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Undergraduate borrowing hit a five-year low last year, with the typical family taking out $4,610 in combined parent and student education loans to finance the 2013-14 academic term, according to a new report from Sallie Mae. Student borrowing among low-income families dropped significantly, making up only 14% of their funding (as opposed to 22% the year before).

The 2014 “How America Pays for College” report shows a decline in education spending, despite the rise in college tuition costs, perhaps indicating a high priority of affordability among the country’s students and their parents. The report, which Sallie Mae has released since 2008, is based on a survey of 1,601 college students and parents of college students, conducted by Ipsos Public Affairs. The data is nationally representative with a margin of error of plus or minus 2.5 percentage points.

Americans Spent Less Overall, But More Out of Pocket

A typical family spent $20,882 on the 2013-14 academic year, which is similar to (but less than) the amount spent in 2012-13 ($21,178) and 2011-12 ($20,902), and down from a peak of $24,097 for 2009-10. After three years of decline, parents increased their out-of-pocket contributions to cover an average of 30% of expenses. Scholarships and grants took care of about the same share of costs (31%).

Given the consistent growth of student loan debt in the U.S., the drop in borrowing and increase of out-of-pocket payments could mean good things for the financial futures of students and their families.

“I think the way that families make this work is to take a lot of steps to afford college,” said Sarah Ducich, the study’s author. “On average, families take about five steps,” including cutting back on entertainment and choosing in-state schools in order to save money.

People are willing to stretch themselves thin in order to attend college, which isn’t always a good thing: A greater share of parents reported withdrawing funds from their retirement savings to pay for kids’ educations.

Generally, having the option of paying for school with income, savings and investments is more favorable than borrowing. In the last academic year, 1 in 5 families (20%) paid fully out of pocket, a figure Ducich said is high. In preceding years that share was 18% and 17%. This is likely (but not definitively) a result of economic improvement and families’ increased ability to save, said Martha Holler, a Sallie Mae spokeswoman.

Students Should Expect to Fund Much of Their Schooling

Whether it’s a result of miscommunication, misperception or poor planning, parents and students tend not to share education expenses in the way they thought they would. Sixty-one percent of those surveyed said paying for college is a joint responsibility, but when payments actually come due, nearly two-thirds of the costs fall on one party’s shoulders.

In 31% of families, that meant the parent paid or borrowed nothing, and in 31% of families, the student bore no financial responsibility. However, when it comes to repaying borrowed money, students are generally expected to take charge. Only 7% of families who borrowed think the parent is solely responsible for education expenses.

Financial Resources Are Underutilized

Each school presents its cost of attendance in different ways, sometimes making it very difficult to accurately compare institutions. It’s extremely helpful for families to estimate the impact of paying for a college education, whether that means comparing costs with savings or projecting monthly loan payments. More than a quarter of those surveyed said they used no resources for estimating the cost of college, and only 12% used a calculator of some kind (financial aid, college cost or college net price) to help in their decision.

“I found that surprising as well,” Ducich said. “There is so much information out there on how to pay for college. … We need to make this easy for parents to understand.”

The vast majority of those surveyed (98%) believe college is a good investment, so it’s critical to take steps to make sure they get a good return on it. Student loans have a significant impact on your credit standing, so being unable to pay them can be devastating to your finances. To see how student loans are affecting your credit, you can review your credit data and two credit scores for free on Credit.com.

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