There’s bad news on the college financing front.
More and more families are cannibalizing their college savings just to pay bills and buy groceries, says Sallie Mae (Stock Quote: SLM) in a new report. That could have big-time negative ramifications for college students, who are also carrying high levels of debt in this recession.
A new study by the Institute for College Access and Success puts the average student loan debt for the class of 2009 at $24,000.
With American families increasingly punting on college savings, that student loan debt number will likely grow even higher, and at the worst possible time. College students are graduating into one of the worst hiring economies in the past 75 years.
Even so, college students are heading to campus facing a stiff headwind. According to Sallie Mae, parents still want to send their kids off to college; it’s just that they’re having problems coming up with the money to get them there.
Parents who say they are contributing ‘all or most” of the money for their kids’ college declined by 1% and 6%, respectively, since 2009. And more and more of those parents have to turn to their retirement accounts to pay their children’s tuition.
The Sallie Mae survey also has some interesting data on how much parents need to sock away for college over the long haul. The “typical” family saves about $28,000 for college, and Sallie Mae estimates that new parents need to put $2,434 away each year to save enough to cover their child’s education by the time he or she reaches 18. The good news is that parents, on average, are saving $2,666 each year toward college cost, which puts them slightly ahead of Sallie Mae’s yearly projections.