By Tim Grant / Pittsburgh Post-Gazette
College is not getting any cheaper, but relying on student loans is all but guaranteed to make it cost more.
A greater number of high school students are starting to realize that preparing for college means more than simply getting good grades and prepping for the SAT. It also means saving more, borrowing less, taking on part-time jobs to help foot the bill and making affordable college choices.
The Washington, D.C.-based College Savings Foundation found in its sixth annual “How Youth Plan to Fund College” survey of high school students that the next generation is taking college savings seriously. More of them are saving (51 percent vs. 44 percent last year) and 83 percent have saved at least $1,000 vs. 67 percent last year.
Also, fewer high school students want to pay for college with student debt: 55 percent intend to borrow, down from 72 percent a year ago.
“We are very encouraged to see that high school students are taking financing of higher education seriously and have already shown themselves to be active planners and savers,” said Mary Morris, chair of the College Savings Foundation and CEO of the Virginia College Savings Plan in Richmond, Va.
As in previous years, the survey of 500 high school seniors, juniors and sophomores in April showed the vast majority — 82 percent — believe it is their responsibility to pay for at least part of their higher education; and three quarters plan on paying for at least part of it.
The difference this year is 71 percent of those students plan to pay for more than 25 percent of college costs, compared to 53 percent last year.
“Growing up in the aftermath of the recession has had a huge impact on their attitudes toward debt and savings,” Ms. Morris said. “They are more keenly aware of the impact of student loan debt on their financial futures.”
The average student who graduated in 2013 has $28,400 in student loan debt and 69 percent of graduates from that year have student loans, according to The Institute for College Access & Success based in Oakland, Calif.
The average student who graduated from Pennsylvania colleges owes $32,528 and 71 percent of graduates from Pennsylvania colleges left school with debt.
Total student loan debt stood at $1.36 trillion as of the end of March, according to the Board of Governors of the Federal Reserve System, an amount that tops every other type of household debt except mortgages.
Larry Elkin, president of Palisades Hudson Financial Group based in Scarsdale, N.Y., said most often students with big debt went to high-priced private schools or out-of-state public universities. He doubts if the brand-name prestige is worth the cost.
“Buying a college education is a lot like buying a car,” Mr. Elkin said. “If only one model and color will make you happy, you have no bargaining power. If you are willing to consider any vehicle that can take you where you want to go, there are many opportunities to save money.
“You’ll get the best long-term value for your education dollar if you consider your options with an independent attitude and an open mind.”
There’s nothing inherently wrong with expensive, prestigious colleges or student loans, he said.
“They all have their place, and if your family can comfortably afford these things, fine,” Mr. Elkin said.
“But you should treat college as exactly what it is: one of the most expensive purchases you are likely ever to make. Sometimes the best decision is to forgo the brand-name college and start life without a big debt.”
Tim Grant: email@example.com or 412-263-1591.