Student financial stress is on the rise, with 70 percent of undergraduates saying they feel stressed1 out due to their financial situation.
According to a survey by Student Loan Hero, in the past year, almost half of all students have had a reduction in income, while one in four has reported food insecurity or trouble paying their bills.2
In general, students are worrying about:
- Having enough money for tuition
- Ability to cover monthly expenses
- The capability of paying off student loans
- Finding a job after graduation
When experiencing financial stress, students are more likely to accumulate debt, avoid studying, drop classes, consume more alcohol, and eat less healthy foods.
Students under financial stress may not feel they have anywhere to turn for help, particularly if they fear judgment from family and friends.
However, educators have the power to exchange the culture of financial shame for one of financial well-being.
Here are three things you can do:
1. Get Talking and Include the Ugly
One of the biggest reasons that your students feel stress is due to a lack of financial literacy.
The National Financial Educators Council’s (NFEC)3 most recent Financial Foundation Test is an entry-level financial test meant to test a student’s ability on basic financial topics. These topics consist of financial tasks a student is likely to undertake at some point during college, such as taking out a loan, buying a car, renting an apartment, or paying off debt. The results were not promising, with a third of students failing the test and an average test score for incoming freshmen at just 58.67 percent.
Students who do not understand these basic financial issues are much more likely to make financial mistakes that can follow them well into adulthood.
For instance, students may pay for necessities using a credit card but plan to pay off the card by making only the minimum payment each month. Or, they may take out student loans without understanding how they are to be paid back.
If they make these mistakes and never seek appropriate help, they are bound to continue making similar financial errors that only compound the problem.
Educators can help by talking about money, especially money mistakes. If professors, mentors, and counselors share their own financial woes and mistakes, students will learn:
- Everyone can make mistakes, so there is no need for shame and embarrassment.
- It is possible to overcome poor financial decisions
- Ways to reverse their financial state
- How to avoid making future mistakes
Just knowing they aren’t alone can empower a student to take charge of their financial well-being.
2. Be Prepared for Student Financial Emergencies
Student financial emergencies are not uncommon. In fact, one study4 shows that three out of four students stated they had run out of money at some point while in college.
To show that the campus culture is one of financial wellness, colleges and universities should offer resources to students who find themselves in this predicament.
For instance, your institution may provide:
- Emergency grants
- Interest-free emergency loans
- Advances on work-study paychecks
- No-cost access to a financial counselor
- Food pantries
- Dining hall vouchers
- Emergency housing
- Clothing closet
3. Provide a Student Financial Wellness Program
Finally, educators can offer membership to a financial wellness program to students.
When students have access to a holistic financial wellness program, they learn financial information and how to use that information to create better financial habits and make better financial decisions.
What can students learn from using a financial wellness program?
- Money Management Skills: How to create and follow a budget; how to balance their financial accounts; how to be savvy shoppers; when and how to spend money wisely.
- Debt Reduction Skills: Best ways to pay down debt; how to avoid getting into debt; how debt affects credit scores.
- Savings Skills: How to create an emergency savings account; how to save for short-term and long-term goals; why saving for retirement makes sense even for students; how much should they save.
- Fraud Avoidance Skills: What are financial frauds; how to avoid financial frauds; how to protect yourself against identity theft.
- Student Loan Skills: How much student loan debt is the right amount; how do student loans work; what are alternatives to taking student loans; what will student loan repayment look like.
Institutes of higher learning who ignore their students’ financial stress do so at their own peril.
With such extensive financial stress, the consequences to your students and your school are too potentially disastrous.
By adding these components to your campus, you can create a culture that helps your students achieve financial wellness.
If you are interested in a financial wellness program for your institution, check out Start a College Financial Wellness Program in 4 Easy Steps.
1 - https://whattobecome.com/blog/college-student-stress-statistics/
2 - https://studentloanhero.com/featured/college-students-financial-coronavirus-survey/
3 - https://www.financialeducatorscouncil.org/financial-foundation-test-results/
4 - https://www.goodcall.com/news/over-60-of-college-students-have-run-out-of-money-during-a-semester-reveals-new-survey-05538/