Feeling Flush, More Parents Open Their Wallets for College Spending
As lingering financial fears from the recession fade, more parents are willing and able to open their wallets to pay for their children’s educations.
Parents have become the top source of college funding for the first time since 2010. According to a new report from private student loan lender Sallie Mae’s, parental income and savings covered 32 percent of college costs in the academic year 2014-15, while scholarships and grants covered 30 percent.
Families spent an average of $24,164 on college this year, a 16 percent rise in spending from the previous year and the largest increase since 2009-10. The money spent covers costs of tuition, books, and living expenses.
Related: Average Family Has Saved Enough to Send One Kid to College for Half a Year
The report details how fewer parents fear the worst when it comes to the risks associated with college. Fewer parents are worried that their child won’t find a job after graduation, that their income will decline because of layoffs, and that there will be an increase in student loan rates. As confidence has increased, fewer families are using cost-saving techniques, such as having students live at home.
Another factor contributing to the willingness of parents to spend on education is the improving stock market. The average size of a 529 account, the popular college savings investment plan, continues to grow after the recession caused a downturn, hitting a balance of $20,474 as of December 1, 2014. That figure tumbled to $10,690 at the end of 2008, according to data from the College Savings Plan Network.
Although parents may be feeling better about paying for college, the basic trend of increasing prices continues, and loans are still a big part of the funding picture. Between 2001 and 2012, average undergraduate tuition almost doubled, causing an average real rate increase of 3.5 percent each year. Nearly 71 percent of college graduates left school with student loan debt this year, up from 54 percent 20 years prior. The average debt was $35,000 in 2015, an increase of 34 percent from 2010, student loan-tracker Edvisors has found.
Wages Are Finally Going Up, Sort of
Average hourly earnings last month rose by 2.9 percent from a year earlier, the Labor Department said Friday — the fastest wage growth since the recession ended in 2009. The economy added 201,000 jobs in August, marking the 95th straight month of gains, while the unemployment rate held steady at 3.9 percent.
Analysts noted, though, that the welcome wage gains merely kept pace with a leading measure of inflation, meaning that pay increases are largely or entirely being canceled out by higher prices. “The last time unemployment was this low, during the dot-com boom, wage growth was significantly faster — well above 3.5 percent,” The Washington Post’s Heather Long wrote. The White House Council of Economic Advisers this week issued a report arguing that wage gains over the past year have been better than they appear in official statistics.
Cost of Trump’s Military Parade Rising Fast
It looks like President Trump’s military parade is going to cost a lot more than the initial estimate suggested – about $80 million more.
The Department of Defense pegged the cost of the parade at roughly $12 million back in July, but CNBC reported Thursday that Pentagon officials have increased their estimate to $92 million. The total consists of $50 million from the Defense Department and $42 million from other agencies, including the Department of Homeland Security.
The parade, which President Trump requested after attending a Bastille Day military parade in Paris last year, is scheduled for November 10 and will reportedly include aircraft, armored vehicles and soldiers in period uniforms. Abrams tanks, which weigh roughly 70 tons apiece, will also be included, CNBC said, despite concerns about heavy military equipment ripping up the streets of Washington. A Pentagon analysis apparently found that the armored vehicle’s treads would not cause any damage.
The parade is expected to begin at the Capitol, continue past the White House and end at the National Mall, according to earlier reports from NBC News.
Quote of the Day: Time to Raise Taxes?
“Tax revenue as a percentage of gross domestic product is expected to be 16.5 percent next year. The long-term average in a full-employment economy is 18.5 percent of GDP; if revenue were at that level for the coming decade, debt would be $3.2 trillion lower and the 10-year fiscal gap would be halved. Returning to past revenue levels, however, will be inadequate over time, because an aging population will increase Medicare and Social Security costs. This need not pose a problem: Revenue was roughly 19 percent of GDP in the late 1990s, and economic conditions were excellent.”
– Former U.S. Treasury Secretary Richard E. Rubin, writing in The Washington Post
Quote of the Day: When Tax Cuts Pay for Themselves
“You … often hear the claim that a lot of tax cuts will ‘pay for themselves,’ that they’ll cause so much additional economic activity that the revenue feedback from that activity will fully offset the direct revenue loss caused by the tax cut so that you end up making money for the federal government, or at least not losing any money. Now, of course that is theoretically possible and it would happen at extreme rates. I mean if a country had a 99 percent flat rate income tax and lowered it to 98 percent, I believe that they almost certainly would collect more revenue at the 98 percent rate than they did at the 99 percent rate. But the idea that this type of effect would occur at today’s tax levels just requires responses that are much bigger than statistical evidence would support and I think much bigger than common sense would indicate if you just ask people how they themselves would react to the tax cut.”
-- Alan Viard, tax policy expert at the American Enterprise Institute
Map of the Day: Gas Taxes
It’s summertime and the driving is anything but easy if you want to get to your favorite beach or mountain cabin for a well-deserved break. As lawmakers consider a plan to raise federal fuel taxes by 15 cents a gallon, here’s a look at the current state-level taxes on gasoline, courtesy of the Tax Foundation:
