Families Doing Whatever It Takes to Pay for College

NEW YORK (TheStreet) -- American families are still convinced that college is a good investment, but they're just as convinced that paying for college now requires some extreme financial measures.

That's the conclusion of an annual report from Sallie Mae, which says Americans are cutting back on their household budgets to send their sons and daughters to a good school. The 2012 study, completed in collaboration with the data analysis firm Ipsos, finds that 83% of Americans believe that college is an "investment in the future," and that finding ways to pay for higher education is a huge priority.

Paying for college is increasingly proving to be a high mountain to climb for U.S. families as cost have escalated far faster than the rate of inflation.

The total cost of paying for four years at a public college or university will rise to $120,000 by 2015, according to InflationData.com. Furthermore, tuition costs have increased by a staggering 498% since 1986, as the overall inflation rate has only risen by 115%. The web site also notes that the total amount of outstanding student loan debt stands at $40 billion.

That has U.S families up against a wall in paying college costs, but it's a fight they're willing to engage in to increase their children's chances of succeeding in life, Sallie Mae concludes.

Some study highlights:

83% of college students and parents strongly agree that higher education is an investment in the future; 70% say college is needed now more than ever; 69% think it is the path to earning more money. That's supported by the facts. According to Forbes, college graduates earn about $55,000 annually, whereas high school graduates earn, on average, $23,000 per year.

U.S. families seem to be splitting the college financial tab. Sallie Mae says that students paid 30% of the total cost of college, up from 24% in 2008, while parents covered 37% of the bill, down from 45% over the same time frame.

Families are getting choosier, too: sixty-nine percent of Americans say they are "eliminating" expensive schools.

Meanwhile, college consumers are cutting costs to pay for the school they ultimately choose. "Virtually all families exercised cost-savings measures, including living at home (51%), adding a roommate (55%), and reducing spending by parents (50%) and students (66%)," Sallie Mae reports.

Community colleges are growing in popularity, too -- mainly for financial reasons. "In 2012, families continued the shift toward lower-cost community college, with 29% enrolled, compared to 23% two years ago," says Sallie Mae. In fact, overall, families paid 5% less for college compared to one year ago.

Public funding is the "go to" option for U.S. families. Sallie Mae says that 35% of students turned to student loans to pay for college; 25% are borrowing federal loans only; 9% are using a mix of federal and private loans, and 1% of students are tapping private loans only.

In addition, grants and scholarships are down from 2011, making it even tougher to pay for college. Families are also cutting back by taking credit cards away from their children, and those students who do carry a credit card are keeping their balances under $755, on average.

Clearly, American families still want that college education, but paying for it is proving to be a Herculean task.

"This is really a tale of the resilient American family who still see the extreme value of a college education and are finding new and creative ways to pay for it," noted Clifford Young, managing director at Ipsos, in a release.

"New and creative" is one way to put it.

Increasingly, Americans are working overtime and cutting back to pay for college, no matter what the cost.

--By Brian O'Connell

More on college finances:

Savings tips for new college grads

Student loan debt bomb threatens America

6 reasons to attend a college fair

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