College students experience a high level of stress. Though many things add to this stress, the largest, by far, is finances. In fact, one report1 found that two out of three people under the age of 30 are stressed about finances.
Another study2 found that nearly 60% of college students have cried about the cost of college, with almost half considering dropping out because of financial concerns from college loans to monthly expenses and saving for an emergency3.
Schwab conducted a study of Americans over the age of 18 to find out how they currently feel about their finances4. Though not specific to students, this study sheds some light on their shifting priorities.
In addition to concerns about mental health, over half of Americans polled state that financial health is at the top of their mind.
Student financial health should be important to colleges and universities as well. Not only will students be happier, but they will also be more likely to graduate on time and with higher grades.
Optimism Amid Concerns
Students are responding to recent financial concerns with resilience.
According to a study by AIG and EVERFI, students feel optimistic about finding a job after graduation and feel prepared to handle their personal finances5.
Schwab agrees with this data, finding that Americans continue to feel good about the stock market, technological innovation, and the economy as a whole.
Much of this optimism revolves around the notion that life is going to go back to normal. Students are looking forward to heading back to campus for in-person learning to:
- Assert independence
- Enjoy the college experience
- Engage with college communities
- Make friends
Poor Financial Habits
The Schwab survey found that more people saved during the pandemic and even more planned to save in the coming year. They also intended to build an emergency fund and reduce debt.
However, AIG and EVERFI found that despite stating this intention, college students have increasingly turned to using credit cards rather than cutting back on spending.
- Over half of students now have debt on two or more credit cards
- Four in ten have more than $1,000 in debt
- One out of seven have more than $5,000 in debt
- Almost four in ten do not pay their credit card bill in full each month
Additionally, students are failing to create a written financial plan. Schwab found that only one-third of Americans have a written plan.
When asked why, four in ten felt they didn’t have enough money to warrant a plan, while two in ten felt that creating a plan took too much time or was too complicated.
Helping Students Gain Financial Wellness
A FINRA survey6 found that the causes of financial stress are infinite. A wide variety of factors, from socioeconomic status to family circumstances to societal norms all play a part.
However, the central issue came down to financial literacy.
People with poor financial literacy often participate in poor financial behaviors, such as forgoing a written plan or overusing credit. These poor behaviors lead to high levels of stress.
Here’s what Schwab found concerning the habit of making a written plan. Those who did so were three times more confident of reaching their financial goals than those who did not. Plus, those who created a written plan also participated in other healthy habits more often such as:
- Creating an emergency fund (2x as likely)
- Paying off credit cards each month (1.6x as likely)
- Making loan payments on time (1.6x as likely)
The iGrad Financial Wellness program helps students understand financial literacy concepts, learn their financial personality, create a budget, and stick to new financial habits.
The program is easy to use, breaks concepts down into manageable bites, and allows students to use the program across a variety of devices at their own speed and on their own schedule. Plus, internal user data shows that using the program increases saving, reduces debt, increases financial understanding, and decreases financial stress.
1 - https://gflec.org/wp-content/uploads/2021/04/Anxiety-and-Stress-Report-GFLEC-FINRA-FINAL.pdf?x85507
2 - https://studentloanhero.com/featured/college-students-dont-know-fafsa/
3 - https://grad.arizona.edu/gradcouncil/sites/default/files/minutes/financialstressreport.pdf
4 - https://content.schwab.com/web/retail/public/about-schwab/schwab_modern_wealth_survey_2021_findings.pdf
5 - https://www.businesswire.com/news/home/20210512005617/en/College-Students-Predict-Brighter-Outcomes-for-Their-Financial-Futures-Despite-Lingering-COVID-Concerns-and-Rising-Credit-Card-Use
6 - https://gflec.org/wp-content/uploads/2021/04/Anxiety-and-Stress-Report-GFLEC-FINRA-FINAL.pdf?x85507