Students come to colleges and universities to become successful in their field of choice. This entails gaining knowledge and skills to prepare them to gain employment upon graduation.
A National Center for Education Statistics study1 found that college graduates are doing just that. Eighty-six percent of college graduates ages 25 to 34 were gainfully employed at the time of the study.
However, this same cohort has a substantial problem – lack of financial health. A Heart Mind Strategies survey2 found that 60% of Gen Z and 59% of Gen X have high levels of financial stress. This same group also has high levels of student loan debt3 and credit card debt4.
All of this means that the success found by gaining a higher education is tempered by their lack of financial knowledge – and this lack of financial knowledge will follow them and your school for years to come.
Thankfully, there’s a way to help – offer a student financial wellness program.
Why Student Financial Wellness?
A financial wellness program can promote financial literacy and help students learn the best habits when managing their finances.
The benefits to students range from better physical and mental health to a greater likelihood of meeting financial goals and saving for retirement. And the benefits to colleges are just as broad.
- Financial wellness reduces college dropout rates: One study found that students taking a financial literacy class were 22% more likely to return to school the following year5.
- Increase on-time graduations: Students with high levels of financial stress are less likely to graduate on time according to The Journal of College Retention6.
- Lowering student loan defaults: The Financial Literacy and Education Commission found that students often do not understand their loans7. This leads to high loan delinquency and default rates. Before the loan repayment suspension due to COVID, 15% of students are in default at any given time, and 11% of new graduates default within the first year of repayment.8
- Improving alumni donation: Students who graduate from college and find financial success are more likely to become alumni donors9. This is important to the success of colleges and universities since strong alumni contributions indicate a greater likelihood of planned gifts and factor into school rankings.
What to Look For
Not every financial wellness program is the same.
Some offer information without offering tools. Others offer a one-size-fits-all package that does not take into account the differing life situations of students. Many offer only one way to access the information, such as a yearly seminar.
That’s why it is important to look for a financial wellness program that offers:
- Unbiased information
- Many ways to access financial knowledge
- Easy availability to students in terms of time and location
- Information, tools, and assessments in a multimedia format
- Analysis of results for students and for the university providing the program
- Information specific to students such as student loan information, FAFSA, and scholarship search
For more information, read about our six essentials for a holistic financial wellness program.
Columbia University Example
Columbia University began using iGrad, a student financial wellness program, early in the 2019-20 school year. According to their website10, they believe students should have:
- Access to the best financial information possible
- Skills and habits needed to make smart financial decisions
- Knowledge of the best ways to handle money
To help students achieve these goals, they suggest starting with a financial wellness checkup. This checkup leads to personalized recommendations including the most useful tools, content, and courses based on the student’s goals.
They also recommend taking an assessment to determine how a student’s money personality affects their money decisions.
To encourage student participation, Columbia University offers a $1,000 monthly challenge. Past challenges include planning for the future, bringing down debt, automating finances, understanding the tax process, saving for big goals, and investing.
Students who participate in the challenges are put into a drawing for a $1,000 prize.
In addition to the monthly challenge and money personality assessment, other highly popular portions of the program include:
- Scholarship search
- Budget tool
- Content on federal student loans, budgeting, and how COVID-19 has affected student financial health
- Courses on finding scholarships, creating a budget, banking beyond checking and savings, and creating a financial plan.
- Student loan snapshot
Additionally, students can learn about financial aid, loan repayment, and even tax information concerning stipends, 1098-T forms, and international student considerations. Columbia University offers this program free of charge to all students and alumni.
To learn how iGrad can set up your college students for success we are sharing some of the proven strategies and best practices that we've put together through our collaborations with other universities across the country.
1 - https://nces.ed.gov/fastfacts/display.asp?id=561
2 - https://www.cfp.net/-/media/files/cfp-board/news/2020/CFP-Board-Survey-Release.pdf
3 - https://educationdata.org/student-loan-debt-by-generation
4 - https://www.fool.com/the-ascent/research/how-gen-z-millennials-gen-x-baby-boomers-use-credit-cards/
5 - https://digitalcommons.wku.edu/cgi/viewcontent.cgi
6 - https://journals.sagepub.com/doi/abs/10.2190/CS.16.3.c
7 - https://home.treasury.gov/system/files/136/Best-Practices-for-Financial-Literacy-and-Education-at-Institutions-of-Higher-Education2019.pdf
8 - https://educationdata.org/student-loan-default-rate
9 - https://www.alumnifactor.com/node/5854
10 - https://www.sfs.columbia.edu/financial-wellness