Unlocking the Gen Z Lifestyle: How Subsidies Make Modern Living Affordable

Finals season is here, and this year looks a bit different. College students are still pulling all-nighters and relying on caffeine, but many are also turning to AI for extra help. OpenAI is offering students two months of free access to ChatGPT Plus, normally priced at $20 per month. This is a great chance for students looking for support on everything from essay writing to studying for exams. With the Plus version, they can use advanced features and a tool that quickly compiles information from various sources.

This isn’t the only AI promotion happening on campuses. Companies like Anthropic and Google have also introduced discounts for students. These promotions are straightforward and aimed directly at the student crowd: "Good luck with finals!" was the message shared by xAI on social media to promote their deal. According to OpenAI’s vice president of education, college students are the biggest users of ChatGPT, utilizing it for tasks beyond academics—like creating workout plans and planning meals.

The trend of giving away AI access for free or at discounted rates is reminiscent of the early 2010s when startups sought to attract customers with low-cost services. Back then, Millennials enjoyed affordable rides with Uber and meals from DoorDash, thanks to subsidies from these tech giants. Similarly, today’s college students are benefiting from what some are calling a "Gen Z lifestyle subsidy."

To engage this audience, companies are pulling out all the stops. Anthropic launched a campus ambassadors program where students could gain a premium AI service for just $1 a month. One ambassador, Josefina Albert from the University of Washington, successfully promoted the offer to her peers, although some professors were hesitant to support it.

The financial implications of these offers are significant. In the U.S., there are around 20 million postsecondary students. If just 1% take advantage of OpenAI’s free offer, it would equate to about $8 million in handouts. However, with more AI companies offering similar deals, many students may be signing up for multiple platforms, increasing this figure.

Despite the high costs of providing these AI services, companies are keen on acquiring users, especially since tech improvements will lower future costs. Yet, they remain unprofitable with OpenAI expecting to lose around $7 billion this year. Historically, companies like Uber and Lyft also bled money but attracted customers, only to later adjust their pricing structures once they had built a loyal user base.

As technology improves, AI companies will need to find ways to monetize their offerings effectively. OpenAI, for example, is exploring ultra-premium services that could charge upwards of $20,000 per month for advanced capabilities. However, the reality is that many free users will not sustain indefinitely, leading to inevitable price increases down the road.

The growing reliance on AI among students is notable. OpenAI reported that many young users are turning to chatbots for relationship advice, meal planning, and even fitness routines. One user, Jaidyn-Marie Gambrell, shared how she consulted ChatGPT about her fast-food choices, highlighting how integrated AI has become in daily decision-making.

While AI offers convenience, there are concerns about its long-term implications. Students using tools like ChatGPT for academic tasks may be undermining their preparation for careers in fields that might soon be affected by advancements in AI.

In conclusion, the relationship between students and AI tools is evolving. Companies may be giving away access now to establish a base of loyal users. However, as prices rise in the future, the landscape may change, potentially leading some students to rethink their reliance on these technologies.

For further insights into the impact of AI on education, you can check out this OpenAI report.

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