Five financial realities facing today’s college students

If you follow the news, you regularly hear updates on the economy and consumer confidence—but how much is this affecting students in higher education?

To understand the impact of finances on college students and their families, Noel-Levitz conducted a number of studies during the 2011-2012 academic year. The following trends and data indicate that student finances must remain an ongoing, strategic issue to address for today’s enrollment managers and their colleagues.  These trends are among those that will be discussed at the upcoming Strategic Enrollment Planning Executive Forum, which will be held December 4-5 in Las Vegas.

1. The financial need levels of incoming freshmen keep rising. 

Based on our study of financial aid awarding at more than 130 private, nonprofit colleges that are using Noel-Levitz financial aid services, the financial need levels of incoming freshmen have steadily increased over the past six years, as shown on page seven of the 2012 Discounting Report. In addition, the proportion of freshmen who file a Free Application for Federal Student Aid (FAFSA) has also been rising.

2. College students are feeling the effects of economic hardship directly.

At four-year public institutions, there is a five-year upward trend in the proportion of freshmen who report being in serious financial stress. By comparing our 2012 National Freshman Attitudes Report with parallel annual reports dating back to 2008, we see that the proportion of incoming freshmen at four-year public institutions who indicate that they have “financial problems that are very distracting and troublesome” has steadily risen from 26.1 percent in fall 2007 to 29.7 percent in fall 2011, with the biggest increase between fall 2010 (27.7 percent) and fall 2011 (29.7 percent).

3. Freshmen aren’t the only students looking for financial assistance.

Across private and public institution types, second-year undergraduates—a group that leaves college at higher rates than many are aware—tend to be less satisfied than their freshman counterparts with the adequacy of the financial assistance available to them. Based on our pilot study of 8,600 second-year students who were enrolled in college in fall 2010, second-year students indicated relatively low satisfaction with the adequacy of their financial support. For details on second-year student satisfaction levels, see page 16 of our 2011 report, The Attitudes of Second-Year College Students.

4. The price of college is more important than ever—to all types of students.

Cost and financial aid are the top factors in traditional students’ college choice decisions, and these factors also rate highly in the college choice decisions of graduate students, online learners, and adult learners. The 2012 Factors to Enroll Reports show that cost and financial aid were the two top factors motivating college choice for traditional first-year students at four-year public institutions and at two-year public colleges, while financial aid was the top college choice factor for students at four-year private colleges and two-year career schools. The reports also show that online learners tend to be more focused on costs and financial aid than adult learners in on-campus programs.

5. Most freshmen expect to get part-time jobs; less than half do so by mid-year.

In the 2012 Report: The Attitudes and Needs of Freshmen at Mid-Year, we see gaps between students’ actual experiences at mid-year compared to their expectations and desires at the beginning of the year, based on a study of 4,000 freshmen. For example, at four-year private institutions, two-thirds of the freshman respondents in fall 2011 expected to find part-time work when they arrived at college, but only 45 percent were working by mid-year.

Given the above findings, it is not surprising that strategies and practices aimed at assisting students with their finances received relatively high ratings in the 2011 Marketing and Student Recruitment Practices Report and 2011 Student Retention Practices Report.  In addition, the practice of awarding assistantships was rated among the top 10 practices in the 2012 Marketing and Student Recruitment Practices for Master’s-Level Graduate Programs.

Clearly, the financial concerns of today’s students are far-reaching and likely won’t be going away anytime soon. We hope you will join us at the Strategic Enrollment Planning Executive Forum in December to discuss how your institution can strategically assess and respond to this situation.

Questions?  Want to discuss your responses to students’ financial needs with one of our experts? Please contact us for an appointment by phone or post a comment below.