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Study: America Continues to Pay for College With Credit

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Credit cards continue to be a sizable source of college funding.

Sallie Mae has updated its survey of college students and parents and how they’re affording a college education. Parents are still footing the highest share (37%) of college costs through their savings and income. Grants and scholarships comprise 23% of the financing followed by student loans (14%), parent borrowing (10%), student income and savings (9%) and borrowing from friends and relatives (7%). While the percentages haven’t changed much from last year, Sallie Mae notes that the cost of college has increased, meaning families and students tapped higher amounts from all funding sources in 2009-2010.

Researchers also found that credit cards — potentially the costliest way to pay for college expenses — remain a considerable source of funding for college. Six percent of total families used credit cards, charging on average $4,900 in 2010. Five percent of students, meantime, charged their cards and spent a little more than $2,000 each.  The one silver lining was that student charges fell slightly by an average $800 from the previous year, perhaps because attaining a credit card has gotten more difficult recently with the passage of the Credit CARD Act of 2009.

[Related: Is It A Good Idea to Market Credit Cards To Young People?]

Borrowers beware: Not only do credit cards carry higher interest rates than student loans, some colleges levy processing fees on those who use credit cards to pay for tuition.

For families currently planning for future college expenses, check out our recent article on saving for college, as well as a review of a new book about college scholarship secrets.

For more on how to afford a college degree, check out:

Image: youngmoneymag, via Flickr.com

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