Jill Jerdee knows firsthand the value of a college degree. She doesn't have one. "Doors close because I don't have a college degree," said the 43-year-old from Osseo. That's why she's encouraging her kids to attend college no matter the cost. "It's going to be like $120,000, $130,000 for four years. But you need it," she said of a college diploma.

The recession has prompted families to rethink their priorities. But they're still sending kids to college, having to borrow more, dig deeper into savings and change the way they live to pay for escalating costs. That's the message from the third annual Sallie Mae-Gallup "How America Pays for College" study released Tuesday.

"Families over the last three years, even though they're cutting back in other areas, are continuing to believe it is an investment," said Sarah Ducich, Sallie Mae's senior vice president for public policy. "We expected to see some erosion there, but we have not."

A whopping 81 percent of parents and 84 percent of students surveyed this year strongly agree that college is an investment in the future, unchanged from 2008. Most parents continue to believe college is so important that they're willing to stretch to send their kids to school. Of the families surveyed, 99 percent said they took at least one step to make college more affordable.

"Families are telling me, 'We're not taking vacations, we're not allowing our son or daughter to take a car to school. We've cut back,'" said Stuart Perry, director of financial aid at St. John's University in Collegeville, Minn. He also is hearing from more families that have run out of options. "They're saying 'I've been unemployed and we've gone through our savings and I don't have credit to co-sign a loan.'"

In those cases, families may qualify for more need-based aid. The school is also willing to accept tuition on a monthly payment plan, something "more families are considering," Perry said.

Average annual cost up 24%

According to the report, families paid an average of $24,097 on college-related expenses -- from tuition and textbooks to living expenses -- in 2010. That's a 24 percent increase from the $19,432 reported in the 2009 survey. Parent income and savings covered $8,752 of that amount, followed by grants and scholarships, student borrowing and student income and savings. While gift money from relatives and friends made up the smallest piece of the pie, it is the fastest-growing piece, rising by 53 percent in just one year. Of course, a family's actual pie may look quite different from the average.

Middle-income families are feeling the squeeze most. The average family making between $35,000 and $100,000 paid $7,149 from earnings and savings in 2010, an increase of 34 percent over 2009. Middle-class parents also borrowed about as much as families making six figures to help their student pay for school, the survey found.

Mike Bridgeman of Minneapolis said that with an annual cost of more than $20,000 once all expenses are factored in, he wouldn't be comfortable paying for his daughter to attend the University of Minnesota Duluth if she didn't have a post-graduation plan to attend law school.

"A lot of kids graduate and still don't know what they want to do," he said. But since she is focused, he willingly paid the $6,000 yearly family contribution out of his paychecks. This year, he's tapping her college savings account. She also borrowed a small amount of money via federal loans, which he plans to help her pay back.

Student loan debt soars

Not everyone is so fortunate. Yet with the cost of college far outpacing the growth of non-loan financial aid, and the stalled economy dinging most Americans' net worth, more families are racking up thousands in debt to get that degree. Americans are now on the hook for $830 billion in student loan debt -- a figure that surpasses the $826.5 billion in revolving credit owed, according to an analysis from Mark Kantrowitz, publisher of www.finaid.org. Some analysts fear student loans, which are nearly impossible to discharge in bankruptcy, will be the American consumer's next financial crisis.

Ronald Ramsdell, founder of College Aid Consulting Services in Minneapolis, said the economy is forcing his clients, who come to him while in high school to navigate the financial aid process, to tap sources they wouldn't have considered in the past. Some are turning to relatives and friends for money. Others are tapping retirement accounts. A few have resorted to borrowing against a stock portfolio.

"I've been doing this for 20 years and I've never seen things this bleak," Ramsdell said. Six percent of those surveyed took a retirement savings withdrawal averaging $8,554 to pay for college costs last school year. The same percentage of respondents resorted to putting an average of $4,943 on a credit card. Surprisingly, 4 percent of those surveyed managed to tap an average of $11,204 in home equity to pay for college, even though tighter credit conditions and declining home values shut off this option for many families. The good news is that more families are using college savings to pay the bills, indicating that some parents have planned ahead.

It wasn't possible for Jerdee and her husband, Bruce Cedarholm Stariha, to put money away for college, especially after the store he managed went out of business. So they're helping in other ways. She cosigned loans for their eldest son, a senior at Bemidji State University. They're letting another son, Jake Letofsky, live at home rent-free while completing general requirements at North Hennepin Community College, a decision that will save him thousands of dollars toward a nursing degree he plans to pursue at Winona State University. Like Jake, 43 percent of students reported living at home to reduce costs. Thirty percent are trying to finish school in fewer semesters.

Although most students believe they need a college degree to earn more money and work in their chosen field, some are beginning to question whether an education is worth the hefty price tag. Only a slight majority -- 53 percent -- of those surveyed in 2010 feel college is worth the cost; 62 percent thought a degree was worth it in 2008.

Kara McGuire • 612-673-7293