Study finds Gen Z taking college debt seriously
The current crop of high school students — members of Generation Z — like Snapchat, Instagram and almost everything else digital. And, according to a new survey, they also would prefer to be free of college debt burdens.
Unlike members of Generation Y — and especially Gen Xers — Gen Z teens seem to be more financially careful and debt averse when it comes to student loans, according to the nonprofit College Savings Foundation.
They also are willing to work their way through high school and college to help cover tuition, room and board and other college costs, the survey found.
As a whole, Gen Z students “appear to be a more conservative generation that also realizes the impact debt can have on their lives,” said Roger Michaud, chairman emeritus of the Washington-based savings organization.
That’s a sharp contrast, he noted, to members of previous generations who often took a “sky’s the limit” approach to borrowing for college.
In late May, the foundation released its eighth annual survey on how youths plan to pay for college. More than 500 high school sophomores, juniors and seniors participated in the survey.
When asked if they would take on debt to cover college bills, only 11 percent of the student respondents said yes. That’s down significantly from 20 percent last year.
And in a related question, 63 percent of the students said they would “possibly” take on student debt, down from 71 percent in 2016. In addition, those already planning on taking financial aid dropped to 49 percent this year from 56 percent a year ago.
Michaud said one reason for these positive trends is the climate and culture today’s high schoolers grew up in: the 9/11 terrorist attacks, a steep recession and stock market crash that wiped out a lot of family savings and corporate downsizings that tossed many parents into unemployment.
The amount of student loan debt stands at about $1.4 trillion, a number that hasn’t gone unnoticed by prospective college students. “They’re more connected to the Internet,” Michaud said. “Those messages and all the headlines every day about rising student loan debt and how it impacts your future are soaking in.”
The foundation’s survey also noted other college-related decisions being made by this generation of students born after the mid-to-late 1990s:
Fifty-four percent have already taken jobs to earn money for higher education, and 85 percent said they would work during college, with 20 percent planning on holding a full-time job.
Seventy-nine percent of the respondents said costs are a factor on college choice, with 39 percent saying high costs caused them to change their path and enroll in state schools, community colleges and vocational and career schools.
About 21 percent of the respondents are planning on putting their college plans on hold to pursue other interests, up from 20 percent last year.
Of those taking a gap year, 44 percent plan to work, 38 percent want to travel, 13 percent want to take time out for public service or philanthropic work, and 5 percent cited other reasons.
Nearly three-fourths of the students said career plans are affecting their college choice. “They’re looking at the cost of college and realizing you don’t have to go to Notre Dame to be a science teacher,” Michaud said.
Seventy-one percent of students who are primarily savings for college through a state-sponsored 529 college savings plan have parents who are also doing so. What’s the takeaway for parents? High school students today want to be “more engaged” in how to pay for college, Michaud said. “It appears they want to take on more responsibility,” he said. “They may just need a little more support from their parents to help them with direction.”