By —
Paul Solman
For PBS NewsHour
The amount of student loan debt Americans hold is at a record high, and much of it is shouldered by Millennials--people in their late 20s and 30s. Now, children in Generation Z, the group born after 1996, are facing their own quandary about how to pay for college. As economics correspondent Paul Solman found, some are taking very seriously the prospect of being saddled with a lifetime of loans.
As economics correspondent Paul Solman learned, some are taking lessons from what's happened to their older brothers and sisters.
It is part of our weekly segment, Making Sense.
Paul Solman:
And this is the famous gate here of Columbia. So you have all visited here?
Student:
Yes.
Paul Solman:
Students across the country are clamoring to get into schools like Columbia University, where barely 6 percent of applicants are accepted, despite its cost, $74,000 a year, including room and board, more than $10,000 greater than the typical U.S. household earns in a year.
Byron De Leon:
For my family, college expenses are not the easiest thing to pay for.
Paul Solman:
For Gen Z, the post-millennials, today's college prices may just be too high.
Byron De Leon:
Going to a CUNY has become an option.
Paul Solman:
CUNY meaning a City University of New York.
Byron De Leon:
Yes.
Paul Solman:
The cost of CUNY? A mere $6,500 a year in tuition, and students can live at home.
Beth Kobliner:
Has anyone ever considered not going to college?
Paul Solman:
Personal finance guru Beth Kobliner had assembled a group of economically diverse New York City Gen Z'ers, all high schoolers, part of the first wave of Gen Z to reach college age.
We crossed Broadway to Barnard, a women's college long tied to Columbia. Price?
Beth Kobliner:
This school is $70,000 a year.
Paul Solman:
Seventy?
Beth Kobliner:
Seventy thousand a year.
Paul Solman:
That's room, board, tuition and car — and a car?
(LAUGHTER)
Paul Solman:
But don't just look at the sticker price, because schools offer financial aid, says Barnard's V.P. of enrollment, Jennifer Fondiller.
Jennifer Fondiller:
Barnard and many schools are offering tremendous amount in financial aid. We meet 100 percent of need, which means that if your family can't afford the cost of Barnard, we're going to help you and meet that need that you have.
Paul Solman:
But to meet that need also requires most students to borrow. Two-thirds of grads are saddled with loans, and their total debt has passed $1.5 trillion, half again the total owed on credit cards. That's 45 million borrowers, averaging more than $30,000 each. The story at Barnard?
Jennifer Fondiller:
Our students do take out loans, but we really limit and maximize the loans that they can get out.
Beth Kobliner:
Do you give guidelines, like how much debt is too much debt?
Jennifer Fondiller:
There's not necessarily a cap, but we will talk to them about what do they feel comfortable with.
Paul Solman:
Fifteen years ago, millennials' top worry about applying for college was getting into their top choice. Today, Gen Z'ers say it's student debt.
Beth Kobliner:
How many of you are worried about taking on student loans?
Paul Solman:
Who is not worried? And is that because you come from a family where there's enough money already?
Irfane Soumanou:
No. It's because I have already implanted in my mind that I have to work as hard as I have to in order to have a scholarship that will get me through college.
Paul Solman:
It's not that you're not scared of them.
Irfane Soumanou:
Yes.
Paul Solman:
You're just not going anywhere near them.
Irfane Soumanou:
Yes.
Byron De Leon:
I feel like I'm scared of taking out loans just because the word debt is just very intimidating.
Paul Solman:
Kobliner, who writes and speaks about youth finance, admires Gen Z's caution when it comes to debt, but warns against becoming phobic.
Beth Kobliner:
I don't think student loans are necessarily a horrible thing, but you want to stick with federal student loans.
Paul Solman:
So, federal student loans, because they have a much lower interest rate?
Beth Kobliner:
Much lower interest rate.
Paul Solman:
Given the price and the opportunity cost of college, however, the money you could make by working instead, why not just go to school online, which can be thousands cheaper in tuition, or skip college altogether?
Marcus Byers:
People always talk about the college experience, and how important it is. So, I feel like, if you want to develop socially, going to college and just being on a campus and being on your own, and like, putting yourself in a situation where you have to get to know people is extremely vital to your life.
Issoufou Garba Hama:
You could also be with people that feed off your knowledge, and you can feed off their knowledge. So that's kind of the main reason for me, is to be with other people, just like to connect.
Jhanique Daniel:
I learn better when I'm in a classroom setting. When I'm at home on my computer, I can be on my phone and I can just like get distracted so easily. I can have, like, the lesson being, like, on my computer screen, right there, and have Netflix on the side.
Paul Solman:
Indeed, the Pew Research Center reports that fully 59 percent of Gen Z'ers aged 18 to 20 were enrolled in college, compared to 53 percent of millennials in 2002. In 1986, the number was only 44 percent.
The main reason for the rise seems obvious. College, though pricier than ever, has been a historically good investment. On average, grads make $300,000 more over their lifetime, even after subtracting tuition and other costs, than their diploma-less peers.
But will it continue to pay going forward? Hey, PayPal founder Peter Thiel, though himself a Stanford grad, has offered students with good ideas $100,000 to start a company instead of going to school.
Beth Kobliner:
Would you accept it?
Jhanique Daniel:
For me, not just going ahead and take a risk, because what if I fail, you know? What am I going to do then? Like, I will have to get another job. I will have to get another job with a high school degree only. You know what I mean? It doesn't really play out. I have to think of a plan B, if all else fails.
Paul Solman:
A prudent plan B, because older Gen Z'ers, like those in our unscientific sample at least, are economically hard-nosed, and shooting for the top tier in an economy they have seen become more steeply split their entire lives.
Byron De Leon:
A lot of us in our age want a job that's high up there. Maybe the dream is to become rich or higher middle class.
Paul Solman:
Anxiety about what economic class they will wind up in is increasingly evident in the actual college classes students choose.
So-called STEM majors have soared in recent decades, while an English degree, with which something like 10 percent of students unapologetically graduated in my day, is down to 2 percent, prompting the question: Is a degree from a liberal arts college worth it economically these days, especially if it's in the liberal arts?
Jennifer Fondiller:
Humanities, social science areas, they open doors, because it is not just about the specific skill that you're learning, but it's all the other pieces that go into what that major might be like in the classroom setting, to be able to collaborate, to be able to be a good public speaker.
Paul Solman:
Fondiller's humanities pitch sounded good to me — I focused on art history and sociology — and to Beth Kobliner, a proud English major. And there's plenty of support for what Fondiller says.
Three-quarters of employers say soft skills are as important as technical ones. But to our Gen Z'ers:
Jhanique Daniel:
I don't really, like, believe that.
Will Brooks:
I didn't really buy her argument either. If I'm someone who is going to — is looking between two people, one who is an English major and one who has a major that's necessary for the field, I'm going to choose the one who is necessary for the field.
Paul Solman:
Lauren, you agree with that?
Lauren Portt:
Yes. I love certain literature that I have read at my school, and I just would love to continue doing that, but, at the end of the day, that kind of doesn't really lead anywhere.
Paul Solman:
And so, Gen Z seems to be thinking about college costs a lot more skeptically, some would say more realistically, others more narrowly, than those who came before.
For the "PBS NewsHour," this is economics correspondent Paul Solman, reporting from New York.
To watch the full episode, click here.