When considering student financial stress, most people would firmly blame the student loan debt crisis.

Without a doubt, this debt is at crisis proportions, with 44.7 million Americans carrying $1.71 trillion in student loan debt1.

To make matters even worse, before the pandemic, when student loan repayment was temporarily halted, 11.1 percent of these loans were 90 or more days delinquent2

However, despite the magnitude of the debt and concerns about carrying such debt well into adulthood, a study conducted by the FINRA Investor Education Foundation3 found that it is not the root cause of financial stress.

Instead, the study concluded that a low level of financial literacy, which leads to poor financial behaviors and eventual decreased financial security, is the culprit.

Related Whitepaper: Diplomas, Debt & Default

Financial Stress Among College-Aged Students

The study used data from 2018 along with focus groups from December 2020 to determine the number of Americans feeling financial stress and the reasons behind the stress.

Although college students were not singled out for the study, the trends for those between 21 and 34 can help educators assess what is around the corner for their students and determine what can be done to help mitigate this stress as students leave their campuses at graduation.

 For instance:

  • Young people are more prone to have financial anxiety when thinking about their personal finances (66 percent) than those between 35 and 49 (60 percent) or those between 50 and 62 (51 percent)
  • College education is inversely related to financial stress, with 63 percent of those with some college experiencing financial stress compared to just 52 percent of those with a postgraduate degree
  • Females (65 percent) are more prone to financial stress than males (54 percent)
  • Those that are not in the labor force (63 percent) or unemployed (69 percent) have more stress than those with employment (59 percent)

This study highlights that nearly all traditional college students have the potential to experience financial stress. 

Lack of Financial Literacy at the Center

The study concluded that financial stress is caused by several issues, including:

  • Not making enough money
  • Unique family circumstances such as health issues
  • Peer pressure to have and/or spend money
  • Money management challenges

However, the most prevalent issue corresponding to financial anxiety and stress was the lack of financial literacy and college students need help.

Among those who could not answer questions concerning interest rates, inflation, and risk diversification, far more felt stress when thinking about (63 percent vs. 51 percent) and talking about (55 percent vs. 38 percent) personal finances.

Those with high anxiety and stress, coupled with low literacy, displayed a variety of poor financial habits, such as:

  • Higher credit card debt
  • Higher consumer loan debt
  • Use of questionable, high-interest loans
  • Lack of savings
  • Lack of retirement funds

These individuals are also less likely to own a home or invest in the stock market. 

Interestingly, having enough money was not enough to alleviate financial anxiety. 

Fifty-eight percent of those making between $75,000 and $99,000 felt anxious, as well as forty-six percent of those making more than $100,000.

What did make a difference was having the knowledge to manage the money they had.

Without these money management skills, survey participants were more likely to make poor financial decisions and fail to plan for the future.

How Financial Wellness Programs Help

Financially stressed students are more likely to miss classes, fail assignments, drop classes, and drop out of college altogether. That’s why it is important to help students reduce their stress.

The FINRA study suggests that one of the best ways to help is to provide programs with a holistic approach that increase financial literacy.

A study of iGrad data shows that financial wellness programs reduced financial stress for its users, on average, by over 23 percent.

A holistic financial wellness program does more than improve financial literacy or knowledge.

The right program will actually provide students with tools and tips that help them change their financial habits.

The iGrad program has been shown to help users:

  • Pay off credit card balances in full each month
  • Plan for retirement
  • Create and maintain a 3-month emergency savings fund
  • Increase savings
  • Reduce checking account overdrafts
  • Stay on track with financial goals

Offering a financial wellness benefit is a win-win situation.

Colleges and universities win by reducing the number of drop-outs, and students win as they experience greater financial health.

Related Article: 4 Surprising Ways Financial Wellness Programs Help Colleges and their Students



1 - https://www.federalreserve.gov/releases/g19/current/default.htm

2 - https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/hhdc_2019q3.pdf

3- https://gflec.org/wp-content/uploads/2021/04/Anxiety-and-Stress-Report-GFLEC-FINRA-FINAL.pdf?x85507