UV Letters

Oct 5, 2018 BACK

The Anti-Kavanaugh Generation

Volume VIII, #20

“I liked beer. Still like beer.” - Judge Brett Kavanaugh

The more I hear about Judge Brett Kavanaugh’s not-so-excellent adventures in the 1980s, the clearer the contrast with young Americans today. This is true not only with respect to beer, which has been on a steady decline for the past 25 years, but more generally in terms of risk. Unlike President Trump’s current nominee for Associate Justice of the Supreme Court, Gen Z isn’t calendaring time at “Timmy’s for [brew]skis w/ Judge.” Few members of Gen Z would be comfortable with much of what went on 35 years ago with the likes of “P.J. or Tobin or Squee.”

This hit home last week when a friend shared that her new Gen Z live-in nanny began her tenure by asking if she could watch TV in the evening with the family because she was homesick. Then, unable to deal with being away from home, she quit a week later. Actually, she didn’t work a full week, because one morning she informed her employer that her Instagram account had just been hacked and was unable to deal with work.

This pretty much sums up a seismic shift. Gen Z is drinking less and is less sexually active than prior generations; sexual activity among 9th graders has fallen almost 40% since 1991. The teen birth rate is at an all-time low. Gen Z’s priorities are comfort and risk aversion, with an emphasis on digital interaction.

Gen Z’s risk aversion is partially a product of an evolution of parenting, from diffident to helicopter. A 2007 report from the UK tracked a single Sheffield family’s willingness to let eight year-old children roam over four generations. In 1926, the child was permitted to walk 6 miles to a fishing hole without adult supervision. In 1950, it was 1 mile to the woods. In 1979, it was a half mile, down to the local swimming pool. And in 2007, the eight year-old wasn’t permitted to cross the street.

At the same time, this is a generation that, as the Wall Street Journal noted, has come of age “during recessions, financial crises, war, terror threats [and] school shootings… The broad result is a scarred generation, cautious and hardened by economic and social turbulence.” Turbulence and helicopter parenting have fed on each other, producing a safety spiral. I don’t know many parents anymore who let their high school age kids go to Delaware for “BEACH WEEK.”

The digital revolution has played an equally important role. As Jean Twenge wrote in iGen: Why Today’s Super-Connected Kids are Growing up Less Rebellious, More Tolerant, Less Happy – and Completely Unprepared for Adulthood, “the experiences [teens] have every day are radically different from those of the generation that came of age just a few years before them.” They spend more of their teenage years sitting at home interacting with friends by phone. According to Twenge, high school seniors are now going out less often than 8th graders did as recently as six years ago. And the number of teens who get together with friends nearly every day dropped by more than 40% from 2000 to 2015. One teen quoted in iGen said “I think we like our phones more than we like actual people.”

***

Gen Z is now firmly ensconced in college. In a recent poll, two-thirds of college-age Democrats said a diverse and inclusive society is more important than protecting free speech (which can be uncomfortable and risky). Then there was the 2016 Harvard poll that showed 51% of eighteen- to twenty-nine-year-olds reject capitalism, while 33% support socialism. Young Americans would prefer to smooth things out: have the highs not be so high, and the lows not be so low. Most seem willing to give up on the American Dream; they’d settle for Canada.

The implications for higher education are easier to grasp than a keg at the 100 Keg Club. Student loans are risky. They require payment of a set amount every month. Default means penalties, wage and income tax refund garnishment, and a tarnished credit record for up to 7 years. Gen Z has a strong preference for federal loans with income-driven repayment plans (IBR, ICR, PAYE, and REPAYE – the most widely available plan where repayment is capped at 10% of a borrower’s discretionary income). Already, 25% of federal borrowers, representing 40% of total student loan debt, are enrolled in income-driven repayment programs.

The twin quasar of income-driven repayment is income share agreements. Income share agreements (ISAs) are contracts between postsecondary programs and students where programs front funds for student tuition and fees and then, for a handful of years (typically three or four), receive repayment following graduation based on a percentage of graduate income. ISAs have an income floor below which grads aren’t required to pay, so those with poor employment outcomes may not be required to pay anything per the terms of the contract. ISAs are also capped in terms of total dollars repaid. With ISAs, the lows aren’t so low. In return, high earners right out of school may pay more. They’re less risky than federal loans without income-driven repayment; ISAs are student loans for the anti-Kavanaugh generation. And colleges and universities are adopting them. Last month Colorado Mountain College became the first to utilize ISAs to allow undocumented “Dreamers” to enroll. Between income-driven repayment and ISAs, traditional student loans without safeguards may soon seem as dumb as picking a fight at Demery’s with Dom Cozzolino.

In thinking about risk, I'm reminded of the debate over "back contamination" in the lead-up to the Apollo moon landings. The concern was that microbes or other forms of life on the moon that could be hazardous to humans would be transported back to Earth by (or inside) American astronauts. The debate pitted University of Chicago's Edward Anders on one side against Cornell's Carl Sagan. Anders, believing there was no possibility of life on the moon, offered to eat moon dust to prove it was safe. Sagan's response to Anders was: “Fine, but he will have to eat it on the moon. It will be too late if he eats it down here. If he is wrong and gasps and dies, then whatever killed him is already among us.”

Similarly, Generation Z isn’t content fiddling with financing. They know if they don’t land good jobs, they’re probably too far gone regardless of the terms of repayment. Last month’s Strada-Gallup alumni survey underscored the importance of getting a good first job immediately upon graduation: such graduates are 2.4x more likely to be earning $60k+ today than graduates who took 2 months or more to secure their first job. This comes on top of Strada’s Institute for the Future of Work’s seminal report with Burning Glass on the persistence of underemployment, The Permanent Detour: Of the 40% of college graduates underemployed in their first job, 2/3 remain underemployed five years later, and half remain underemployed a decade later.

As a result, Gen Z’s willingness to trade the highs to avoid the lows is also appearing in employment patterns. Employers like Revature are hiring talented graduates for advanced software development positions from nearly 20 university partners like University of Virginia, CUNY, University of South Florida, and UT Arlington. Because Gen Z graduates don’t have the requisite technology skills at the time of hire, the first three months of employment are an immersive Last-Mile Training program in exactly the technologies required by Revature clients. In return for this paid training and guaranteed good first job in a desired field, Gen Z grads commit to working for Revature for two years (after which they’re hired by Revature clients and receive a salary bump). Revature associates average about $50k for their first two years. With their advanced technology skills, could they make more on the open market after 6-12 months? Almost certainly. But tens of thousands of Gen Z candidates are applying to Revature’s no-risk pathway to six-figure technology jobs.

Driven by the risk avoidance of the anti-Kavanaugh generation, models like Revature are blowing up like fireworks on the “FFFFFFFourth of July.” “Employer Down” Last-Mile Training models are particularly appealing compared with graduate and professional programs that ask Gen Z to take on tens of thousands of dollars in additional debt, typically in Grad PLUS loans (a 7.6% annual interest rate for the 2018-19 academic year), and typically without anything close to a guaranteed employment outcome. Follow Gen Z’s preferences to their logical conclusion, and soon enrolling in a degree program without a direct connection to a good first job – particularly a program at a non-selective institution where employers aren’t breaking down the door – may be viewed in the same light as attending a house party in 1982 in an affluent DC suburb. That is, bad things can and probably will happen.

Beyond enrollment declines for college and universities, the risk aversion of Gen Z has a more significant downside. This is a generation that’s less interested in owning their own businesses, more afraid of failure, which could be a major brake on future economic growth (and is crazy at a time when technology has made it easier than ever to create new businesses). So in addition to reducing the risk of college affordability, and graduate employability, add one more item to American higher education’s priority list: help Gen Z re-acclimate to a reasonable degree of risk. We don’t want Kavanaugh-level risk to return to the sustained economic growth of the 1980s and 90s. But we need to find the right balance, even if the Supreme Court is about to be thrown out of balance by an associate of P.J. and Tobin and Squee.

Share your thoughts

University Ventures (UV) is reimagining the future of higher education and creating new pathways from education to employment. UV portfolio companies are making higher education more affordable, pioneering entirely new approaches to learning, and helping employers think differently about how and where they discover talent. UV’s approach draws upon the values and traditions of higher education to play a sustainable role in transforming the path from education to a stronger economic future for students, universities, and employers. UV is led by principals with decades of experience as entrepreneurs, investors, authors, and leaders in higher education.

Comments

Scott lee 2018-10-11 12:15
Hello Admin, It is very nice that your blog is providing information regarding the program. I want to aware you towards the “NBC Internships for Bachelor and Master Degree Students” that is provide opportunities to apply your theoretical knowledge and acquire hands-on experience as well as... Read more networking. Application Deadline is Varies. For more information you can go through – https://www.biginternships.com/nbc-internships-for-bachelor-and-master-degree-students/
Scott Lee 2018-10-09 11:41
Hello Admin, It is very nice that your blog is providing information regarding the program. I want to aware you towards the “Wall Street Journal Paid Internships, 2019”. These internships will provide immediate responsibility and offer an opportunity to learn from experienced... Read more professionals. Application Deadline is Varies For more information you can go through – https://www.biginternships.com/wall-street-journal-paid-internships/

Leave a comment

(required; won't be published)

Three articles that tell us where the puck is going in education-to-employment.

1. Work-Study: The New Normal Bloomberg article on how much college students are working to help defray the mounting costs of college, by Riley Griffin. The vast majority of current students – 85 percent – work while enrolled, according to an HSBC survey... Students spend an average of 4.2 hours a day working paid jobs, which is more than double the time they spend in the library, nearly two hours more than they spend in class and 1.4 hours more time than they spend studying at home. Read more 2. Making Degrees More Relevant to Employers New America report on successful strategies for embedding industry-relevant certifications into existing degree programs, by Mary Alice McCarthy and Michael Prebil. At a time when innovation in higher education has focused on “unbundling” degrees to make them shorter, faster, and more modularized, embedding certifications is a way of “rebundling” degrees to take advantage of different types of credentials. Read more 3. Degree Requirements and Employment Regulation Make Hiring Less Diverse Fortune commentary on how degree requirements for jobs and employment regulation are hindering the shift to competency-based hiring. Rather than quashing the adoption of assessments, our diversity watchdogs would be well served to adopt a safe harbor for employers replacing degree requirements with assessments… prohibiting assessments altogether is allowing the perfect to be the enemy of the good. Read more


Sign up for UV letter

For regular bi-weekly commentary on “where the puck is going” in higher education, sign up for UV letters.