Survey: High schoolers likely to avoid debt

Students embrace community colleges

High school students who grew up during the Great Recession and likely saw their parents ride out financial struggle are showing a greater tendency to save for college, avoid debt, and embrace attending two-year community colleges and vocational schools, according to the latest survey by the College Savings Foundation.

Sophomores, juniors and seniors across the country surveyed by the Washington, D.C.-based foundation in its eighth annual “How Youth Plan to Fund College” survey are targeting schools that will lead them to careers while keeping costs in check. They also appear to be relying less on loans and scholarships as opposed to their own savings and expectations for working through college.

“We are pleased to see this year’s high school students demonstrate a strong appetite for making responsible cost-effective choices,” said Richard Polimeni, chairman of the College Savings Foundation. “This bears out the emerging profile of Generation Z students as financially careful and risk averse.”

Gen Zs are young people born during the mid- to late-1990s.

Mr. Polimeni said student debt has been a growing concern nationally, now standing at an alltime high of $1.3 trillion.

“A lot of students are seeing their parents struggle to pay off their own student loans,” he said. “They’ve also lived through the recession and seen their parents have a tough time making ends meet. The way they are assisting is by being more responsible financially and taking more responsibility for their own college costs.”

Part of that financially responsible mindset involves embracing all kinds of education — from traditional fouryear colleges and universities to community college and vocationalschools.

Over the last several years, the survey has tracked an increase in students planning to attend community college, andthis year it showed a jump of 5 percentage points from 20 percentto 25 percent.

Among those surveyed, 44 percent are choosing public college; 18 percent private college; and more than 6 percent are choosing vocational schoolor career programs.

Nearly half of all students — 49 percent — had already saved between $1,000 and $5,000; more than one-quarter — 27 percent — had saved morethan $5,000.

In addition, 54 percent have gotten jobs to earn money for higher education; and 85 percent planned to work during college, with 20 percent planningto work full-time.

Reluctance to take on debt was a recurring theme, with 69 percent saying they were concernedabout loans.

This year’s survey showed a drop among students who planned to take on debt, to 11 percent from 21 percent last year. The number of high school students who would “possibly” take on student loan debt also dropped to 63 percent from 71 percent. Those planning to take financial aid dropped to 49 percent from56 percent last year.

Researchers found that parental modeling counts. Just over 70 percent of those studentswho were primarily saving for college in tax-advantaged 529 plans had parents whoare doing so, too.

“We are seeing great engagement between students and parents, and that conversation is helping them be more responsible,” Mr. Polimeni said. “Also, there is a modeling effect. The students look at their parents saving money and they model that behavior.”