Blame for the rising student loan debt is often put on the shoulders of the Millennial generation, but is Generation Z looking to change the fate of the U.S. debt crisis? Nitro College surveyed over 5,000 Gen Z students to see how they’re approaching the financial burden of college.

A study performed by the National Center for Education Statistics followed 15,000 High School Sophomores for a decade — from 2002 to 2012 — to better understand how the education system affected them when it came to lifestyle and professional milestones. Unfortunately, that timing was not fantastic.

These young people were solidly within the generation known as millennials (classified as those born between 1981 and 1996). They would be 16 in 2002 and those who went ahead with higher education would be on track to graduate college right smack during the recession of 2008. The bursting of the financial bubble would end up putting Millennials, who had been brought up on assurances of continual economic growth, at a huge disadvantage when facing their formative early career years.

Due to rising higher education costs, many had borrowed scads of money to pay for college. According the the study, between 1995 and 2012, borrowing rates for undergraduate education rose precipitously from 26% to 42%.  This was debt that a floundering job market would not allow them to easily repay

This group of borrowers now blame their student debt for many hardships: 25% say student loans are responsible for their having to work multiple jobs, 34% took a less desirable job, 36% feel overworked, and 37% work outside their field of study, just to make student loan payments. Conditions have continued to spiral downward. In the last 10 years alone, student loan debt has grown over 250%. Now in their 30s, millennials are disenfranchised and the first generation to earn less than their parents.  

However, the earliest members of the follow-up generation, known as Generation Z, (defined as those born between 1997 and 2011) are now beginning to seek higher education. And Generation Z is something to watch out for.  

Anne Kingston defines the generation as “smarter than Boomers, and way more ambitious than the Millennials” and a recent Guardian article points to the belief that those in Generation Z harbor, that they are inheriting a “blighted” world, awash with difficulties, that requires clever and agile solutions to large-scale problems.

As a whole the generation is said to be cautious, risk averse, and to move toward a desire to see concrete and practical results from their investments. In all, they have learned from the financial mistakes of the recent past and one way they want to differentiate themselves is by devising strategies to pay for college without incurring crushing debt.

Results from a comprehensive study by Nitro College showed that of the 5,000 students they surveyed, Gen Z students were very revealing when it came to the level of pragmatism that those of this less optimistic, but more realistic, generation seem to have.

What strategies are Generation Z employing to keep their financial status level when it comes to higher education debt?


Staying close to home


Taking advantage of the reduced costs of in state tuition is one major facet of the debt reduction plan for Generation Z. Instead of looking for dream schools and figuring out how to pay for it later, over 65% of those studied say they are primarily looking for in state tuition. Obviously pricing for those that qualify as in state is dramatically reduced — on average a savings of around $9,000.   

That doesn’t mean they are sequestered to one state. To find a way into the best state school for their skills, clever Generation Z students have taken advantage of their immersion in the digital world. They engage credible online college programs and use these to finish prerequisite courses while biding their time. These students can take these courses, save money, and simultaneously establish residency in the state of their choice.  


Staying home entirely

Many Millennials have found themselves part of the “boomerang generation” — a phenomenon where college graduates have had to move back in with parents in order to survive. Generation Z, however, are increasingly not moving out at all. This means saving money on college room and board which on average is over $10k. About 20% of Generation Z students are giving up the campus life and more conscientiously considering continuing to stay with parents to save their money for when they start out professionally.


Thinking more seriously about tomorrow

Generation Z has been typified as generally more practical than several of the generations previous. For example, the optimistic attitude of Millennials that a college degree in a well-paying field would automatically pan out into a high paying position post graduation has proven to be unrealistic.

More pragmatic members of Generation Z realize that their first job is unlikely to be ideal and that wages will be comparatively low. Around 50% state that they understand that, even in the most competitive fields, they are likely to earn around $45k in the early going.

As the chart above shows, this understanding is something that certainly bears out when looking at the average starting salary for graduates with various bachelor’s degrees in the U.S.



Getting a need by giving up a want

The study also demonstrates that Generation Z is willing to make other sacrifices, foregoing many of the the traditional trappings of campus life, if it means remaining financially healthy. Expenses like owning cars, eating out, and hanging with friends are all experiences that they are open to relinquishing if it means affording the education of their dreams.


Working for it

More than ever, students are entering into college with the understanding that loans are just one avenue for affording higher education studies. By employing a combination of scholarships, work study programs, and outside jobs, Generation Z is compiling a recipe for success. This likely will make them competitive as they enter the the growing gig economy that compartmentalizes several different endeavors simultaneously to achieve career stability.

The idea that the kids are alright is a comforting one and their practical nature is something that hopefully will pervade our society. As we enter into a difficult time for conflict around the world it is a hopeful note that the generation coming up, which prizes education, intellect, balance, financial stability and equality, will soon be the prevailing demographic.

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