was conducted between April 10 and May 9 with 1,802 parents of undergraduate students and 800 18- to 24-year-old undergraduate students. The survey has a margin of error of plus or minus 2.5 percentage points.

Al Jazeera and wire services