How Student Debt and Education Costs are Affecting Students’ Choice of Schools
America has witnessed years of skyrocketing education costs and mushrooming student debt. Finally, economic logic is kicking in, and it now appears that these high numbers are influencing the way millennials choose where (or if) they will go to school.
I feel vindicated by these data, which support my argument that schools’ crazy high tuitions are disrupting higher education as a whole.
In a 2017 survey, 93% of students taking the ACT (a standardized test used for college admissions) said that costs would be an influential factor in their college choice.
These aren’t mere words. Last year, Inside Higher Education reported on an eye-opening study regarding college choice trends. According to the data, 18.6 percent of students who were admitted to their top choice school, decided not to go there due to the cost of tuition. Additionally, other students chose a different school due to better financial aid, better scholarships and grants, etc.
When you add those numbers, nearly 40 percent of millennials chose a college other than their preferred one for financial reasons.
These numbers point to changing views about financial aid and student debt. Since most students have little-to-no trouble securing student loans to cover costs of education (a reality which has helped fuel the current debt overload), the fact that students are turning down their top colleges tells us something profound and good. Millennials are wising up to the threat of student debt, and they are looking for ways to take on less of it.
Where Do They Go Instead?
If millennials are basing their choice of school on how much debt they would incur, how does this new reality affect their decisions? If they are turning down admissions to preferred colleges, where do they go instead?
Cheaper state schools. A poll presented recently by the Art & Science Group confirms that in January 2016, 63 percent of high school students surveyed considered a state college or university in their home state for financial reasons. State colleges and universities usually offer huge discounts for in-state residents, reducing the size of student loans.
Community colleges. The same Art & Science Group poll indicates at least 20 percent of students opted to start their education at an inexpensive 2-year community college, then transfer credits to a 4-year school after earning their associate’s degrees.
Online schools. With more educational institutions moving toward a cheaper online format, students have more options for borrowing less money.
Skipping college altogether. As early as 2012-2013, the Census Bureau noted huge drops in college enrollment numbers across the country. As PBS reported, higher numbers of millennials may have unfortunately decided that college is simply not worth the cost.
I am happy that young people and their parents are wising up and becoming more frugal. However, the last bullet point is frightening. Young people are cutting back on college altogether due to the cost. Their calculus is clear. They’re weighing the overall financial benefits of college against the costs and deciding to bail on the system. It is clear they do not believe they will get a good return on their investment.
We have failed as a nation if we do not support the education of our next generation. We cannot compete globally if this trend continues. Our economy will seize up and grind to a halt. This is not to say that everyone needs a college education, but those who do want one should have the opportunity to get it without leveraging their future into indentured servitude.
If more students refuse to take on excessive college loan debt, that act of defiance will definitely slow the student debt bubble’s growth. These numbers should be a wake up call to all colleges across the nation. Your prospects have had their eyes opened to the high price tag of your services, and they’re not paying.
Perhaps colleges will finally have to start taking responsibility for rising tuition costs. Maybe they’ll reduce them. Maybe they’ll even help students and alumni manage their debt. Or—and here’s my ultimate hope—maybe colleges give more value than the cost of the education. In other words, they’ll help ensure the education does its job. That it prepares students for the job market, so they can hit the ground running and get a good income. And, ideally, colleges will simultaneously find more efficient ways to teach and lower tuition costs.
Of course, in the meantime, if you’re already buried under the costs of a college degree, there’s good news. You may have more options than you know. Give College Loan Freedom a call today to learn more.