Examining the Financial Challenges of Today*s Young

Report
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!

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