Saturday, March 16, 2013

Family Savings for Higher Education: Not Enough

According to Moody’s , family savings for these educational costs are very small and proportionately smaller than in the past:

Moody’s, which rates 515 colleges and universities for credit quality, puts a number on the problem in a report released Mar. 12. The average family that has set aside money for a four-year degree has only $12,000 today, down from $22,000 three years ago. In that time the cost of educating a student has climbed 10%. Result: The net tuition income that colleges have to get elsewhere (per student, over four years) has climbed from $59,000 to $77,000.

Those other sources of fuel for the higher education industry are, primarily, the current income of parents and students, borrowing by students and parents and government aid. None of these sources can now be counted on to keep up with rises in the cost of running a college. Students’ willingness to borrow seemed limitless a few years ago but is now tempered by awareness of how much recent grads are struggling with their loans.

Here’s the article from Forbes magazine.


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