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Scholarships Replace Parents As the #1 Payment Source for College

The amount of money parents contribute to their kids’ college education is dropping. Or, more accurately, it’s struggling to keep up. As recently as 2010, parents paid for 37% of the total money spent on college education around the country from their own income. Three years later, that amount has dropped 10%, with grants and scholarships now taking over a greater percentage of the heavy lifting.

Student Borrowing 18%, Parent Borrowing 9%, Parent Income & Savings 27%, Grants & Scholarships 30%, Relatives & Friends 5%, Student Income & Savings 11%

How college was paid for in the 2012-2013 academic year. Source: Sallie Mae

Simply put, the cost of college is increasing faster than parents can afford to keep up with it.

To fill the gap, more students need to take out loans (14% in 2010 has become 18% in 2013) or simply fit the bill for their education from their own income and savings (9% in 2010, 11% in 2013). It’s to the credit of colleges and universities that these numbers aren’t much higher than they could be. They’ve upped how much they spend on scholarships and grants, as well as simply offering more full-rides and other financial support, in order to keep the burden on students from getting too overwhelming.

Keep in mind that these numbers are percentages of total money, not of students. In other words, 18% of total amount spent on education last year came from student loans. It’s not that 18% of students took out loans. The actual total number of students graduating with some sort of  debt? Nearly two-thirds.

So what can a student do? Not much, unfortunately. Basically, you can be very grateful to your parents for what they’ve done and go out of your way to find scholarship opportunities. Obviously it’s going to vary greatly from individual situation to situation, but here are a few general pointers:

  • Even if your parents are paying for college, apply for some scholarships. There are tons of them out there, and your parents will certainly appreciate any money you save them.
  • Weigh your options with student loans carefully. While often necessary, they can be very tough to pay off for young professionals. On the other hand, taking the income hit you’ll get from not getting your ideal degree might leave you just as strapped for cash through your 20s.
  • There are a lot of great scholarship resources out there, but no single, completely comprehensive search engine, so don’t limit yourself to Google. Ask around. If there’s some sort of local community group, church, synagogue, mosque, sports team, etc. that you’re a part of, your odds of getting their scholarship are definitely higher.
  • Don’t just look during the summer. Most scholarships are offered year-round, and the earlier you look the more likely you won’t miss an application deadline.
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