BOSTON (Reuters) - While higher education remains a priority, many Americans are balking at high-priced institutions, and two-thirds of families eliminated colleges or universities during the 2012-2013 application process based on affordability, according to student lender Sallie Mae.
The level of applicants shunning more expensive institutions of higher learning was up nearly 10 percent from 2009, according to the survey, released last week.
Students and their families spent $21,178, including loans, on average, for total college costs during 2012, down from a peak of $24,097 in 2010, Sallie Mae's annual "How America Pays for College" report found. That decline does not reflect lower college costs; students saved by choosing less-expensive schools, living at home or hustling more for scholarship and grant money.
"Price has become a major part of the conversation, and tough choices are being made," says Sarah Ducich, Sallie Mae's senior vice president for public policy.
Klemie and Robert Christie, who live in Royal Palm Beach, Florida, encouraged their three daughters to apply anywhere they wished, but were straightforward with them upfront. The message: Here's what we have to spend, so choose wisely.
"If their scholarships didn't add up, all we could afford was a public school," Klemie Christie said.
Their second daughter, Taylor, wanted to go to out-of-state Savannah College of Art and Design. When scholarships and grants did not cover the difference, she followed her sister to the University of Florida two years ago.
With their high GPAs, both girls qualified for tuition breaks through the state's Bright Futures program.
As families foot less of the bill for college, scholarships and grants are filling the gaps, covering about 30 percent of costs during the most recent academic year. (The average amount a student received in scholarships and grants was $6,355.)
Overall, parents' average out-of-pocket spending declined to $5,727 in 2013, compared with $8,752 in 2010, according to the Sallie Mae report.
While more aid is available, students are working harder to earn it. "Families with incomes $35,000 to $100,000 are investing real time into seeking out scholarships," Sallie Mae's Ducich said.
Student borrowing pays for about 18 percent of college costs, while the remainder of funds comes from student savings or income, parent borrowing or relatives and friends. Ducich notes that while fewer students in 2013 borrowed for school, the ones still borrowing were taking out larger loans.
College seniors are the most likely to borrow, usually after all other financial resources are tapped. "They're borrowing to finish, and that's not necessarily a bad thing," Ducich added.
Roger Blanche's two daughters, now 20 and 23, considered more expensive private colleges farther from their Eldridge, Iowa, home before choosing to attend the University of Northern Iowa. Tuition for the 2013-2014 academic year is an affordable $6,648 for state residents. The younger Blanche daughter will be a junior this fall; the elder graduated last December.
The choice allowed the sisters to leave home and live on campus. "And we could cover their expenses with our savings from a Iowa 529 plan," said Blanche, a corn farmer. "We had no concerns about them graduating with debt."
LIST PRICE NOT ALWAYS TRUE COST
Focusing on college costs may dissuade qualified students with limited means from applying at all. About 40 percent of students eliminated a school based on price before ever even researching the school, the Sallie Mae report found, and another 12 percent did so before applying.
Yet relying on a school's list price rarely gives students a full picture of what they can expect to pay, especially at top institutions that heavily discount tuition for worthy applicants. All schools are required to provide a net-price calculator on their websites, a better way to approximate true costs that takes into account factors such as family income, assets, grades and SAT scores.
Still, families appear unwavering in their belief that college pays off — 85 percent said they saw it as an investment for the future. That was the highest level in the past five years. Also, fewer parents were worried about financial strains, such as tuition hikes or job losses.
Nonetheless, the report's overall findings suggest a much more frugal approach to college expenses. Nearly 60 percent of families reported students lived at home or with relatives, rather than paying room and board. One-fifth reported changing majors to a field of study more marketable after college.
"Before the economic downturn, we, like a lot of parents, thought we had the cost of college covered and were caught off guard," Klemie Christie said. "We told our girls they had to keep up their grades and do anything else they could to qualify for aid."
It appears conversations about cost are starting earlier, too. A recent survey by the Private College 529 Plan, which lets participants prepay tuition at private colleges and universities, found 66 percent of teenagers ages 13 to 17 had discussed savings for college with their parents. More than half had set aside funds for school, while 78 percent had researched how best to save.
"Even from a young age, kids are paying attention to the cost of college," said Nancy Farmer, president of the Private College 529 Plan. While three out of five believed they would have to take out loans, Farmer said, "Most wanted to do whatever it takes to avoid that fate."
At age 15, the Christies' youngest daughter was too young to get a job this summer, so she decided to spend it getting a head start on researching and applying for scholarship money. She hopes to attend New York University, one of the most expensive private schools in the country.
"At least one major grant would ease some of the pressure," her mother said, adding: "But I told her to have a back-up closer to home, too."
(The author is a Reuters contributor. The opinions expressed are her own.)
(Follow us @ReutersMoney or at http://www.reuters.com/finance/personal-finance; Editing by Lauren Young and Dan Grebler)
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