The New Sharing Economy: Earning Money From Your Underused Property

Need some cash? Thousands of people are turning to sites like AirBnB to turn their spare rooms, cars, and free time into extra spending money. You can capture some of this entrepreneurial spirit and capitalize on it in three ways.

1.) Rent your spare room

If you haven’t heard of AirBnB, it’s the flagship of this new economy. People list their spare rooms for rent, and short-term vacationers can search them by location, amenities or price. Rates are usually lower than hotels, and the accommodations can be much nicer. The thrill of staying with a local who can recommend nearby attractions or restaurants also attracts tourists. AirBnB is popular – the company boasts 350,000 people who are renting rooms by using the service.

Getting started with AirBnB is as easy as sprucing up a spare bedroom and making a listing. Obviously, living in a tourist hotspot is a major benefit, but it’s far from required. If you want to increase your revenue, renovations like a private entrance, secure storage facilities and private bathrooms are highly sought-after by renters.

If you rent, you may need to check your lease for potential sub-leasing complications. If you own your home, a quick call to your insurance agent to ensure this practice isn’t forbidden by your homeowner’s policy wouldn’t be a bad idea. One New York AirBnB user made $37,000 from renting the spare room in his condo. He used the profits to buy a vacation house, which he now rents on the service.

2.) Share your car

For people traveling by plane, car travel is one of the biggest expenses. Whether by taxi or in a rental car, it can be quite costly to get from place to place. Popular services like Uber allow folk with spare time to undercut the big rental and taxi companies and offer rides to traveling strangers. Alternative services like RelayRides allow you to rent your vehicle to others during extended periods of disuse while you’re traveling or if you only need your car a few days a week.

These services occupy a significant legal gray area. If someone borrowing your car damages it, how will you hold them responsible? If they run a red light and are caught on a traffic camera, will you be stuck with the ticket? You may run afoul of larger, established taxi and rental companies that have the power to influence regulation.

Still, success stories with these services exist. One struggling California musician started renting his car on the service. One $200,000 investment later, he owns eight high-end SUVs and a few sedans. Renting cars has become his full-time job. It’s required sacrifice, as he now finds his music career increasingly confined to weekends. But it’s allowed him to pay the bills.

3.) Share your skills

For some people, like engineers and writers, the freelance economy of the Internet was fairly obvious. These kinds of tasks can be done remotely. Increasingly, though, other kinds of labor are becoming sharable. Services like Amazon’s Mechanical Turk began as a survey site, but entrepreneurs realized its potential as much more. Now, tasks like transcription, data entry, and research can be completed by willing laborers who never have to leave the comfort of their computers.

More specifically, services like Google Helpouts allow you to share skills remotely, too. A video conference instruction enables you to instruct others in doing something you’re good at, and the possibilities are endless. You can use Helpouts to help people practice English, organize a kitchen cabinet or cook your family specialty. You can use your specialized knowledge to make a little extra money and brighten someone else’s day.

Realistically, wages for this type of work are not high at all. A global economy means competing against people who live in countries with considerably lower standards of living. You can expect to earn between $2 and $3 per hour for unskilled Internet labor, though many skilled workers are earning much more than that. With enough dedication and practice, you can turn your hobbies and spare time into your own cottage industry.


Responsible Use of Credit or Debt Trouble? How to Recognize the Difference

Debt may be a four-letter word, but it certainly has its place. A home mortgage, for example, is good debt, and so is a credit card with a reasonable rate and a manageable balance. Without the ability to borrow money to finance a home, most of us would be stuck renting, because who has hundreds of thousands of dollars for such a purchase? 

However, debt does have a dark side. And it’s important to know when your use of credit is a good thing, as well as when it’s time to cut back and watch the bills more carefully.

The truth is, you already know the answer to that question without running any numbers. If making payments on time is difficult and causes you stress, if you’re charging necessities to a credit card because you have no other options, if your bills are what’s keeping you up at night, if you’re borrowing from Peter to pay Paul, well, then you know there’s a problem.

While a crisis can put even the most responsible consumer into this type of situation temporarily, when this pattern becomes a way of life, there’s reason for concern. Generally speaking, if less than 30% of your income is going to debt, you’re doing great. However, if 40% or more of what you earn is going to debt payments, something needs to change.

Figure out your number, also known as your debt-to-income ratio, by adding all your monthly debt payments together, and dividing it by your monthly income. Calculators on websites such as can do the math for you. (Or come in to the credit union and we’ll run the numbers for you.)

If you find yourself in some difficulty with debt, or even if you need help budgeting, Destinations Credit Union offers free financial counseling through our partner – Accel.  

6 Things to Know Before Applying for Medicare

If your 65th birthday is approaching, it will pay to get to know the Medicare system. Timing is a huge factor in keeping your costs low, and there are other tricks to the trade that will help you navigate the often-confusing rules of Medicare. Did you know that the decisions you make early on in your Medicare eligibility can have a lasting financial impact? Here are six things you need to know-before it’s too late!

1.  It’s a good idea to get help.

Navigating the confusing paperwork that’s involved in Medicare and evaluating health plans can be an overwhelming task. Depending on where you live, there are about 20 different Medicare Advantage plans, upward of 35 drug plans, and a wide variety of supplemental plans, in addition to traditional Medicare. So how do you know what’s right for you? Hiring an independent Medicare advisor will help you find the coverage that will meet your specific needs. For the advisor’s $250 to $1,000 fee, you will have access to an expert who sifts through the different options for you using proprietary software-not guesswork. A simple Internet search will net you multiple advisor options.

2.  If you apply early, you can avoid additional fees.

You can sign up for Medicare three months before you turn 65 through three months after your 65th birthday. However, it is in your best interest to apply early, regardless of whether you need the coverage on your 65th birthday. If you don’t sign up then, you are still eligible for benefits, but you will pay more. For every 12-month period that you are eligible for Medicare but don’t sign up, you will pay an additional 10 percent on your premiums. If you are currently part of a group health plan through an employer, sign up within 8 months of leaving the job to avoid the higher premiums.

3.  You may need a supplemental plan.

Medicare acts as a basic insurance plan, but many retirees have additional out-of-pocket expenses, just like any other health plan. Supplemental coverage with Medicare Advantage or a Medigap plan will help to defer some of that cost. There is a six-month period beginning the month you turn 65 that guarantees your acceptance into a Medigap plan, regardless of any preexisting conditions. After that period expires, your case will be evaluated based on your current health, which may mean denial of coverage or high premiums. So again, it pays to sign up on time.

4.  It pays to revisit plans yearly.

Your needs may change every year, and Medicare’s supplemental plans will also change. You will be automatically renewed under your current plans each year, but it’s a good idea to take a look at what else is out there. Has the premium changed? Is the coverage the same? Do your homework to ensure you receive the coverage you need and at the price you want. This will help you avoid unnecessary surprises when your bill arrives in the mail.

5.  Preventative care is covered.

Yearly physicals and check-ups are just as important now as they were when you were younger. Medicare offers a preventative care visit within your first 12 months in the system. Your doctor will review your medical history and discuss preventative care with you. After your first year with Medicare, you are eligible for yearly wellness visits in addition to other preventative procedures. Ask your adviser or doctor about your coverage.

6. Medicare works with other coverage.

If you are covered under another health plan, Medicare will work with that plan under coordination of benefits rules. Essentially, your primary plan will cover costs up to the limits of the plan, and then your secondary plan will pay the costs that the primary plan did not. It’s important to note that there may still be out-of-pocket expenses, based on your coverage, which is why it’s important to take advantage of supplemental coverage.

Making sure you’re adequately covered by health insurance is a necessary, but often confusing, process. It pays-literally-to do your homework and sign up early to avoid unnecessary price increases that will last the rest of your life. And when you take advantage of Medicare’s preventative coverage, you will save more in the long run in terms of your health, quality of life, and in future health care costs.

Looking For A Job? Scammers May Be Looking For YOU

Job searching is already a frustrating process. Between the stress of unemployment and the sting of rejections, job hunting for any length of time can make you desperate. Unfortunately, that’s exactly what identity thieves are counting on.

Many con artists are relying on a sophisticated new scam by trolling for job seekers on job boards like Monster or Indeed. They reach out to job seekers by pretending to represent a major company that has a supposed interest in the job seeker’s credentials and/or experience. They claim they need a few more pieces of information to conduct a background check before hiring. They’ll ask for personal information, such as a Social Security number. Then, they’ll take you for everything you’ve got.

Or, they set up fake job postings on sites like Craigslist or LinkedIn and wait for job seekers to contact them. This practice provides them with a steady stream of desperate and vulnerable applicants. It also saves them the trouble of tracking down e-mail addresses, and makes the contact seem more legitimate.

These schemes work, like most other identity theft scams, by preying on people’s hopes. You need this job offer to be true, so you are willing to rush into the “opportunity” without waiting, thinking, or researching. It only takes one slip to wipe out your savings and ruin your credit, which can also undermine your future job search efforts.

You can’t give up your job search, and you wouldn’t want to refuse a reasonable request from a legitimate employer. So what can you do to keep yourself safe from identity thieves when looking for work? Follow these pieces of advice, which you can remember using the acronym KISS:

1.) Know the hiring process. For most businesses, the hiring process includes job posting, interview, background check, job offer. Background checks cost money to run. No business is going to start running background checks on every potential applicant, and most will only do so as a component of a job offer. Before they’ve hired you, that’s all they’d do with a Social Security number. Also, the company would need your signature to run a background check or fill out immigration paperwork. A legitimate business won’t ask for your Social Security number out of the blue.

2.) Identify the poster. If a job offer comes from a major company, odds are good that it’s not just on the job boards. It’s also on their web page. Copy the text of the job description and paste it into a search engine. You should get results from several job boards as well as the company’s website. You can use tools like who is to determine the ad’s country of origin. This can help find hidden red flags. If the posting claims to be from a company that’s located in the U.S., its domain registration should reflect that. If it’s a company that’s been in operation for years, its website registration shouldn’t be from the last few weeks or months.

3.) Sanitize your online presence. Tools like Facebook and LinkedIn can help you in the job search process, but they can also help identity thieves. Remove unnecessary personal information like your hometown or your birthday from your social media profiles. This information can help identity thieves bluff their way past human security. As an added benefit, putting your date of birth on your resume may be a turnoff for employers. Age discrimination in employment is illegal, and employers can land in hot water if they ask you any questions that hint at trying to determine your age.

4.) Stay vigilant. Look for all the typical scam warning signs: unbelievable salaries, vague descriptions, misspellings, grammar errors, and unprofessional e-mail service providers. Someone offering you a job isn’t that much different from someone offering you a large sum of money. You should be skeptical of everyone you don’t know who contacts you wanting personal information. Take the time to do your due diligence in every instance. Don’t let the pressures of the job search crumble your common sense. If it sounds too good to be true, it probably is.

Four Ways To Save This Mother’s Day

Mother’s Day is just around the corner and it’s easy to get caught up in the last-minute scramble for gifts. Much to the delight of florists and gift vendors, this happens every year. With expensive flowers or jewelry as the top gifts, it’s easy to go over budget if you look to traditional options. To help decrease your stress level and save your money, we have found some surefire ways to tell Mom how special she is without breaking the bank! Whether it’s something you can do for her, or something you do with her, you’re going to be a big winner this Mother’s Day. Here’s four ways for you to save money this Mother’s Day:

1. Do something for her.

Remember the “coupon books” we used to make mom as kids? This time, we’ll make sure it happens! Rather than just offering to do some task in the future, take care of something that will make her life easier today. If she has dogs or pets, you could bathe and walk her dogs, or groom and clean up after other pets. If she never gets a chance to wash her car, clean it out, wash it, and detail it for her. Even if you have to go somewhere to do it, it’s a big gesture for a small amount of money. Cleaning the inside of cars can be hard work and it’s an easy chore to overlook when you’re busy! Having someone else take the time to do it for you is nice. You could also find chores she has to do all the time and do them for her. Tackling tasks, like cleaning the house or maintaining the yard, will let mom spend some time relaxing on her special day. What you do is less important than actually doing it. Pick something you know she would rather not do herself, and do it for her. She’ll appreciate your effort and the results will last a lot longer than just Mother’s Day!

2. Swap out an expensive, traditional gift for something that’s more personalized.

If you were thinking of getting her flowers, don’t spend your money on some cut stems! A rose bush or a flat of small flowers costs the same as a dozen roses and lasts much longer. You can also share the joy of planting the gift with her. If you were going to take her out for lunch or dinner, cook something for her using her favorite dishes or ingredients. You could also pack up her Mother’s Day meal as a picnic for some extra flair! Spa gift cards are expensive, and it might take months for her to get value from it. Instead, look online for some do-it-yourself spa treatments, like bath oils or sugar scrubs. She’ll be more likely to use them right away if they’re in her bathroom and sh’ll appreciate the personal touch.

3.Find something you can do together.

ier if you can do it with someone you know. Rather than just giving mom another gadget, give her a new experience this year. By doing something new together, you make it fun. You also get to spend more time with her: a win-win situation.There are lots of free-to-try classes at gyms, like free introductory yoga or exercise classes. If there was something she’s been meaning to try, call around and see if you can set up a day to take a free class. The effort is important. Many grocery stores now offer cooking classes for free or discounted rates. Some even bring in rotating instructors to get a variety of cooking styles. It could be a real adventure to try a meatless cooking class or a course on a type of cuisine that she likes. There are also lots of inexpensive classes that are offered through most Parks and Recreation Departments. A beginner’s painting class, a dance lesson, or even a guided hiking group might be a fun activity. By making her interests the center of your focus, you’ll be able to make a big impact, and may even help her find a new activity to enjoy. Bring her a registration confirmation for a class or a business card with a date and time on it for the activity. It may not have the presentation value of flowers, but it will prove that you took the initiative. Show her that you care about her interests and value time with her.

4. Go see your mother.

It may sound like a greeting card, but spending time together is a real gift. Invite her over for the day and just enjoy time together. You could always tour museums or hike at a park if you need more to do. Cooking a meal (or even baking cookies) together will give you something to do while talking and is a great bonding activity. If you don’t live near your mother, you could consider helping her set up a free video chat service. That way it will feel more like you’re together, even from miles away. If you still have some home movies from when you were growing up, take a bottle of wine or some snacks and watch them. There is no wrong way to spend time with your mother, but she’ll definitely remember that you did. Have a happy Mother’s Day!

How Common — And How Dangerous — Is Living Hand-To-Mouth?

If the news describes someone as living paycheck to paycheck, you might have a pretty good idea of what their life looks like. You might imagine them struggling to get by just to cover all of their bills. You might picture them as constantly juggling those bills and relying on revolving credit card debt. Yet, a new report out of Princeton University suggests that this may not be an accurate vision of this group of people.


The report describes the habits of a group it calls the “wealthy hand-to-mouth.” 25 million of the 38 million Americans who live hand-to-mouth, that’s a staggering 65%, have a median income of $41,000, which is close to the national average of $43,000. This group includes a fair number of people in your community. You might even see a little of your own habits here.


These individuals tend to be somewhat older, with a peak age of 40. Their spending habits tend to expand in accord with their income levels. For instance, if they get a raise, they increase their discretionary spending. They might eat more meals out or take on another monthly payment. If they get a windfall, like a tax return or an inheritance, they splurge on a big-ticket item. They pay all their bills on time and don’t carry a tremendous debt load. They likely own a home and are building equity by paying down a mortgage. These folks are also more likely to be investing in a retirement account, like a 401k or IRA.


Make no mistake: these are important savings strategies. What they don’t offer, though, is flexibility. In a volatile labor market, anyone can lose their job at any time. Illnesses and accidents can strike without warning and lead to huge bills. Even inclement weather could result in home or car damage, requiring extensive repairs. If an emergency happens to someone in this group, they may be in for serious trouble.


The money in their home and retirement account is inaccessible. They might curtail their spending, but that won’t help if they need a large quantity of money in short order. They will have three options: sell their home, cash in retirement accounts, or take on significant debt. None of these options offer much hope of a brighter future. One foul stroke of luck is all it would take to move them from “wealthy hand-to-mouth” to just plain struggling.


These kinds of misfortunes happen to everyone sooner or later. That’s why the factor most strongly correlated with financial security is regular savings. A “rainy day” fund separates a short-term financial problem from a life-changing tragedy. The “wealthy hand-to-mouth” think retirement funds and home equity will ensure their financial security. The tumultuous early 2000s showed us, though, that making it to that point is no sure thing.


Credit union members have a variety of tools that are available to them to help provide this measure of security. Among the most popular is the club account. This is an interest-bearing savings account that allows for unlimited deposits and discourages frequent withdrawals. Another is a Kasasa Saver Account – giving you automatic transfers of your checking account rewards into a high-yield savings.  Consider the money you put into these accounts to be a way of paying yourself. You pay your bills, your house note, and your other obligations on time. Putting money into your savings account is paying off the future trouble you don’t want to deal with when it happens. You can set up direct withdrawals from your paycheck or put in a specific amount each month. You and your partner could also put any unexpected windfalls, like bonuses or refunds, into this account.


If a disaster strikes, and you need the money, it’s there. You won’t need to worry about selling your house, cashing in your retirement fund, or taking on expensive debts. A vacation club account is an inexpensive form of self-insurance. If nothing bad happens and you don’t use the money before you retire, it’ll still be there. You can use it to take your dream vacation, to buy an RV or a vacation house, or just to throw one heck of a retirement party. All the money you’ve saved will be gaining interest, and it will be a wonderful supplement to your retirement fund.

Your parents or grandparents may have kept their rainy day fund in a jar on top of the refrigerator. You don’t have to be that low tech. You can protect your financial future, insure against accidents, and gain some peace of mind along the way. Head to Destinations Credit Union and ask about opening a club (Vacation, Holiday or “You Name It”) account today!

The Closing Mortgage Window

Over the past 6 months, you’ve no doubt heard that this is the best time in recent history to refinance your mortgage or buy a new home. While it’s easy to assume that those low mortgage rates are just the new normal, recent action from the Federal Reserve tells us that this window to lock in a mortgage at 60-year lows may be closing.

Before we look at the reason, let’s take a quick look at why mortgage rates have been so low for so long. A little background on the banking system might help explain why experts are making this observation.

Financial institutions base the rates that they charge for loans on how much it costs them to borrow money. Because other financial institutions are the lowest-risk borrowers, they get the best rate. This is usually called the “prime rate.” This rate is set by each individual institution, although they all follow signals from the Federal Reserve. The Federal Reserve uses a variety of instruments to influence the prime rate. These signals come in two forms: lending rates and bond purchases. Lending rates are the interest rates that the Federal Reserve charges to other financial institutions. Bond purchases are investments that the Federal Reserve makes in loans that institutions are making.

Since 2008, the Federal Reserve has used these signals to make credit cheaper in an effort to spur growth in major employment sectors, like construction and small business. The Federal Reserve Board kept rates low until unemployment dropped below 6.5% or inflation went up over 2.5%. New economic reports suggest that the unemployment figure could be approaching that 6.5% target. New Fed Chair Janet Yellen has begun reducing bond purchases. Experts suggest that this tapering is the Federal Reserve’s first step toward reigning in the stimulus. These signals tell financial experts that rates may soon go up, including the interest rates on new mortgages.

The frightening reality is that it doesn’t matter if they’re right or not. If enough big lenders decide they are, those institutions can start raising their interest rates. This move will prompt other lenders to raise their rates in response, and your chance to get into a cheaper mortgage will be over.


Unless you can get a full percent lower interest rate, the costs of refinancing make it unfeasible. You might not be able to do that by just extending the term of your mortgage. Yet, this may be a good time to revisit your financial goals and figure out what kind of mortgage suits your financial future. Here are a couple of questions to help you figure out if a new mortgage is for you:

Can you afford a higher monthly payment for a shorter period of time?

The most significant impact you can have on the interest rate for your mortgage is to shorten the term of the loan. Because your lender gets paid in full sooner, they’re exposed to less risk, so they charge a lower interest rate. If you’re 10 years into a 30-year mortgage, you aren’t likely to save by refinancing into another 30-year mortgage. You might be in a better financial situation than you were 10 years ago, though. The higher monthly payment of a 15-year mortgage might not be as much of a problem. This refinancing strategy gets you out of debt sooner and saves you money in the long term.

Are you going to be out of debt before you retire?

The best way you can make retirement more affordable is to retire debt-free. This allows you to use your retirement funds to support your lifestyle and hobbies. Now is a good time to investigate a shorter-term mortgage that you can have paid in full before you retire. It’ll never be cheaper to get into a mortgage that better fits your financial needs.

Are you unsure if you’ll be moving soon?

Remember, “soon” for big decisions like mortgages means in the next five years. If the next 5 years could bring a move for career or family, it might be wise to lower the total debt load on your house. For this kind of decision, the monthly payment matters less than the total amount owed. You’ll be selling your house to cover the debt. The smaller you can make the amount owed, the more of the sale price of your house you get to keep. Consider a “hybrid” mortgage (Our 10/1 ARM is a good example of this type of loan). These loans are fixed-rate for a specified time, and then use adjustable rates for the rest of the loan. This kind of refinance can save you money for the time you’ll be paying for the home.

Have you been denied for refinancing before?

If you considered refinancing your mortgage before but were told that you didn’t qualify, now is a great time to try again. If you were unemployed for a while, but now have a job, lenders are more willing to see this as a positive sign of recovery. Additionally, home prices are on the rise. The collateral you have for your loan might be worth more, which will help your lender get you the best rate possible. If you signed a mortgage before 2008, it just makes sense to investigate a refinance. The interest rates are lower, the economy is stronger, and now might be your last chance to take advantage of recovery. Call our mortgage experts at (410) 823-3300 today to see what refinancing options are available for you.

The ACA deadline: What to do now that it’s passed

March 31 was the last day to sign up for health insurance through the Affordable Care Act marketplace, and 7 million Americans enrolled in the health care exchange before the deadline. However, if you’re one of the many who missed your window to sign up, and you don’t have health insurance this year, it looks like you’re going to have to pay a penalty next year come tax time.
But just because it’s too late to sign up in “open enrollment” for 2014 doesn’t mean you’re stuck paying the penalty. There are still some solutions to your health insurance needs. Let’s take a look at a few ways you can get covered post-deadline.

Qualifying life events
The ACA allows for “special enrollment” periods for people whose life circumstances change. These changes are “qualifying life events.” Examples of these are having a child, marriage, divorce, moving out of state, or losing significant income. After one of these events occurs, you get 60 days to apply for coverage on the exchange. Although there are better options than quitting your job or getting divorced to get health care, if you’re expecting one of these events, you could sign up for health care within 60 days of that event.

Applying for an extension
Like most government programs, the ACA includes a sort of human release valve. You can apply for an extension to open enrollment on the marketplace enrollment website. To qualify for an extension, you’ll need to show good reason why you need one. One of the most common reasons for applying for an extension is technical difficulties. If you struggled with the website, you can note that on your application. Describe the attempts you made to enroll and the technical hurdles you encountered.
Remember, lying or intentionally submitting false information in an attestation is a crime. Not only could it put you in legal trouble, it could also be a reason to void your insurance coverage. While there’s no harm in asking for an extension, you should be truthful about your reasons for the request.

Getting private insurance
Though the exchange deadline has past, you can still get insurance through a private company. Companies like Blue Cross Blue Shield are still open for business and they would be happy to sell you a plan. Calling the insurance company and signing up for a plan the old fashioned way is still an option. You won’t get the benefit of seeing all the available plans next to each other, but you can still get health insurance.
The ACA mandates simplified insurance pricing, so you can still get access to all the same benefits at the same price. If you had thought that private insurance was too expensive, it might be time to take another look.

Paying the fine (or not)
The penalty for non-compliance is small. If you don’t have health insurance, you can expect to pay either $95 or 1% of your income. The federal filing threshold for income was $10,000 last year and ought to be about the same next year. If you don’t make more than that, you don’t have to pay the fine. There is also a list of exemptions. If you belong to a recognized religious organization with objections to health insurance, you’re exempt. Also, if the least expensive plan costs more than 8% of your household income, you won’t be penalized.
The penalty is also pro-rated for the number of months you’re uninsured. If you don’t have insurance now, you can reduce the amount you’re fined by starting insurance next month. The March 31 deadline isn’t an all-or-nothing. You can get coverage for most of this year, and then plan to sign up on the exchange next year.
Even if the penalties are low and infrequently applied this year, expect them to become harsher in future years. In 2015, for example, the penalty will be $325 or 2% of your taxable income, and it will probably go up from there. There will be another open enrollment period starting in November, so start planning to get covered then.



Understanding how families are financing college is vital for effective financial aid counseling. A new national study by Sallie Mae® and Ipsos® Public Affairs, How America Pays for College 2012, explores the decisions that parents and students are making about choosing and paying for college — as well as how they put those decisions into action.
Decisions based on price begin early on in the admissions process. The percentage of families eliminating college choices due to cost rose to its highest level (69%) in the five years that the study has been undertaken. But families are still managing to tap resources to pay. Following are some of the highlights from the study:
Students are paying a larger share
The majority of parents and students (83%) surveyed strongly agreed that higher education is an investment in the future. But given today’s economic realities, students are footing a larger percentage of the college bill than previously.
In the study, the way that families paid for college changed in three ways:
Parents spent 32% less (compared to 2010) from their income and savings, while students contributed more from their own income — and borrowed more as well.
Fewer families used scholarships: 35% in 2012 versus 45% in 2011. (This may be due to colleges awarding less than they had previously.)
Grant usage remained high for the second year in a row, likely resulting from a substantial investment by the federal government to make Pell Grants available to more families.
As a percentage of total college costs, grants and scholarships covered 29% of college spending in 2012 — higher than in 2009 and 2010, but lower than last year.
 Sources of student payment for college, AY 2011/12
 Source  Percentage of total cost of college
 Grants and scholarships  29%
 Student borrowing  18%
 Student income and savings  12%

Sources of parent payment for college, AY 2011/12
 Source  Percentage of total cost of college
Parent income and savings  28%
Parent borrowing  9%
The remaining 4% came from relatives and friends.

The cost-conscious reality of affording college
While being more resourceful in paying for college, parents and students are also trying to cut costs wherever possible. Nine out of ten families surveyed took at least two actions to make college more affordable. The most common were: having the student live at home (51%) or get a roommate (55%), reducing student spending (66%), reducing parent spending (50%), having the student increase their work hours (50%), and taking an income tax credit or deduction (45%).
The need for an informed financial aid officer
Faced with financial realities, families are becoming more cost conscious and are seeking more value from their college choices. One of the more striking findings of How America Pays 2012 is that advance financial planning for college is low — just 39% of families had a plan for paying for all years of college prior to enrollment.
Now, more than ever, students and their families will need well‐informed help, guidance, and reassurance to make the best decisions for financing their higher education.
For the complete How America Pays for College 2012 study and an infographic of major findings, visit
Sallie Mae (NASDAQ: SLM) is the nation’s No. 1 financial services company specializing in education. Whether college is a long way off or just around the corner, Sallie Mae turns education dreams into reality for its 25 million customers. With products and services that include college savings programs, scholarship search tools, education loans, insurance, and online banking, Sallie Mae offers solutions that help families save, plan, and pay for college. Sallie Mae also provides financial services to hundreds of college campuses as well as to federal and state governments. Learn more at Commonly known as Sallie Mae, SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America. © 2012 Sallie Mae, Inc. Sallie Mae is a registered service mark of Sallie Mae, Inc. All rights reserved. SLM Corporation and its subsidiaries, including Sallie Mae, Inc. and Upromise, Inc., are not sponsored by or agencies of the United States of America. MKT5951