Rather than racking up debt on college expenses, families are borrowing less and finding more ways to pay out of pocket, according to a new study from Sallie Mae.

 

(Helder Almeida, ThinkStock)

The report found families are cutting costs wherever possible, from renting textbooks to dormitory costs.

"People are finally realizing that you need to do a cost-benefit analysis of the money that you spend on education," said Leslie Beck, principal of Maplewood-based Compass Wealth Management. "No one is doubting that an education is something worthwhile, but you have to take a look at what you're spending to get that education versus what your expected return is over the course of the years."

The report found more of the college costs in 2013-2014 were paid by the income or savings of students or their parents, 42 percent as opposed to 40 percent last year.

Additionally, families borrowed money to pay 22 percent of their college cost, a decline from 27 percent last year.

Enrollment at community colleges is at the highest level it's been in years, Beck pointed out, with the cost of credits at a two-year school a fraction of the price compared to four-year colleges. More parents are encouraging their children to pursue that option.

"And then, transfer into a four-year college, or supplementing their credits from their four-year college by taking summer courses or other courses at a community college," Beck said.

Beck said parents especially no longer want to take out large loans and jeopardize their retirement; rather, they are approaching the concept of saving for education at an earlier age.

"People are asking us when their children are actually still in grade school what they need to do to plan for a college education," Beck said. "I'm not just talking about starting 529 plans or starting savings plans, but what they need to do in terms of their own finances. Should they be paying down debt, should they be putting more money into their IRA, how should they position their own assets to qualify for the most financial aid for their children?"