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?

Gen Y: The End of the Home Ownership Dream?

What a great time for first-time home buyers, right? They have the good fortune to buy at what may be close to the market low (we hope) without having to sell at that same low point. Well, as usual with Gen Y, it's not that simple. While the average age of first time home buyers is 26, realtors shouldn't expect waves of Millennials to be knocking on their doors. While the under 30 set may enjoy high incomes and high hopes for future earnings, both their attitudes about homeownership and the reality of high debt are certain to impact their likelihood rushing in to snap up real estate deals.

First is attitudes. Millennials do not aspire to the homes many grew up in. They see a big backyard and lots of square footage as a maintenance nightmare. Smaller living spaces and open space floor plans are likely to be their preferred way of life, for environmental as well as lifestyle reasons. The NewsObserver recently interviewed several Gen Y members on their dreams of homeownership. Here's what they said about the desirability of living in a big house:

Stephen: No. I want a smaller space so it's easier to take off and go. A house that's low-maintenance is good. Generation Y traveled a lot in college and will continue to do so through life. So a big yard isn't a plus, either.

Ryan: No. I think that seeing so many of our generation's parents divorce makes us understand that family togetherness is important. So as we start having kids you will see us avoid homes with a living room, family room and finished basement rec room in favor of open-plan homes where the family can share space.

Carrie: Definitely not. The huge space thing as a status symbol is gone. Well-used efficient space is best. I want a house that reflects who I am and where I've been. In big houses, people buy meaningless stuff just to fill them up. Living in a cookie-cutter subdivision with vinyl siding and no trees is not palatable to me.

Second is finances. Even if they aspire to home ownership, it's harder now to amass the necessary down payment of $30,000 or more. It's been widely reported that the average college debt is $20,000. Many struggle to pay it back, while making ends meet. Many still accept support from parents. Higher income Millennials in our focus groups, those with MBA's and good paying jobs, tell us of staggering college debt loads -- $60,000 or even $80,000. While these civic- and community-minded young adults are motivated to dontate to their college and other causes they believe in, they sheepishly admit it just isn't possible right now.

Add inexperience in budgeting and planning, credit card debt and the uncertainty of the job market, and the picture becomes even more grim. Consider these statistics from MSN (Why Gen Y is Broke):

The median credit-card debt of low- and middle-income people aged 18 to 34 is $8,200

People between the ages of 25 and 34 make up 22.7% of all U.S. bankruptcies (but just 14% of the population at large).

While the facts are sobering, Millennials are cautiously optimistic rather than dismayed. They have the long view, and are confident in their skills and abilities. As one young potential home buyer shared with me, 'With so much for sale, we can afford to be picky right now and get a really great deal.'

Millennials Get This Message: Beware of Debt

Marketing a cause to Millennials should be easy, especially when the cause is anti-marketing. Millennials are a prime target for financial services, but often see credit as 'free money'.... until they find themselves suddenly in debt. Truthout, in a blog post titled: Millennials: Debt Becomes You, informs us college students are more heavily in debt than ever.

The Federal Reserve says graduates now shoulder three times more debt than a decade ago, after adjusting for inflation. Undergraduates now average almost $20,000 in debt, with a quarter taking on more than $25,000, according to Robert Shireman, director of the Project on Student Debt, a Berkeley-based think tank.

The issue goes well beyond educational debt, however. College students graduate with $4,000 of credit card debt, on average, according to the U.S. PIRG Education Fund. The PIRG's FAll 2007 campaign, 'Truth about credit' shows a solid understanding of how to reach and motivate Millennials, and is worth a closer look. It starts with a web site, www.thetruthaboutcredit.com that explains the pitfalls of credit card debt and the marketing techniques used by credit card companies to lure new customers. PIRG goes further by sending out peer marketing teams to get students to sign petitions about marketing practices on campuses. The teams will look and act like a regular credit card company, working for a fictional company called "Feesa" (tagline: "Free stuff now. Huge debt later") and handing out lollipops saying, "Don't be a sucker." Volunteers fanned out across 34 universities last October, distributing information and collecting petition signatures to persuade colleges to establish specific "principles" regarding credit card marketing on campus. The principles include prohibiting the use of gifts in marketing on campus and blocking the sale of student lists. The volunteers wear blue Feesa shirts that are designed to look and sound like a real credit company (sounds like VISA).

Facecard (love the name) uses similar techniques to promote its pre-paid debit card. Facecard marketing teams will distribute informational packets on 50 college campuses around the country. The brochure, titled "Get smart. Get more," provides tips on budgeting, banking and preventing identity theft. Mobilizing Millennials to educate other Millennials and enroll them in the cause sounds like smart marketing to me.

Millennials: Six Surprising Facts

After three months of blogging about Millennials, it seems appropriate to ask what have we learned about them that differs from common wisdom? While we agree with many of the mainstream conclusions about Millennials - they are more collaborative, tech savvy, ambitious and self-confident than previous generations, I would like to take moment to challenge a few 'myths'.

1. Millennials are cash strapped and debt ridden. (5.22.08) In 2006, households headed by 18-24 year olds had earnings before taxes of nearly $29,057, up from just $20,120 in 2003. Their earnings grew 7.5% 2005-2006 alone compared to a 1.1% jump for total households. While that is not a whopping salary, consider that less than 10% of 18-24 year old men are married, 50%live with the parents. This may help to explain why, according to the BLS, they are heavy spenders in virtually every category other than food and housing. Within many of these categories, they are more likely to purchase the luxury brand, like imported or craft beer, rather than the mainstream brand.

2. Millennials and Boomers make good partners. (5.19.08) While it's true Millennials enjoy stronger relationships with their (mostly Boomer) parents than most other generations, they prefer working with Gen X'ers who they believe have more to teach them in the workplace. In fact, our research shows that Millennials have little respect for tech-challenged Boomers. Perhaps Hogwarts provides a good metaphor; in the Harry Potter books, the kids are the crusading and effective wizards, while the professors seem a little behind the times and inept.

3. The way to reach Millennials is through social media like Facebook. (5.19.08) Social media is more social than media. Millennials do not use social media to shape their buying and tend to ignore commercial messages. MySpace and Facebook lowered their sales goals by 11 and 13 percent respectively. EMarketer has also lowered its forecast for social media ad spending by 12%. Much more experimentation will be needed to bring brands directly into the application experience rather than relegate them to a banner or group, such as Slide's branded 'SuperPokes'.

4. Millennials are no more socially liberally than other generations. (5.29.08) According to Pew (2007), each generation tends to be more liberal than its predecssors, but Millennials are even more socially liberal than Boomers were at a similar age. On Super Tuesday, 58% of younger voters self-identified themselves as 'Liberal'. This is happy news for Brand Obama.

5. Millennials are drinking more beer compared to earlier generations of young drinkers. (5.26.08) Not true! According to Nielsen, U.S. 21-30 year olds are forgoing beer in favor of wine, with beer dropping 12 percentage points in this age cohort over the past 10 years compared to a 6 percentage point drop among over 30's. Instead, Millennials are embracing the wine culture in record numbers. This contrasts with France, where Millennials are losing interest in wine. Mon Dieu!

6. Millennials are cynical and mistrusting of institutions. (5.21.08, 6.04.08) According to Pew, Millennials put more faith in government and business institutions. Their faith in business is growing, while that of other cohorts is decreasing. The gap is even more pronounced when it comes to government effectiveness.

7. The Ultimate Millennial personna is an entrepreneur. (5.12.08) This is more true of Gen X'ers than Millennials, who tend to be more idealistic. Their goal is to 'make a difference' as well as be successful. Clues to the Millennial Persona may be found in some of the TV shows they watched growing up. There are a remarkable number of fifties style through backs and 'princesses' where the kids are smart, gifted, special and uniquely successful - Lion Witch and Wardrobe, Nancy Drew, High School Musical. There are also a surprising number of 'princesses' and average kids by day who become rock n roll stars by night.