As several recent studies show, student financial wellness corresponds with academic performance and graduation rates.
Students with fewer money worries perform better in college and are more likely to graduate, while financially stressed students have lower grades and are more likely to drop out.
This is part of the reason that the U.S. Financial Literacy and Education Commission recently recommended mandatory financial literacy education for all colleges.
The Ohio State University’s National Student Financial Wellness Study found that 72 percent of college students experience financial stress stemming from the fear of being unable to meet tuition costs (60 percent) and meet monthly expenses (50 percent).1
Even more alarming, a large number of college students are housing and food insecure.
The Hungry and Homeless College Report states that2:
- Nearly 50 percent of college students experience housing insecurity, such as the inability to pay rent, inability to pay utilities, or the necessity to move frequently.
- Thirteen percent of college students not living on campus experience homelessness.
- At least 20 percent (and up to 40 percent) of college students experience food insecurity, such as the inability to purchase nutritious foods or persistent feelings of hunger.
At the same time, nearly a third of U.S. colleges and universities are struggling financially due to operating deficits and decline in enrollment, both of which are affected when students are financially unwell.
But what can a college or university do to decrease student financial stress? The first step is to recognize the signs.
Higher Drop-Out Rates
Students experiencing financial stress often decide to drop out.
This makes sense in the short term since they will no longer have to pay for tuition or books.
However, these students may also lose:
- Subsidized room and board
- Free public transit
- Grace period for loan repayment
- Higher earning power
Colleges and universities have found that about one-third of those who start a four-year degree never finish.3
And according to a LendEDU survey, about half of these students drop out due to financial issues.4
When this happens, colleges suffer. Potential students look at a school’s graduation rates when choosing a school.
Low graduation rates have been linked to lower academic support, lower faculty support, and higher tuition rates. As graduation rates decline, so does enrollment.
Additionally, students who have dropped out of school are highly unlikely to donate to the school later in life.
Alumni contributions are a strong indicator of receiving major donors and planned gifts.5 It is also a factor in the U.S. News and World Report’s school ranking.
Poorer Physical Health
Another sign of a student’s financial stress is poor physical health.
A Student Loan Hero survey found that 64 percent of students lose sleep due to financial stress.6
According to the Mayo Clinic, a lack of sleep can lead to7:
- Poor performance in school and on the job
- High blood pressure
- Heart disease
- Substance abuse
Additionally, financial stress creates physical symptoms in 67 percent of those surveyed, including headaches, muscle tension, stomach issues, heart palpitations, hand tremors, exhaustion, and shortness of breath.
Therefore, students experience more health issues because of stress, thus requiring them to seek out medical care from campus facilities.
Since these facilities are covered by insurance purchased by the university, as the use of facilities rises, so do operating costs.
Poorer Mental Health
More mental health problems are also linked to financial stress.
The Student Loan Hero survey found that three-quarters of students isolated themselves due to stress.
They also felt apprehension or dread, restlessness, irritability, tenseness, and depression.
Other studies indicate that:
- 75 percent of mental illness begins by the age of 24
- 30 percent of young adults 18 to 25 experience some form of mental illness
- 30 percent more students sought out mental health services between 2009 and 20158
- 33 percent take medication for mental health issues8
- 33 percent consider committing suicide8
These numbers have created a mental health crisis for educational institutions.
In fact, a Columbia University-sponsored survey found that two-thirds of student affairs administrators felt that mental health is their top concern.9
Because of the expense of counseling, universities either have to begin charging students for visits, capping the visits, or adding the costs into their bottom-line.
Additionally, universities are having to hire more counselors to handle the increased load. For large schools, it could mean hiring hundreds of therapists.
Universities, of course, want healthier students. A healthy student is more likely to stay in school and graduation.
For many students, financial stress leads to lower grades.
This is likely due to the finding from the Ohio State survey that found 32 percent of students with financial stress neglect their studies.1
Additionally, the National Survey of Student Engagement found that one-third don’t buy the needed study materials due to cost.10
Financially stressed students are also more likely to hold at least one part-time job.
The National Student Financial Wellness Study found that 60 percent of full-time students working 20 or more hours per week felt their job interfered with their studying.1
The one factor that helped grades the most was seeking mental health counseling. In fact, 70 percent of students seeking mental health services state that doing so improved their grades.11
However, as stated earlier, the cost of mental healthcare is an issue for many educational institutions.
Reduced Class Load
Finally, financially stressed students may choose to reduce their load, becoming part-time students. Doing so will decrease their tuition and book costs while giving them more time for work.
However, some part-time students find that scholarship and grant awards are reduced or eliminated and finding college loans becomes more difficult.
Additionally, part-time students are far less likely to graduate than full-time students.
According to the Department of Education, less than 25 percent of part-time students will graduate within an eight-year period. This is usually due to the cost of classes along with scheduling classes around work and childcare.12
With part-time students making up a quarter of 4-year college enrollment and over 60 percent at community colleges, completion rates for colleges will continue to decrease unless action is taken.13
Financial Wellness Programs are Part of the Answer
Finding a way to decrease financial stress among the student population could help alleviate some of these issues.
One way to do so is by providing a financial wellness program for students.
A recent study by the Financial Industry Regulatory Authority found that mandated financial education for college students had many positive effects.14 Credit scores rose, delinquencies lowered, more money was saved, less debt was incurred, and students made fewer compulsive purchases.
However, not every financial wellness program helps students become financially sound.
When looking for a student financial wellness program, an educational institution should find one that has:
- Many avenues for learning such as games, quizzes, videos, and more
- Unbiased information
- Expert advice proven to help students with their financial wellness
- Provides an analysis of the results of the program and will help modify the program to obtain university goals.
If the signs of student stress are evident in your organization, it is time to search for a financial wellness program that addresses the needs of your students.
To learn more about the iGrad Financial Wellness Program and how schools are using it, watch our demo video here.
1 - https://cssl.osu.edu/posts/documents/nsfws-key-findings-report.pdf
2 - https://hope4college.com/wp-content/uploads/2018/09/Hungry-and-Homeless-in-College-Report.pdf
3 - https://www.collegeatlas.org/college-dropout.html
4 - https://lendedu.com/blog/college-dropouts-student-loan-debt/
5 - https://www.alumnifactor.com/node/5854
6 - https://studentloanhero.com/featured/psychological-effects-of-debt-survey-results/
7 - http://www.mayoclinic.org/diseases-conditions/insomnia/symptoms-causes/dxc-20256961
8 - http://ccmh.psu.edu/wp-content/uploads/sites/3058/2016/01/2015_CCMH_Report_1-18-2015.pdf
9 - https://universitylife.columbia.edu/sites/default/files/HigherEd-Report-2017.pdf
10 - http://nsse.indiana.edu/
11 - https://www.statnews.com/2017/02/06/mental-health-college-students/
12 - https://nces.ed.gov/programs/digest/d18/tables/dt18_326.27.asp
13 - https://nscresearchcenter.org/currenttermenrollmentestimate-spring2019/
14 - https://www.finra.org/sites/default/files/investoreducationfoundation.pdf