When I was filling out independent school applications for my son in 2000, the environment was one of steep competition. So anxious were Washington, DC-area parents to get their children into independent schools that, when I was picking my son up from his entrance exam, one parent commented that I should be applying only to schools in Maryland (where we lived), not taking a coveted place at a DC-based independent school.
Fellow Baby Boomers in the DC metro region placed a high value on education, and independent schools in the area became antidotes to overcrowded area public school systems. With a median tuition just over $15,000 for sixth grade in 2000, the tuition was costly at DC independent schools, but doable for many in a region that boasts incomes above the national median. Most independent schools in the area had long waiting lists, and the competition got steeper every year.
But, as the novelist L.P. Hartley said, “The past is a foreign country.”
Fast forward to 2016. Median sixth-grade tuition has climbed above $35,000 per year in DC independent schools, a struggle for many families in a city where 27.4 percent of adults work for the federal government. The recession has rocked the local economy, and new types of schools — many less expensive than traditional independent schools or even free — appear on the landscape every day.
Washington, DC, is not an outlier. Nationally, some independent schools are faring well in “the new normal,” but others are struggling to meet enrollment goals post-recession. Part of the challenge for independent schools may be related to the ways the economy is affecting Millennials, the generation of young adults, many of whom are of traditional parenting age now.
The Unluckiest Generation?
The Great Recession left many lasting impacts on the economy — families and businesses are still recovering financially. But the recession may have left an even more long-lasting effect, one that could have a significant impact on independent schools in the future: It altered the trajectory of a generation that was just coming into adulthood.
In The Atlantic magazine’s 2013 article “The Unluckiest Generation: What Will Become of the Millennials?” the author probed whether coming of age in the recession has set Millennials back for decades. As author Derek Thompson comments:
“Generation Y is the most educated in American history, but its education came at a price. Average debt for graduates of public universities doubled between 1996 and 2006. Students chose to take it on because they expected to find a job that paid it off; instead, they found themselves stranded in the worst economy in 80 years. Young people who skipped college altogether have faced something worse: depressed wages in a global economy that finds it easier than ever to replace jobs with technology or to move them overseas.”
Now that the leading edge of the Millennial generation is 35, are Millennials beginning to shed the recession’s mantle? Will they marry, have children, and make educational choices as their parents did? There are already some trends that foretell a different path for the next generation of American families.
1.Millennials are forming households later in life. Although the labor market has rebounded, 18- to 34-year-olds are less likely to be living independently of their parents or establishing their own households today than they were in the depths of the recession, according to a 2015 Pew Research Center study. Many Millennials are simply putting off home ownership.
“What distinguishes Millennials from other generations is the historic student loan debt that the generation carries, which has meant that Millennials have had less access to full-time jobs and wealth than previous cohorts,” according to Beth Ann Bovino, Standard & Poor’s U.S. chief economist. This could have a negative impact on the economy overall because Millennials have not fueled demand for housing as did previous generations, and big-ticket sales, like housing, drive the economy.
2. Millennials are putting off having children. More than one in five Millennials reported that they have postponed having babies because of the economy, according to a Pew Research Center poll. Wharton professor Stewart Friedman found similar results in a study he conducted with Wharton graduates. He found that only 42 percent of 2012 graduates planned to have or adopt children, compared with 78 percent of 1992 graduates.
In his book, Baby Bust, Friedman writes, “It is not about young people forming smaller nuclear families, that is, with fewer children, it is about the many who say they are simply opting out of parenthood altogether. Being a parent is still very important for most young people, but many just don’t see how they can manage it, so they are planning lives without children.” A 2013 Gallup study confirmed that the No. 1 reason Americans cite for not having a first child or additional children is the cost of raising a child.
3. Some Millennials are counting on their parents for support. Known for indulging their Millennial children in so many other things, and currently holders of 70 percent of the disposable income in the U.S., Baby Boomers are now stepping up to help their children with the costs of childcare and education. A 2012 MetLife study titled Grandparents Investing in Grandchildren found:
- The majority (62 percent) of grandparents have provided financial support or monetary gifts for grandchildren within the past five years. Of those grandparents who provide financial assistance, the average amount given for all grandchildren over the past five years was $8,289 total. More than half contributed up to $5,000.
- Cash was the most common type of financial support. Helping with basic needs rose to the top, with 43 percent of grandparents giving for clothing; 33 percent for general support; and 29 percent for education, such as pre-school through high school private schools, tutoring, college tuition, and graduate school.
- Forty-three percent report they are providing more financial support due to the economic downturn, and one-third (34 percent) are giving financial support to grandchildren even though they believe it is having a negative effect on their own financial security.
4. Millennials who are having children plan to finance their children’s educational costs. Crushed by student debt themselves, the leading edge of the Millennials want their children to have a different experience than they have had. Nearly half of parents in their early 30s intend to pay for their children’s full college bill. That’s compared to just 16 percent of parents the same age in 2007, according to a recent report from Fidelity.
According to the study, on average, they have about $1,500 saved for their kids’ future higher education, $500 more than young parents had saved previously. Given this proclivity for saving for the future, what impact could this have on their decisions about a K–12 education?
5. Millennials are savers, much like the Silent Generation. Because the Millennials have lived through tough economic circumstances and witnessed the effects on their parents, they are much more likely to make saving a priority throughout their lives. Fidelity Investments studied financial habits of Gen X parents compared with Millennial parents and discovered some stark differences, as seen in the chart below:
Gazing into the Crystal Ball
Within the next 10 years, the Millennials are forecast to make up 75 percent of the workforce. But will they be the predominant families in our schools? We already know that population forecasts predict that the size of the school-age population will drop by nearly two percent over the next five years. But will it drop even further if Millennials do not begin forming households and having children? We will have to watch closely as this very large generation continues to come of age. The good news on the horizon: Some forecasters say the younger half of the Millennial generation may just be the most resilient generation yet. So stay tuned.
