It isn't hard to see that your students are struggling financially. A recent Student Voice Survey1 found that one in four college students experienced food insecurity, and 17% have experienced housing insecurity.
Despite two-thirds of those surveyed working part-time and almost 20% working 30 or more hours a week, students still worry that something as simple as a car repair bill could be detrimental.
In fact, sixty-four percent of those surveyed feared that such a bill could cause them to drop out of school.
This kind of financial stress is not uncommon, and a recent FINRA survey2 discovered why. Data suggested many different factors that contributed to financial stress. These included:
- The pandemic
- Socio-economic status
- Family circumstances
- Social pressures
- And more
Interestingly enough, when all of these were accounted for, there was still a central issue – financial literacy.
Those with a low financial literacy score participated in poor financial behaviors, which led to high levels of financial stress.
One habit that hurts students is what an RIA study3 calls "fake it until you make it."
Students with this habit pretend they know what they are doing even though they really have no clue. This leads them to make poor decisions about student loan debt, credit cards, and spending vs saving.
What Don't Students Know?
The RIA study found some things that aren't too surprising.
For instance, most of your students do not understand investing or the stock market. They don't understand the difference between stocks and bonds, how to do their taxes, or how to save for retirement.
A little more concerning is that about half do not understand credit scores or compound interest.
However, students' main concerns are surrounding personal finances.
Although the survey asked these questions to a range of adults and not just students, it stands to reason that your study body will have similar concerns.
- 86% do not know how to create a budget
- 90% do not know how to open a savings account
- 83% do not understand how to build an emergency savings
- 65% do not know what to cut out in order to save money
Finally, there is the problem with financial terms. People do not like to appear uneducated, so they become uncomfortable and unwilling to learn when they hear unfamiliar financial lingo.
Over two-thirds of people feel put off when they hear financial terms they do not recognize.
Confused and No Place to Turn
Although your students want to feel more confident about financial topics, 39% don't know where to find accurate information, and three out of four prefer to learn on their own rather than speaking to someone in person.
Of those willing to speak to a professional, many are embarrassed to ask for help or believe they cannot afford the consultation.
Although almost half feel that their family and friends know more about finances than they do, studies show that financial literacy among Americans is dismal.
If your students look to their families for information, they may not be getting the help they need.
That's why colleges and universities should offer a financial wellness plan to students. Such a program will help students reduce their stress now and be financially stronger after graduation – it will also help your bottom line.
Student Financial Wellness Programs
A financial wellness program can teach students the skills they need to understand their personal finances, make better financial choices, improve financial habits, and improve their financial health.
But how will this help your institution? Consider the following:
- Lowered student loan delinquencies and defaults4
- Improved academic performance
- Higher graduation rates
- Fewer classes dropped5
- Decreased time to graduation
The iGrad financial wellness program offers students the financial information they need. The iGrad program offers accurate and up-to-date information in a personalized, interactive way providing students with a library of multimedia resources and tools.
1 - https://reports.collegepulse.com/financial-wellness
2 - https://gflec.org/wp-content/uploads/2021/04/Anxiety-and-Stress-Report-GFLEC-FINRA-FINAL.pdf?x85507
3 - https://blog.riamoneytransfer.com/en/financial-literacy-personal-finance-survey/
4 - https://www.finra.org/media-center/news-releases/2015/finra-foundation-funded-study-documents-effectiveness-state-financial
5 - https://journals.sagepub.com/doi/10.2190/CS.10.3.c