This fall semester, 20-year-old Isaac Irvin will spend several hours a week teaching his fellow students at Indiana University Bloomington about financial wellness.

The junior is slated to start working as a peer financial educator with the college's MoneySmarts team, which teaches students through presentations and one-on-one meetings about budgeting and paying off loans, among other topics. 

MoneySmarts is part of an effort spearheaded by the university to bring more clarity to college costs. In July, it announced an alliance for colleges that want to help students improve their financial position. 

"When you look at the cost of (college) online, it's going to be drastically different than what you end up paying," Irvin said. "A lot of students coming in don't know what they're paying and don't know what to budget." 

All age groups can benefit from more transparency around college costs, but it could be especially important for Generation Z. That's because its members, who were born 1997 and later, may be more debt-averse after watching the nation's student debt load cross $1.6 trillion. 

"(Millennials) came in and were in some ways blindsided by the debt," said Corey Seemiller, co-author of the book "Generation Z Goes to College," which examines the defining characteristics of those students. "Gen Z sees this and is making choices before they're even taking out debt to be mindful about trying not to put themselves in that situation." 

Research backs that up. Two-thirds of surveyed Gen Zers say paying for college is their top concern. Meanwhile, in a 2019 survey of high schoolers, 46% said they would possibly take out student loans, down from 65% the previous year. 

Indiana U's alliance is one example of a growing movement led by lawmakers, colleges and advocacy groups to help students understand how they're going to pay for college, which can involve budgeting for a complex mix of costs including tuition, room and board, and unexpected emergencies. Add concerns about transparent pricing and potential changes in institutional or government aid, and it can be a tricky situation for students to navigate. 

Bringing transparency to college costs

The murky information colleges provide students to understand what they'll end up paying, and how, can be difficult to wade through. 

For one, colleges' offer letters have been faulted for being unclear. Last year, the nonpartisan think tank New America analyzed more than 11,000 financial aid offer letters and found that the majority (70%) grouped together all types of aid, including loans, scholarships and work study. Moreover, the letters often used "confusing jargon and terminology" to identify loans. 

To remedy the issue, the U.S. Department of Education released guidance earlier this year that called on colleges to avoid labeling loans as an "award" or "letter" and instead use terms such as "financial aid offer." It also recommended colleges break out estimated costs for materials, housing, medical insurance and transportation. 

Seemiller advises colleges do more to help the parents of Gen Zers understand the cost of attendance. That could include holding workshops on the Free Application for Federal Student Aid or providing more information about how to decipher offer letters. 

"This is a generation that really trusts their inner circles, including mostly their parents, about financial decisions," she said. "If parents don't know how to read these aid packages, then it's going to be really hard for them to articulate to the students what they're getting."

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"(Millennials) came in and were in some ways blindsided by the debt. Gen Z sees this and is making choices before they're even taking out debt to be mindful about trying not to put themselves in that situation."

Corey Seemiller

Co-author, "Generation Z Goes to College"

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Other issues remain around transparency. A recent study of 80 institutions found that several weren't meeting requirements to provide students with a net price calculator for college costs on their websites.

Meanwhile, other colleges had information that was "misleading or incomplete," researchers from the University of Pennsylvania Graduate School of Education's Alliance for Higher Education and Democracy (Penn AHEAD) explained in their report. 

Some used out-of-date data, asked students to estimate costs, suggested students can spend less on food and presented loans the same as grants.

That can cause students to think they're priced out of a college they actually can afford. Alternatively, misleading information can make it appear that a student can afford a college, but then they end up with overwhelming costs. 

Bipartisan legislation put forth in the House and Senate earlier this year aims to tackle those issues. Both call for colleges to include "readily noticeable" links on their websites to their net price calculators and include estimates of students' entire college costs, including tuition and fees and living expenses. 

Such transparency will be key for students when they're selecting a college, said Laura Perna, co-author of the Penn AHEAD report. "Presenting the information in a way that will allow students to consistently ... compare the cost of institutions is really important," she said. "Some of the tools out there are just limited." 

'The right thing to do'

Some colleges are taking transparency into their own hands.

Since 2013, the University of Dayton, a private Catholic institution in Ohio, has locked-in students' net-tuition price for four years. It also eliminated fees. 

The university rolled out the policy after noticing some students were leaving after their first year of college. An investigation revealed one reason why: Many were put off by an increase in tuition, which they were either unwilling or unable to pay. 

There were risks in keeping each student's net tuition flat during their time at the university. For example, the college may have to increase institutional aid for students to keep their net price consistent. 

Jason Reinoehl, the university's vice president for strategic enrollment management, said it would have been risker to keep hemorrhaging students over tuition and fee increases. "It costs a lot of money to recruit a student and bring them in to get acclimated and then to lose them," he said. 

A movement to require colleges across the U.S. to be more transparent also spurred U of Dayton to act. "We positioned ourselves with the board to say, 'You know, we can be out in front of this,'" Reinoehl said. "It's the right thing to do anyway." 

There's evidence to show the change has been beneficial for both students and the university. The graduation rate for students who entered in 2013 — the first cohort to be impacted by the change — stands at 80.4%, compared to an average of 76.4% for the previous five years. Additionally, the university has been able to curb tuition increases, Reinoehl said. 

Students are also borrowing 28% less than they were before the fixed net tuition pricing was in place. That equates to a decrease of more than $10 million in student loans.

Other colleges have taken similar steps.

Trinity College, in Connecticut, announced in 2017 that it would offer low-income students estimates of their institutional aid for all four years with the first year's award, instead of requiring them to reapply annually. The private liberal arts college also vowed to keep students' net prices consistent, regardless of changes in government aid. 

Initial feedback from students has been promising, said Angel Perez, Trinity's vice president of enrollment and student success. "Families have come to us and said this has really made a difference because we can now tell what the future is," he added. 

A streamlined financial aid application process could help recruit Gen Zers, Seemiller said. Other steps colleges can take include setting up a database of available scholarships and allowing students to apply to multiple institutional scholarships simultaneously. 

Proving value

Although college has long been viewed as a time for students to engage in self-discovery, members of Gen Z may be more likely to perceive their time on campus as transactional, said David Stillman, co-author of "Gen Z @ Work: How the Next Generation is Transforming the Workplace." 

In his research, Stillman found that nearly two-thirds (61%) of surveyed Gen Zers want to know what career they want before they set foot on campus. "(Colleges') value proposition needs to change to, 'You know what you want, we'll help you get there the most efficiently and economically,'" he said.  

As more employers drop degree requirements and Americans question college's value, Gen Z may be more likely to turn to alternative types of postsecondary education, experts interviewed for this story said. To stave off that shift, colleges should make sure they communicate the value their degrees can provide. 

To that end, some institutions are making it clear how much a student can expect to make in their chosen fields. The University of Texas and University of California systems, for instance, have interactive websites that show how much their graduates earn by major.  

Without such information, Gen Zers may be reluctant to take out loans for college. 

"They have to know in the future how they're going to pay that back," Seemiller said. "If they're going in with a very clear vision and saying, 'This is what I'm going to do, I know that this is about the kind of salary that I'm going to make, I know this is about the rate at which I can pay back a loan,' (they) can make a much more informed decision."