Should Gen Z be taking on more student loan debt? The decision's getting 'harder and harder,' says an economist

Since the onset of the coronavirus outbreak, Gen Z has witnessed a stark economic transformation that has dramatically reshaped their future. While millennials came of age during the Great Recession, Gen Z is grappling with what may be the most rapid unemployment spike our economy has ever seen.

In a July 2020 Pew Research Center survey, nearly three in ten young people (ages 16 to 24) reported that they are neither working nor in school, a measure referred to as the "disconnection rate." The share of disconnected young people is the highest since 1989, when such data was first made available. Most of the increase is connected to pandemic-related job loss among young workers.

Now, as many prepare for virtual college classes this fall, students and their families are questioning if it makes sense to take on more student loan debt as the economy struggles to recover.

"Ideally, we'd be in a world where we didn't have to make these trade offs," Elise Gould, senior economist at the Economic Policy Institute, tells CNBC Select. "The decision to go to college has been made harder and harder with the rising price of tuition." Particularly, she adds, when the college experience will not be what we're used to.

When deciding whether it's a good idea to take on college debt, it helps to start by asking whether a degree will be valued for your desired career path.

"In the overall economy, almost two-thirds (61.8%) of workers don't have a college degree," says Gould. This includes those in service industries like hospitality and health care, as well as in manufacturing jobs.

On the other hand, people with college degrees tend to make more money and experience a lower likelihood of unemployment.

But before you take on a lot of student debt, which can take decades to pay off, evaluate whether you're willing to pay the price for a private college or advanced degree — there may be more affordable alternatives available.  

For the 2019-2020 school year, students and their families paid an average total tuition (including fees and room and board) of $21,950 for in-state, public four-year colleges, according to College Board's 2019 Trends in College Pricing report.

The price tag is even higher for private schools. In the same report, the average annual undergraduate private school tuition, fees and room and board was $49,870. Doctoral programs cost $60,160.

As a result of these increasing costs, U.S. student loan borrowers now owe a collective total of $1.7 trillion in student debt, according to the Federal Reserve. The average student loan debt per borrower in 2019 was $35,359, and both parents and students bear the weight of this responsibility.

According to data from EPI's State of Working America Data Library, college degree earners make about 49.5% more ($34.63 per hour on average) than someone with only a high school diploma ($18.91). That's taking into account variables like gender, race and ethnicity, education, age and geographic division.

This figure hasn't grown much in recent years, even though student borrowers (and their families) are taking on 116% more in student loan debt than they were a decade ago.

When deciding whether student loans are worth it, take the following steps:

1. Research the annual cost of tuition, room and board and fees.
2. Make a budget to see whether you can afford the costs. Factor in any income you expect to make from part-time jobs, scholarships or family help.
3. Add up the total amount of money you expect to borrow from the time you enroll through graduation, including any interest that might accrue.
4. Use a loan payoff calculator to get a feel for what your monthly payments will be upon graduation and how long you will need to pay off your loan, including interest.
5. Look up entry-level salaries in your desired fields, using sites like ZipRecruiter and Glassdoor. Same for your earning potential over time. Consider how competitive jobs are in your industry and how quickly you'll be able to reach your desired income level.
6. Evaluate whether you can afford to live comfortably at your expected income level while also paying off your loans. What long-term sacrifices might you have to make in order to afford your loan payments?

You can also take steps while you're a student to get ahead financially. When you receive your student loan disbursements, you can put excess money that you don't need for tuition as well as room and board into a checking account to cover your living expenses while you're in college.

If you have enough income to cover your expenses, or if you have the ability to take a part-time job to supplement your loans, there are some options for what you can do with any surplus.

For starters, you can make payments on your student loans before you graduate. Nearly every checking account lets you set up recurring payments, so you can chip away at your loans while you're still in school.

In particular, the Capital One 360 Checking® Account is rated high for its top-notch mobile banking app, where you can go to set up payments from your phone.

You can also transfer any excess loan funds into a savings account while you're in college or graduate school.

Most federal subsidized loans don't incur interest while you're enrolled as at least a half-time student, so there's no reason why you can't use excess loans to start an emergency savings while in college. Once you graduate, you will start to incur interest on the full amount you borrowed.

For most federal loans, you'll have a six-month grace period before interest and monthly payments kick in (this doesn't necessarily apply to private loans). If you decide to hold on to your extra loan money, just make sure you're ready to start paying it off after graduation. You can defer your loans if you can't afford payments, but this option is not ideal since you'll still rack up interest.

The Ally Online Savings Account could provide a helpful way to keep track of your excess loans and budget your money for the school year and beyond. Account holders can organize their saving goals by creating up to 10 different "buckets" within the same savings account. For example, you can create a designated fund for paying tuition and another for your "after college" fund so it's there when you're ready to start repayment.

If you do decide to attend college or pursue post-secondary training, Gould advises that you try to complete the degree or certification you began if at all possible.

"About a third of people have attended some college, but they couldn't finish the degree because of the cost," says Gould. But not finishing can be really expensive when you've already used borrowed money to pay for those credits.

Without completing your studies, you miss out on the financial benefits of a degree and you're still stuck paying student loan debt.

The college investment is significant, but planning ahead can help you see the best return on your money and all your hard work.

Information about the Capital One 360 Checking® Account has been collected independently by CNBC and has not been reviewed or provided by the bank prior to publication.