In the past year, COVID-19 has wreaked havoc on college students.

The National College Student COVID-19 Survey1 found that students are more worried about the financial fallout of the pandemic than they are the health consequences:

  • 42 percent are worried about getting COVID-19
  • 64 percent are worried about paying for school
  • 77 percent feel that they will not be able to earn what they need to pay for college
  • 64 percent state that the pandemic has increased their need for financial aid

Add to that the realities of a student loan crisis that has 165.2 million people paying $1.57 trillion2 in student loan debt, and it becomes obvious that financial stress is high among students.

So, what can institutes of higher learning do to help their students become financially well? The answer may be found in the Nudge Theory. 

Definition of the Nudge Theory

If you consider ways you might influence a student’s decision-making or behavior, you might list such things as:

  • Provide information or education
  • Create rules or laws
  • Enforce rules and laws
  • Forbid certain choices

For instance, if you want students to respect others by limiting noise in a dorm, the university could provide a class dealing with respecting others that includes information on noise reduction.

The university could also create rules that require quiet during specific hours along with ways to enforce these rules.

Though not likely, the university could also prohibit devices that made noise above a certain decibel level.

However, for personal financial wellness, such methods are either not effective or practical.

Though you could require a financial literacy course, you cannot require that students follow any of the principles taught in the class.

For instance, you cannot force a student to create and follow a budget or begin a savings account. 

Instead, educational leaders may want to consider the Nudge Theory3.

A nudge is defined as information that a student can easily choose to avoid without any associated cost.

In layman’s terms, a nudge is similar to an indirect suggestion or positive reinforcement.

Providing nudges allows students to hear information they need to hear without feeling pressure.

Nudges keep financial wellness at the forefront of their minds as they make financial decisions and choose appropriate financial behaviors. 

Applying the Nudge Theory

When it comes to practical application, applying the nudge theory is not difficult.

Here are simple things you can do to use the Nudge Theory to increase your student’s financial wellness.

  1. Influence Behavior with Messaging

Colleges and universities communicate with their students in several ways, such as emails, texts, notices, newsletters, and more.

When communicating with your students, consider including a financial wellness nudge.

  • Education: Financial facts your students may need to know. These messages can include information about student loans, using credit cards, or avoiding financial frauds and scams. 
  • Call to Action: These messages ask students to consider doing something. For instance, in April, during Financial Literacy Month, you could offer financial wellness suggestions such as starting an emergency fund or signing up for the institution’s financial wellness benefit.
  • Reminders: These are nudges to remind students about financial deadlines or situations, such as the deadline for filling out FAFSA or filing taxes.
  1. Gain Attention with Stats 

Another way to provide a nudge is by using statistics.

In this way, you don’t tell students what to do but the numbers lead them to the right course of action.

Here are a few examples:

  • Eating out costs the average college student $4000 per year. Eating out one meal less each week would save you $5004.
  • The average credit card debt for college students is $11835. If you only make the minimum payment on a card with 18.9 percent annual interest, it will take 17 years and 2 months to pay off the debt, and you will pay $2341.41 in interest6.
  • You can have a million dollars at retirement by saving $80 every week between high school graduation and retirement. You’ll have to save four times that amount - $310 per week – if you wait until you are 40 to start saving7
  1. Show Off Nudges

In addition to adding nudges to your digital communication, you can also add nudges everywhere a student might encounter them: 

Nudging students lets them see that you care about their financial well-being.

It also gives you the ability to influence a student’s financial decisions and behaviors, thus creating financially well students.



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