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.
As of June, 90% of college-bound Gen Z students said they don’t yet know how they’ll pay for school in full, said a survey of 9,097 students surveyed by application site ScholarshipOwl. Gen Z was born between 1997 and 2012 and includes the high school class of 2024. A fifth said they still needed more than $20,000 to cover the year’s tuition.
It’s true that some students will have enough savings 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 wreaking havoc in their future college plans.
If you find during the year you can’t raise the rest of the money, it’s “much harder to potentially have to change direction to () in the middle of the school year,” said ScholarshipOwl financial expert Jennifer Finetti.
Of the 1,500 college students surveyed by education software firm Ellucian who dropped out, 19% cited financial insecurity as the main reason. The survey was conducted between February 26 and March 1.
Learn more: Best personal loans
How much do students have to pay for the full year 2024-25?
Among the 90% of students who don’t have all the funds available to pay for college next school year, ScholarshipOwl said:
- 24% need another $5,000
- 22% need another $10,000
- 13% need another $15,000
- 11% need another $20,000
- 20% need another $25,000
Only about 4% said they are fully funded for the year, and roughly 7% said they were not attending college this year (numbers are rounded).
Is it worth the money?:How to decide if college is worth the cost
Why do so many families still have a funding gap?
The late and difficult release of the 2024-2025 Free Application for Federal Student Aid (FAFSA), inflation, and high interest rates all contributed to the lack of tuition, said the experts.
Since the FAFSA was messy, many people delayed or skipped completing the FAFSA. as of June 30, the number of high school graduates applying for student aid was down 11.6% from a year earlier, said Jack Wallace, director of government relations at student loan refinancer Yrefy.
- College costs have risen exponentially over the years, outpacing general inflation and wages, making college less affordable overall, Finetti said. Since 1998, the cost of a college education has risen 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%, he said.
- Student loan interest rates are at their highest levels in more than 15 years, making families think twice about borrowing.
What can students do to fill the gap?
Steps to take, experts say, include:
- Fill out the FAFSA, if you haven’t already. This should always be your first step because almost all federal government grants and scholarships, as well as state and institutional aid, are based on that information.
- Consider alternative routes: Save money by attending a less expensive community college and then transferring to a four-year university, or see if you can start your career with a certificate or internship program or associate degree instead. Or attend an in-state public school, where tuition is usually lower than at a private school. Focus on “colleges that are a good fit financially as well as academically,” Finetti said. “Choose the best financial fit because if you have to take out a lot of student loans to pay it off, it might not be worth it.”
- Constantly apply for scholarships. Apply for scholarships throughout the year. “People assume they’re only available at certain times, but that’s not true,” Finetti said. January through May have the most opportunities from schools, but private scholarships are listed throughout the year. She recommends applying at least three each week to maximize your chances. Even high school juniors 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 boost in your financial aid to attend the school of your dreams, call the financial aid office and ask for it. “Most people don’t do it, but they should, because they can do it,” Wallace said. “All they can say is no, but what if you can get more?”
- Apply for a loan. That should be a last resort because of the interest and the years it can take to pay off tens of thousands of dollars, Finetti said. But if you must, aim for government subsidized loans first because they offer the best terms. Then go to unsubsidized federal loans.
If parents want to help, they can look into the federal PLUS Parent Loan, but this year because interest rates are so high, Wallace said consider 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 at nearly half that rate, he said.
“My word of wisdom is more important than ever, which is that you need to be an educated consumer when choosing a college and paying for college,” Wallace said.
Medora Lee is a USA TODAY money, markets and personal finance reporter. You can reach him at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.