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September 4, 2001 Story

Student Spending Still Has Wings:
Some Are Getting Clipped

With many college students unpacking in dorm rooms and apartments this week, Northeastern University student Nicole Martins is moving home to her parents' house in Somerset. "I'm moving home because I can't afford the rent," said Martins, a fifth-year student who will make the one-hour daily commute to their co-op at a Boston public relations firm. Martins says she's grateful to have a job lined up after she graduates. Many of her contemporaries don't. Still, her uncle was recently laid off, sending shivers through the family. She'd shared a South End apartment with two roommates, but her rent was raised by $350 this year. "In terms of my own spending, I'm definitely cutting back," Martins said. "You can't go spending as much as you'd like to with rising rents."

Conversations with many local college students leave the impression that Martins is the exception, rather than the rule. Most interviewed last week said an economic downturn has had little effect on their spending habits. If students are trying to scrape up enough money for pizza, beer, and some new clothes, that's just normal college living, they said -- good economy or bad. But delve a little deeper and some of the same students say they're struggling to find their first post-college job and planning to move home because they can no longer afford rising rents. If college students appear immune from a business downturn at first glance, some observers say it may not be true. Which raises the question: Is the weaker economy causing college students to rein in spending, as it has with much of the general population?

If [they are not affected by the economic downturn], that's good news for local merchants, as well as retailers nationally who are honing in on a group with a population that's 14.5 million strong and is estimated to spend in excess of [$200 billion] annually, according to TWENTYSOMETHING Inc., a Philadelphia, Pa., consultancy. The college crowd is critical for marketers looking to cultivate brand loyalty with customers at a young age. That population not only accounts for as much as one-third of the young adult population, but it also has a huge influence on the spending patterns of other groups, said TWENTYSOMETHING INC. president David Morrison. "They're telling their parents what movies to go to, what kind of DVDs to buy, and even what kind of cars to buy," he said.

Morrison says many students that come from well-off families are not feeling the pinch. "They're working hard to have the latest computers, lots of cell phones and PDAs (personal digital assistants)." But those that come from less affluent families are starting to show more sensitivity to prices. "That computer that worked for you in high school is going to keep working for you," he said. "Your sister may have gotten a new one when she went off to school, but for you, yours works well enough." And the current tight job market is weighing heavily on students from all income levels, Morrison said. In the recession of the early 1990s, job concerns filtered all the way down to freshmen and sophomores, he said.

Erin Cavanaugh, a fourth-year Northeastern student, is one who said she was not affected by a weaker economy -- before adding that many of her friends can't find jobs. "People are moving home," she said. "Nobody can afford to live here. My roommate and I live in a one-bedroom with mice. Trust me, it's not fun living with mice. We're moving out, but (other) places are way too expensive."

Morrison said clothing sales may soften some with the college crowd, but for the most part, new fashions are one thing students won't give up. Still, some, including Martins, say they are cutting back. "I've been brought up with the fact that it's always nice to have new clothes," she said. "But this year I'll make do with what I have." Morrison suggests the trend may be toward "smarter purchasing". "Instead of going to Saks or Bloomingdales, maybe it's discounters," he said.

Another thing students aren't likely to give up is their cell phones. "The cell phone for them is communication... given the uniqueness of a mobile lifestyle," Morrison said. "They live with it."

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