How Colleges + Universities Can Stay Competitive
Colleges and universities around the country are contending with a harsh reality: costs are rising and interest in higher education is dwindling, with Gen Z questioning the value of the ivory tower. Some might chalk this up to the disaffected apathy of a generation troubled by economic and environmental uncertainty, coming of age during a global pandemic, and hypnotized by social media and the culture of content creation. At least, that’s the broad-strokes narrative that circulates on cable news, one that is as dismissive as it is totalizing.
But subscribing to a narrative that oversimplifies the complex issues of an entire generation would be missing an opportunity for us to understand, engage with, and captivate Gen Z. The truth is that all industries will need to embrace curiosity toward this generation in order to survive and thrive. This is particularly crucial for higher education because Gen Z represents your predominant audience and application pool, now and for the next decade.
Gen Zers are true digital natives. Unlike their Millennial predecessors who were pioneers of the digital age, Gen Z is the first generation to grow up completely immersed in ubiquitous connectivity, online information, and 24/7 digital media from birth. The formative experience of having anything they want a mere click or swipe away has shaped their expectation for instant gratification across their content consumption, purchasing habits, and overall relationship to money. Gen Zers are increasingly skeptical about whether getting a college degree is as valuable as it was for past generations.
According to Morning Consult’s 2022 report, Gen Z adults report the lowest trust in US universities compared to any other generation. This dubiety matters to universities because suspicion breeds disinterest, which directly impacts the pool of available and interested applicants and, subsequently, enrolled students. Building trust with Gen Z will be a daunting undertaking for institutions of higher learning, requiring an orchestrated effort between your internal teams.
Essentially, the future success—and in some cases, survival—of the higher education industry rests in the hands of Gen Z. Understanding who they are, what they need, and how their behaviors differ from previous generations is key to effectively targeting and resonating with them, as well as to developing operational systems and digital touchpoints that address their needs. Because Gen Zers are more skeptical of institutions than prior generations, building trust will be an uphill battle. If you underestimate the degree of the slope, your institution could see fewer applications in the short term and deterioration of your long-term brand affinity and loyalty.
Agital has developed long-lasting partnerships with education clients over the past decade, including colleges, universities, high schools, and trade schools. The issues impacting the industry directly impact the marketing support we provide, so we wanted to determine the correlation between Gen Z’s economic outlook, their sentiment toward higher education as a whole, and their view on graduate school attendance in particular.
We conducted secondary qualitative research through a small, independent survey to analyze younger generations’ expectations around higher education, macroeconomic trends, and spending habits. We also conducted a survey asking individuals about their generational affinity, economic outlook, and interest in graduate school. Of our survey respondents, 87.3% were Gen Z and Millenials—77.5% with a bachelor’s degree and 15.5% with a master’s degree.
Gen Z is coming into adulthood during an era of economic uncertainty, staggering interest rates, and unaffordable housing. This trifecta has largely given them a sense of hopelessness about their economic prospects, and they feel like owning a home is—and will forever be—out of their reach. Enter doom spending, or making frivolous purchases to cope with stress, fear, and lack of control.
Dr. Dion Terrelonge, also known as The Fashion Psychologist, argues that “Doom spending [is] a display of what we call the passive to active flip, with the passive being the many things we may want to change in the world but feel we cannot, and the active being the buying of things.” Because the large macro-economic forces are beyond their control, Gen Zers exercise economic control over what they can—smaller purchases that can provide some material comfort or fleeting emotional satisfaction.
Thus, while their negative economic outlook makes them uncomfortable, Gen Z continues to spend on indulgences like clothing, trips, etc. as a new iteration of “keeping up with the Joneses” in which the Joneses are often online influencers, content creators, and other digital celebrities.
Gen Z is not the first generation to exhibit this behavior in reaction to an uncertain future. Young adults during the 1980s—with new access to credit cards and anxieties abounding about The Cold War and nuclear holocaust—also engaged in doom spending. Many Millennials entered the work force during the 2008 housing market crash and have found the prospect of home ownership unattainable and elusive, even as they enter their 40s, but Millennials by and large have embraced a saving mentality and pursued higher education at a higher rate than any other demographic as their antidote to anxieties about the future.
The Marketing Mind argues that doom spending emerges because “the idea of indulging in ostentatious expenditures offers a momentary diversion from the stress of money” for Gen Z. Essentially, because of their lack of faith in the future and general skepticism toward the promises offered by institutions, they aren’t investing in their future because they don’t see the value in it. Instead, they are investing in the now because that feels like the only thing they can control.
According to Credit Karma, 35% of Gen Z engage in doom spending behavior, which our survey confirmed with 41% of Gen Z respondents admitting to doom spending. Note that only 18% said it actually made them feel better. 75% of Gen Z respondents are concerned or very concerned about the current economic state. With costs for big-ticket items like housing and education skyrocketing while income growth remains stagnant, Gen Z is focused on seeking affordable and instant gratification through material goods, rather than saving for long-term investments like homes or degrees in higher education that seem increasingly out of reach.
It makes sense that people who do not believe a brighter future is possible due to political, civil, and environmental unrest would not feel the need to invest money into their career or education. Higher education feels too forward thinking and too out of their control, putting too much faith into institutions, which have not proven to live up to their promises. Ultimately, doom spending will have lasting financial and educational impacts for Gen Z. Predicted impacts include continued growth of social media retail apps pushing product purchases, rising credit card debt levels, and accelerated distrust in major institutions.
Our research and survey data are clear: Gen Z’s general feelings and interest toward pursuing higher education are shifting in a negative direction. Graduate degree interest has dropped by 12% since 2019, and nearly 50% of Gen Z see less value in college degrees overall. In our survey, 46.4% of Gen Z respondents said they were not interested or unsure about getting a higher degree, with most citing financial barriers as the top concern preventing them from pursuing more education.
The high cost of education and questions about sufficient return on investment (ROI) are primary factors driving the anti-college sentiment. Many Gen Zers have witnessed the struggles of Millennials with student debt and underemployment, making them much more wary of the value proposition of an expensive college degree. 46% of Gen Z flatly said they don’t think college is worth the cost. This outlook has lead institutions to experiment with new tuition models, like subscription pricing and monthly payment plans, to stay competitive.
Due to the overall negative outlook this generation has toward the future, colleges and universities will need to be able to pivot their positioning in the market. Looking ahead, lower enrollment rates will likely lead to a buyer’s market where many higher education institutions feel forced to get more aggressive with tuition price cuts or scholarship offers to undercut competitors and convince students that their investment is worthwhile.
Dollar-based ROI will become table stakes, with less tangible ROI benefits like life experience and personal growth becoming key differentiators. Prospective Gen Z students have had increased exposure to customer experience (CX) focused companies, meaning they will have higher expectations that will be harder for universities to meet. This will lead them to discount or distrust organizations that fall short. Colleges and universities need to find a way to reframe the benefits of education for students, not just for the future, but also in their day-to-day lives right now, in order to meet them where they are today.
Reframing the conversation beyond money to address how college can help them now broadens the scope and scale of “ROI” to one that positions investment holistically, rather than just financially, as an act of “betting on yourself.”
To better resonate with Gen Z and rebuild their trust, universities should prioritize improving user experience (UX) and digital integration for digital natives who crave instant gratification. You can do this by ensuring seamless usability across your website and application and incorporating interactive learning tools like mobile apps and classroom technology that Gen Z expects to have deeply embedded into their educational experience.
Universities should create more affordable, career-oriented program offerings that are more financially digestible for cost-conscious Gen Z. Certificate programs can be one way to offer this while still maintaining the integrity of traditional degrees.
Perhaps most importantly, universities must find ways to change Gen Z’s current opinion and reframe the cynicism they have towards institutions and the value of higher education. Updating messaging to directly address Gen Z’s top concerns around affordability, career preparation, and clear ROI will help colleges and universities maintain relevancy in today’s market and offer a competitive advantage in the dwindling pool of potential students.
In a world where Gen Z feels judged and dismissed by older generations and institutions alike, making them feel heard and seen will go a long way in winning back their trust, interest, and loyalty. Educational institutions can appeal to Gen Z by communicating that you understand their concerns and you want to proactively address them.
At Agital, we approach marketing and messaging through the eyes of the end user. With research and data at the helm, we develop tools and frameworks that allow us to understand audience needs and develop creative and messaging that aligns your target audience’s needs with your offerings. If you’re looking to improve how your educational institution is engaging with potential students, Agital can help.
Explore the partnerships we’ve built with Purdue University, Gonzaga University, or the recent CX research we conducted in conjunction with Purdue. Contact us to start a partnership today.
