As tuition fees drop in the fall, Gen Z isn’t prepared to pay for college this year, survey finds

Fall tuition bills for the upcoming academic year are arriving in mailboxes this month, but only 4% of Gen Z students say they’re fully funded for the entire school year, data shows.

In June, 90% of Gen Z college-bound students said they weren’t sure how they’d pay for their entire education, according to a survey of 9,097 students by the application site ScholarshipOwl. Gen Z was born between 1997 and 2012 and includes the high school class of 2024. A fifth of them said they still needed more than $20,000 to cover tuition this year.

It’s true that some students will have enough saved to pay the first tuition bill that lands in their mailbox now, but not knowing how to pay for the rest of the year can be stressful and wreak havoc on their future college plans.

If you find during the year that you can’t come up with the rest of the money, it’s “all the more difficult to potentially have to change direction”) “In the middle of the school year,” said Jennifer Finetti, financial expert at ScholarshipOwl.

Of the 1,500 students surveyed by education software company Ellucian who dropped out, 19% cited financial uncertainty as the primary cause. The survey was conducted between February 26 and March 1.

How much do students have to pay for the full 2024-25 year?

Of the 90% of students who don’t have all the funds available to pay for college next school year, ScholarshipOwl said:

• 24% need an additional $5,000

• 22% need an additional $10,000

• 13% need an additional $15,000

• 11% need an additional $20,000

• 20% need an additional $25,000

Only about 4% said they were fully funded for the year, and about 7% said they would not attend college this year (figures are rounded).

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Why do so many families still suffer from a lack of funding?

The late and difficult rollout of the 2024-25 Free Application for Federal Student Aid (FAFSA), inflation and high interest rates have all contributed to the tuition shortfall., experts said.

The story continues

Because the FAFSA was complicated, many people delayed or ignored filling out the FAFSA. As of June 30, the number of high school graduates who had completed the student aid application was down 11.6% from a year earlier, said Jack Wallace, director of government relations at Yrefy, a student loan refinancer.

• Tuition has risen exponentially over the years, outpacing inflation and wages, making college generally less affordable, Finetti said. Since 1998, the cost of college has increased 188%, a faster rate than virtually all goods and services and inflation-adjusted hourly wages, education platform Research.com said. Wages have increased only 26%, it said.

• Student loan interest rates are at their highest level in more than 15 years, causing families to think twice before borrowing.

What can students do to fill this gap?

According to experts, the measures to be taken are as follows:

• Complete the FAFSA, if you haven’t already. This should always be your first step, as almost all federal government grants and scholarships as well as state and institutional aid are based on this information.

• Consider alternative paths: Save money by attending a less expensive community college and then transferring to a four-year university, or see if you can jumpstart your career with a certificate or apprenticeship program or an associate degree instead. Or attend a state public school, where tuition is typically lower than a private school. Focus on “colleges that are a good fit for you both financially and academically,” Finetti said. “Choose the best financial fit, because if you have to take out a lot of student loans to pay for it, it may not be worth it.”

• Apply for scholarships constantly. Apply for scholarships throughout the year. “People think they’re only available at certain times, but that’s not true,” Finetti said. January through May offer the most opportunities at schools, but private scholarships are offered throughout the year. She recommends applying to at least three scholarships a week to maximize your chances. Even high school freshmen should start applying now, experts say.

• Find a job. A full-time job during the summer and school holidays and a part-time job during the school year can earn you extra money.

• Call the school’s financial aid office. If you need a little help financing your way to your dream college, call the financial aid office and ask. “Most people don’t do it, but they should because they can,” Wallace said. “All they can say is no, but what if you could get more?”

• Apply for a loan. This should be a last resort because of the interest and the years it could take to repay tens of thousands of dollars, Finetti said. But if you absolutely must do it, go for government-subsidized loans first, because they offer the best terms. Then, go for unsubsidized federal loans.

If parents want to help, they can consider the federal Parent PLUS loan, but this year, because of the very high interest rates, Wallace advised considering a private loan if you have excellent credit. The interest rate on a federal Parent PLUS loan is 9.08% plus a 4.228% fee. If you have excellent credit, you may be able to get a private loan for about half that rate, he said.

“My word of wisdom is more important than ever: You need to be informed consumers when choosing a college and paying for your education,” Wallace said.

Medora Lee is a personal finance, markets and money reporter at USA TODAY. You can reach her at [email protected] and sign up for our free Daily Money newsletter for personal finance advice and business news Monday through Friday mornings.

This article was originally published on USA TODAY: Gen Z unsure how they’ll pay for college this year