NYSFAAA 2014 Examining the Financial Challenges of Today’s Young Adults Presented by: Jonathan Sparling, ASA Agenda LIGHTS: What do you think today’s young adults are saying about their financial challenges? 2 CAMERA: What do recent studies reveal about the financial and psychological challenges of today’s young adults? ACTION: What can we do to support today’s young adults to provide both individual and institutional support and success? Lights! Your Thoughts: What do you think today’s young adults are saying about their financial challenges? 4 Camera! Community Composition 6 SALT Insiders Since our June 19th, 2012 launch, we’ve had: Total number of contributions: 19,215 Total number of research activities conducted: 117 Total number of community building activities conducted: 147 7 Defining Financially Stable 8 • About half consider themselves “financially stable.” • Primary definition: Being able to pay your bills and cover your necessities. “Currently I am financially stable. I am unfortunately living paycheck to paycheck, during theon year that is a Finding a well• Goals: Cutting back spending; “Fairly stable, work study paycheck which does not help with my bills paying job. though I have little very much. But for right now I am doing alright, making money of my own some money during the summer to save for the future and have to rely on and for the rest of the year.” loans and family support.” [Being financially stable means] 9 “…not being afraid of checking the mailbox because you know that it's bill time again, not having to dig inside the couch and under your car seats for change, never seeing a cut-off notice, not having a panic attack when the kids need new everything, not having to break into the piggy bank when you just started putting something into it last week, not having more numbers of bill collectors on your caller ID than friends and family, and being able to say the word financially ‘stable’ without laughing.” Stressors and Taboos 10 • Finances are the biggest stressor for many. • School and family rank as higher priorities. “For me,taboos. debt is the biggest “I that people not want to discuss • think Debt and do income are the biggest taboo to talk about. I don't like debt because yes it means a lack of for others to know my business money,•but Too it alsopersonal! means that they will in that regard because I feel always have that trailing them because like it's personal. All of my bills they cannot pay it off. Most people are get paid, but being a student ashamed that they are not able to pay it sometimesdecisions. sucks my bank • back Many would all right away. It maychange not always past financial account dry, leaving me to feel mean they a lack of money. could and staying inadequate if I struggle • have Especially savingIt more away from to mean that they just are not spending know where my next funds for credit cards. necessities will come from.” their money in the smartest way possible.” Note to Former Self “I would tell my former self to SAVE! SAVE! SAVE! I would say save as much as possible and spend as little as possible.” “I would tell myself to be more responsible and keep track of every dollar earned and spent. I would also say SAVE!!! Save every time you can and it will add up.” “If I were to write a letter to myself I think the only thing I could honestly say would be to Save. I have never been all that great at saving money, though I am getting better now. But having a savings that equals about 2 months worth of bills is a good thing to have, so I would definitely tell myself to work on savings, because it would come in handy many times.” 11 General Background 12 1985 2013 Average in-state tuition at a four-year public institution $1,3181 $8,6552 Average tuition at a four-year private institution $6,1211 $29,0562 Outstanding student loan debt $35 billion3 $1.1 trillion4 1. 2 3 4 U.S. Department of Education, National Center for Education Statistics, Higher Education General Information Survey (HEGIS) College Board Advocacy & Policy Center, 2013 The Institute of College Access and Success, Project on Student Debt, 2012 Consumer Financial Protection Bureau, 2013 ASA’s Research Question 13 How does student debt affect the daily lives of young Americans? Source: Life Delayed: The Impact of Student Debt on the Daily Lives of Young Americans. American Student Assistance, 2013. ASA’s Survey 14 Open invitation survey of young professionals nationwide 1,000 surveys emailed and 259 responses Survey open from May 14, 2013 – May 31, 2013 No incentive to participate Source: Life Delayed: The Impact of Student Debt on the Daily Lives of Young Americans. American Student Assistance, 2013. Survey Demographics 15 Age 60% Annual Salary 54% 50% 40% 30% 20% 22% 14% 9% 10% 1% 0% 18 to 24 25 to 30 31 to 35 36 to 40 41+ Under $25,000 $25,000-$39,999 $40,000-$49,999 $50,000-$59,999 $60,000-$69,999 $70,000-$79,999 $80,000-$89,999 $90,000-$99,999 $100,000+ Prefer not to answer 21% 20% 18% 10% 4% 3% 3% 3% 2% 0% Highest Level of Education 2-year College Degree 15% 5% 10% 15% 20% 1% 4-year College Degree 43% Master's Degree 93% of respondents had student loans 38% Some Advanced Graduate Work 10% Doctoral Degree 2% Professional Degree (JD, MD) 4% 0% 10% 20% 30% 40% 50% Source: Life Delayed: The Impact of Student Debt on the Daily Lives of Young Americans. American Student Assistance, 2013. 25% “My college experience… “was valuable, however it is NOT worth the amount of debt I have.” “was valuable but I could have probably gotten the same value going to a cheaper college.” “was transformative, but I’m not sure it was worth the expensive price tag.” “was great and opened up opportunities for me. However, student loan debt has made my life challenging after, especially to pursue a career in the field I want to. I get by every month, but it is tough.” 16 “was valuable to my personal fulfillment, but I wish I had a job in the field.” “was valuable and left me better off, but the debt is seriously holding me back significantly.” Impact of Student Debt 27% found it difficult to buy daily necessities. 17 30% stated their student loan debt was the deciding factor, or had considerable impact, on the choice of career field. 75% indicated their student debt impacted their ability or decision to purchase a home. 63% said student debt impacted their ability or decision to make larger purchases such as a car. 73% said they have put off saving for retirement or other investments. 29% indicated that they have put off marriage. 43% said that student debt has delayed their decision to start a family. Source: Life Delayed: The Impact of Student Debt on the Daily Lives of Young Americans. American Student Assistance, 2013. Impact on Living Choices 18 YES Did you student loan debt factor into your 28% decision of which state you would live in after leaving school? Did you intentionally move to a low cost 31% of living state? My student loan debt played a role in my decision to live with roommates. 29% - Strongly applicable 14% - Somewhat applicable Source: Life Delayed: The Impact of Student Debt on the Daily Lives of Young Americans. American Student Assistance, 2013. Education Decisions 19 Source: Life Delayed: The Impact of Student Debt on the Daily Lives of Young Americans. American Student Assistance, 2013. Student Loan Responsibility 20 Who do you feel is responsible for your student loan debt? Source: Life Delayed: The Impact of Student Debt on the Daily Lives of Young Americans. American Student Assistance, 2013. Giving Back 21 YES Should your alma mater help you manage your debt? 60% Does your student debt impact your ability to donate to your alma mater? 77% Does your student debt impact your willingness to donate to your alma mater? 72% Source: Life Delayed: The Impact of Student Debt on the Daily Lives of Young Americans. American Student Assistance, 2013. Survey Comments I only took out the amount I NEEDED, so I feel like I walked away with much less debt than many do, but it was a joyous day when I made that last payment! 22 I would not have taken more than the bare minimum if I knew what I know now. My poor, poor generation. It’s sad and disheartening that I have a negative reaction to my college experience due to the financial impact it has had on my post-graduate life. This is the only debt I have ever had. I am very responsible with my finances in every other aspect of my life, but the fear of this debt is crushing. Student loans will control how you are able to live your life. Survey Comments Student debt weighs on every decision I make, from food shopping, to where I choose to live, how I spend my free time, to what clothes I wear, and ultimately, what career I choose. Upon graduation you realize that you can’t really begin the life you imagined having after college. My debt is minimal. It is scary to think about the way debt has impacted many of my friends and loved ones. 23 My parents also took out a loan to help pay for my schooling. I wish I could help them pay off the loan but I am not in the financial position to do that. Without their willingness to take out a parent loan, my own student loans would have been much higher. Student loan debt has impacted my whole family. College Loans/Costs Top Money Issue for Young Adults • • • 24 An April 2014 poll by Gallup has found that paying for college or paying student loans is the top financial problem for adults who are 18-29 years old, with 21 percent citing the issue. That issue beats out lack of money/low wages (15 percent) and housing costs (14 percent). Paying for college or students was also the top issue cited by those 30 to 49 years old, but the percentage citing the issue was smaller (14 percent). http://www.gallup.com/poll/168584/young-adults-cite-college-costs-top-moneyproblem.aspx?utm_source=WWW&utm_medium=csm&utm_campaign=syndication Action! Institutional Understanding 26 A survey of 16- and 17-year-old high school students by the College Savings Foundation reported that almost all (94%) were concerned about their potential debt burden at graduation. What is the message that your president conveys? What messaging is provided by your admission and/or financial aid offices? Source: High School Students Unprepared for Rising Costs of College with Deep Divide Between Funding Plans and Actions. Rep. College Savings Foundation, 2012. Web. Alumni Giving • “The mere fact of taking out a student loan decreases the probability that an individual will contribute to the university as an alumnus.” • What is your alumni giving trend? • What are you doing to educate students about their debt and how to manage it? Source: Meer, Jonathan, and Harvey S. Rosen. “Does Generosity Beget Generosity? Alumni Giving and Undergraduate Financial Aid.” National Bureau of Economic Research. February 2012. Web. 27 Financial Aid 28 • Across all institutions, the amount of the debt itself seems to be less important than how the student feels about his ability to manage it. • What are you doing for entrance and exit counseling? • What else are you doing for borrower education? • What are you doing for financial education in general? Retention and Student Success 29 • The 1,669 colleges and universities studied collectively lost revenue due to attrition in an amount close to $16.5 billion with the largest single school losing $102,533,338, the smallest single loss being $10,584, and the average school losing $9,910,811. • What retention efforts do you have in place? • Are you focused on student success? • Are you providing holistic well-being services? Source: Cost of Recruiting an Undergraduate Student: Benchmarks for Four-Year and Two-Year Institutions. Rep. Noel-Levitz, 2011. Web Alumni Financial Impact 30 • An average student debt burden for a dual-headed household with bachelors’ degrees from 4-year universities ($53,000) leads to a lifetime wealth loss of nearly $208,000. • Nearly two-thirds of this loss ($134,000) comes from the lower retirement savings of the indebted household, while more than one-third ($70,000) comes from lower home equity. • The wealth loss will be greater for households with largerthan-average levels of student debt: students from lowincome families, students of color, and for-profit students. Source: At What Cost? How Student Debt Reduces Lifetime Wealth. Robert Hiltonsmith. August 2013. Demos.org. Got the Same Script? 31 Common mission • Is everyone on the same page? • Have you conveyed the “WIIFM” to each group? Director’s Cut 32 Short Term • Identify three actions you would like to take that will have an immediate positive impact – for either current students or alumni. Long Term • Consider the ideal state. • What resources do you need to make this happen? • Who do you need to partner with? • What does the final script look like? Thank you!