Sizing Up the College Market

According to the College Board, the cost of tuition at a 4-year public university doubled between 1980 and 2006. The pace of increase is accelerating with a 35% increase in the past 5 years alone. (Source: Economic State of Young America). According to the National Retail Federation, college students are expected to spend about $10.5 Billion gearing up for and attending college this year. But tuition is only a fraction of the story. According to a very cool graphic assembled this spring by Westwood College, just 19% of college student spending goes to tuition. Another 26% goes to to room and board. Where does the rest of the money go? Most goes to consumer goods and services – travel, apparel, textbooks, entertainment and ‘discretionary’. The National Association of College Stores says students spend about $750 in their college store, only $488 of which goes to textbooks and course materials.

However you size it, college, and preparing for college is big business. Department stores like JC Penney and Bed Bath and Beyond each have specific college directed efforts and there are dozens of web businesses like collegepad.com that would love to outfit your dorm. The College Board even offers a handy checklist to make sure you don’t forget the band-aids and Neosporin, much less a bottle opener or DVD player.

It's possible 2009 will see the peak for college spending. Not only has the recession put pressure on decisions about where students apply and attend, it may also alter how they go to school. According to Engage Gen Y, educators, parents and students are taking a hard look at these alternatives to expensive textbooks.

Chegg: Allows students to rent their book for class at a discount of more that 50% and have it delivered to their door. Chegg plants a tree for every book rented.

CourseSmart: Offers digital versions of traditional textbooks from some of the major publishers in the industry.

Textbook Media : Textbooks and study guides provided online through a web-based book reader, offered free to students through sponsorships from national brands.

Flat World Knowledge : An open-source textbook provider that provides online textbooks in a reader to students free of charge. Students pay for premium services.

Beyond text books, as online education becomes more mainstream, the ‘college experience’ itself, as least as I knew it with four years at college living on campus, may become the premium or luxury option, not the default. This summer, my son is taking an online high school ‘health’ course for credit from BYU.edu. If he likes it, it may shape how he thinks about college. And according to Time (July 29, 2009, "Can Community Colleges Save the U.S. Economy?"), community colleges are enjoying record enrollment surges from laid off workers and students looking to save on room and board.

College Choice: Millennials Under Pressure

College application deadlines are now behind us, and final choices still lie ahead for this year's crop of high school seniors. That makes now a good time to look at, what is for most Millennial's, the most-important-decision-of-their-lives-so-far. It is not only the most important, it is also the most expensive. The Education Department says there is an outstanding $556 billion in Federal education loans, with private outstanding loans adding another $130 billion. (Hey! That's about the same as the stimulus bill, now there's an idea we haven't heard yet.....)

Despite the extended and agonizing decision-making, a survey of 2000 freshman by collegeclicktv.com says most freshman regret their choice. 56% replied 'no' to the question, "Are you happy with the college you chose?", In an interesting footnote, 81% of those who like their choice say their school has a winning football team. (Maybe all those coach firings make sense after all?) Fortunately, my own daughter is deliriously happy with her choice, but she reports many of her peers are not, and not just because the football team had a disappointing season. Many find that the college they picked is simply not what they expected it to be, while others are facing the usual adjustment issues of too many late nights and difficulties with time management.

While not the whole picture, finances may be playing a role in freshman unhappiness. A Eduventures survey of the parents of 7000 freshman found one-third say they are having trouble paying for college this year. Little wonder transfer applications are up, as are applications for 2-year community colleges (WSJ, 1.27.09).

Looking ahead to this year, finances are likely to play even greater role in the decision than in the past. The WSJ, (1.15.09) reports the college-advisory business is booming. Test-prep classes have become the norm, and more parents are hiring educational consultants to help students qualify for financial aid at top schools, not just get in. According to the Journal, the biggest audience for these services are families with middle incomes - $75K-$100K.

With Millennials under pressure, college marketers will have to work even harder to make the case for their schools. With freshman unhappiness running high, perhaps the place to start is by retaining the students they already have?

Crowdsourcing Comes to College Marketing

As a parent who spent way too many hours last year with the Princeton Review of Colleges Guidebook, the idea behind Unigo.com is compelling. Why rely on statistics, the college web site, a campus tour and a few anecdotes, when you can hear everything direct from the students themselves? That's the idea behind Unigo.com which launches this month just in time to help the class of 2013 pick a college. The idea combines many concepts familiar and dear to Millennial's 1) No one is as smart as all of us 2) All the information, all the time 3) unfiltered and unedited 4) free. What's not to like?

Here's how the New York Times (9.19.08) describes Unigo's utility to a prospective student:

"Every student who joins Unigo has a user profile, and while that profile might not feature his or her real name, the idea is that by garnering a few pieces of personal information — your major, your hometown, your race, sex and political leanings — a database is created that makes it possible for newcomers to search the site by all kinds of hyperspecific criteria. You can see how many other people from your own high school are looking at a particular college. You can contact the author of a review with follow-up questions. “You can say, ‘I only want to see reviews of Harvard by African-American students,’ and have a choice of 20,” Goldman projected, “or by English majors, and have a choice of 50. So you can not only see a more comprehensive version of the school than you can anywhere else, but you can also see the school through the eyes of someone who’s just like you.”

The Beta site is still a little dysfunctional, but the promise, is enormous. The idea of video testimonials is compelling, you can hear the 'virtual' tour on an official web site, then hear the unofficial tour on Unigo. With my ties to Notre Dame, I will be especially interested in seeing this video described in the NYT article: "Two girls at Notre Dame, one an official campus tour guide, visit several spots around campus: at each one, the tour guide gives you the approved spiel, and then her friend tells you what the spiel leaves out."

Millennial Myth Busters

While it's fun to generalize about generations, the College Board (those folks who bring us the SAT, AP Tests, etc.) sent up a loud cautionary note in May. As one of the few organizations who have studied college students over time, they are in a position to know. According to StudentPoll data, an ongoing study of incoming freshmen, CB maintains Millennials are not that different from other generations in their goals, aspirations, values and college choice criteria.

Millennial Myth: Student interest in "making a contribution to society" is on the rise while interest in "having lots of money" is declining. studentPOLL's Freshman Survey data conclusively show that interest in "being financially well off" remains high and at levels comparable to previous generations.

Millennial Myth: Students are more intellectually oriented and less career focused than previous generations.Again, studentPOLL's findings and CIRP's data demonstrate that students are very much career focused, but equally interested in the academic aspects of college that challenge them intellectually.

Millennial Myth: Millennials associate themselves with the name "Millennial Generation." Despite the public and media hype about the "Millennial Generation," only 6 percent of students associated their generation with the name "Millennials." In fact, 43 percent reported that they didn't know or that none of the six generational names tested was the name used to describe their own generation, and as many identified themselves as Generation X or Y.

Millennial Fact: Raising a family tops the list of life objectives that are "essential" or "very important" to Millennials—even more so than their parents' generation. In 2007, 77 percent of the 272,000 students surveyed indicated that "raising a family" was an "essential" or "very important" life objective to them. In 1977, only 59 percent of students gave the same level of importance to raising a family, although this figure has remained relatively constant since the early 1990s.

Millennial Fact: College Bound Seniors welcome parental involvement in college planning. Ninety-five percent of students indicated that their parents were either "very involved" or "involved" in their college plans but, contrary to anecdotal suggestions, the students reported very little unwanted, intrusive behavior on the part of their parents. In fact, nearly 30 percent of students want more, not less, parental involvement.

Millennial Parents: Hopelessly Devoted to You

After three days spent observing and interacting with 500 Millennials and their parents at George Washington University's "freshman orientation", I now have a better understanding of the parenting relationship that resulted in such a self-confident, community-oriented, civic-minded cohort. The fact that there even is such a thing as 'parent orientation' speaks volumes about Millennial parenting.

As a Boomer parent who went to small liberal arts college in the dark ages of 1973, I don't recall my parents even being interested in what challenges I might encounter at college, much less with the details of registering for the right classes, finding clubs that interest me, achieving a realistic balance of classes and outside activities, resolving issues with roommates or identifying the right career. Of course, my parents weren't paying more than their mortgage for a college education either -- but that is another story.

In the Millennial era, orientation is a 3-day affair with separate events for and parents and students. There were theatrically produced skits on the perils of college life (X-rated for students, PG for parents), speeches from the deans, tours, small group sessions and more. I admire the marketing insight behind the event: Reassure parents and their kids they great choice and address any lingering buyers' remorse. I also admire the 'target insight': 'Helicopter' parents have a hard time letting go. The skit that evoked the most laughter among parents depicted a mom who arrived on day one with her son's teddy bear, a super sharpie to mark his underwear and an extra phone so she could leave messages on his phone -- to the mortification of her son and the amusement of his new roommates. Another skit "The Little College Student Who Could" modeled good parental behavior: refraining from helping kids register for classes, not offering to bring them home too often, sending too many packages, texts or voicemail messages. I began to wonder, do I (who me?) have issues I don't even realize I have?

Clearly this is an issue. As the head of student services informed us, "it's one thing to call a professor, it's another to call a boss, so you may as well start letting go now". (More laughter) How this situation came about is easy to comprehend. Boomer and Gen X parents ran a parenting gauntlet, what David Brooks refers to as the 'Achievatron', to get their kids into a top tier school. They certainly can't be expected to stop now just as their kid encounters his/her biggest life challenge to date.

Millennials enjoy closer, more friendly relationships with their parents than previous generations. According to "Millennial Makeover" by Winograd and Hais:

"Half of all Millennials say they see their parents in person every day, and aided by widely available and relatively inexpensive cell phone service, nearly as many (45%) talk with their parents in the phone daily. Virtually all do so at least weekly. One in five communicates with them by email at least occasionally. These incidences of ongoing parent-child contact are well above those for all older generations of Americans (Pew Research Center 2007a)."

Many parents continue to support their Millennial kids well beyond the point when kids used to be expected to be self-sustaining. The traditional hallmarks of adulthood, marriage, children, home buying, are all being delayed. What this new extended 'pre-adulthood' means for marketers is anyone's guess. At minimum it means extended spening power for Millennials as they continue to draw upon parental subsidies and housing. It also means Millennials have more opportunity to influence parental choices, particularly in the areas they know best, such as technology and entertainment. As one parent put it, "when it comes to college these days, it takes a family."

Are Millennials Less Decisive?

I attended a Junior Achievement dinner this week honoring the Michiana area's best and brightest. Bill Rancic, entrepreneur, author and winner of the first season's Apprentice, was the speaker. After an entertaining and thoughtful look at his own journey from JA to motivational speaker (with a detour into Donald Trump's empire) he offered that young people today need programs like JA because they are less comfortable making decisions. Fear of 'getting it wrong' causes them to be shy of making decisions at all. Could this be true?

Possibly.

Personal experience suggests that a theory of low decisiveness has some merit. My 14 year old son has instant buyer's remorse each time he purchases a new pair of $90 shoes.

May 1 is the deadline for incoming freshmen to inform their choice of college of their decision. My 17 year old daughter was paralyzed by the fear of 'getting it wrong' even though both of her admitted schools are world class and no wrong decision was possible. She chose GWU at the 11th hour but still has doubts whether Notre Dame might not have been a better choice.

I don't think my kids are unique. Each year I require my sophomore Marketing students to select a publicly traded company that manufactures products to analyze as their semester project. I give them two weeks to make a selection. Most wait until the very end, agonizing over this very simple choice.

Apparently, Bill Rancic and I are not the only ones to ponder this question. Even the American military has its doubts about whether the highly tolerant, tech savvy Millennials have what it takes to command decisively. Booz Allen writes:

"The next generation of soldier: tech savvy, open-minded, multitasking, and perhaps unprepared for command-and-control. (Military of Millennials, 3/10/08) http://www.strategy-business.com/resiliencereport/resilience/rr00056?gko=6681b-4284843-26726738

If true, lack of decisiveness has important implications for marketing, especially for big ticket items like college educations, careers and automobiles. Marketers need to be aware that Millennials will consider every aspect of the decision, and even then have trouble simply deciding. The key will be to make them comfortable enough in the outcome that they can let the alternatives go. Perhaps this explains the popularity of online customization options and automobile 'configurators'; they make it next to impossible to make a wrong choice since you selected each and every detail yourself.