A different kind of high school student is headed to college now.
The graduating seniors who will be entering into post-secondary education and training over the next few years care less about ivy-covered prestige and more about saving money, keeping costs down and college debt at a bare minimum, even if it means living at home.
In a national survey of more than 1,000 high school seniors, juniors and sophomores, the Washington, D.C.-based College Savings Foundation found they want more practical and functional education options that are tied to real work experience and the possibility of finishing their requirements faster.
The two years of disrupted schooling caused by the pandemic appears to have reshaped young people's idea of what higher education looks like. Generation Z students, or "zoomers" born between 1995 and 2012 have expressed the highest level of appreciation — 63% — for technical and career education or apprenticeship programs as a viable alternative to four-year college than ever before.
"This year's survey reflects more maturity, a real growing up of young people and their view towards the role of education after high school," said Vivian Tsai, chair of the College Savings Foundation.
This survey marks the 13th annual nationwide study of high school students' attitudes toward saving for, selecting and paying for college.
Ms. Tsai said survey results from 2019 and 2020 indicated high school students viewed college as a next chronological step in growing up. They looked forward to the independence from their parents, moving into their dorms, experiencing a new phase of life and having fun with a whole new set of friends.
"The reality of 2020, 2021 and now 2022 has indicated that that view of college is a bit stale at this point because the reality is that college is a four-year preparation for real life," Ms. Tsai said.
"I think many of our kids have seen that real life is a lot more difficult today than it was five years ago."
Keeping higher education costs low was a consistent theme in this year's canvass of the college planning landscape.
Cost-cutting measures chosen by high school students included attending public college (38%); and community college (27%). In an interesting comparison, technical and career education and private college are evenly ranked as higher education destinations, with 10% of high school students planning to go to technical and career schools, only slightly behind 12% going to private colleges.
Other key findings in the survey were that 82% of high school students plan to work either full-time or part-time while attending higher education to help cover costs; 59% are saving for their higher education and 22% of them have saved more than $5,000; 54% plan to pay part or all of their higher education; and 66% plan on living at home.
Financial aid expert Mark Kantrowitz said students coming out of high school are taking a more serious approach to whether they will attend a four-year college, which one, what they will study and how they will pay for it.
The days when students spent two or three years in college without even declaring a major are on the way out.
"Families have become increasingly price sensitive, and increasingly sensitive to the question of whether college is worth it," Mr. Kantrowitz said.
"Students are increasingly trying to avoid having to borrow, or borrow too much," he said. "They are looking at whether the employer provides a student loan repayment assistance program. They are evaluating how easy it will be to repay the student loans.
One rule of thumb he offered was that if a student's total debt at graduation is less than their starting salary, they should be able to repay the student debt in 10 years or less.
The rising cost of college has pushed up the amount of debt students have taken out to afford it.
Student borrowers in the U.S. owe a total of $1.75 trillion as of Dec. 31, 2021, according to the Federal Reserve Bank.
The average student loan debt outstanding for federal student loans — not private student loans — is about $37,000 per borrower, according to the U.S. Department of Education.
High school students in the CSF study — 21% — reported their families are using 529 education savings plans to fund their higher education.
A 529 is a tax-advantaged savings plan that was created by Congress to assist families in paying for college expenses. Unlike custodial accounts, which are taxable based upon income and capital gains, funds used for qualified educational expenses grow federal tax-free within a 529 plan, allowing more of a family's savings to be used for tuition and less of it going toward taxes.
529 plans can be used to pay for technical, career and vocational training, as well as tuition and room and board, at four-year colleges. The funds can be used to pay for books or any supplies necessary for courses.
Technical schools and career and vocational training programs are increasing in popularity due to their many advantages, which include a shorter time frame to finish the education and the lower cost. But it's not for everyone.
"Not all kids have the technical skills that lead to an interest in a career attending a tech or vocational school," Ms. Tsai said. "The traditional four-year university where you're able to take classes on history and creative writing is always going to have a purpose."
The College Savings Foundation is a trade group for 529 plan program managers, state sponsors and financial services firms that manage the accounts. The nonprofit organization reports there are 15.8 million individual 529 plan accounts in the U.S. with a total of $457.7 billion in assets families have set aside for future higher education expenses as of March 31, 2022, according to ISS Market Intelligence.
Every state in the country has at least one 529 plan. Some states offer more than one. There are currently 93 operating 529 plans across the country.
Pennsylvania allows a tax deduction for any contribution — family or non-family — to 529 plans up to the annual gift exclusion amount — $15,000 per contributor or $30,000 for a married couple. Pennsylvania rules are considered especially generous because the state will give contributors the deduction regardless of whether it is to a Pennsylvania plan or an out-of-state plan.
