In 2014, over 18,000 students from 51 different public and private, two- and four-year colleges and universities in the United States participated in the Study on Collegiate Financial Wellness. Although there has already been extensive research showing that college students are generally lacking in financial knowledge, the Study on Collegiate Financial Wellness provides data which better tells the story of how American college students are directly affected by their lack of financial literacy.
For instance, the study reveals that more and more students are using credit cards in order to help pay for tuition, books, housing and other costs associated with obtaining higher education. Currently, 56.5 percent of students participating in the study own and use at least one credit card. Although a large proportion of students are able to pay the full balance on their card each month, 42.5 percent of college students with a credit card do not pay the full monthly payment on the card and are forced to accumulate debt. Worse yet, a significant number of students do not know what their credit card balance is, and as a result, are ill equipped to make sound financial decisions on other matters.
Students who lack financial literacy face increasing levels of financial stress due to the overwhelming costs of tuition, housing, books, and day to day life. According to the study, 72.1 percent if college students report that they feel stress regarding their personal finance. Unfortunately, financial stress has been linked to having a negative impact on students’ lives including reducing students’ course loads, withdrawing from college completely to pursue full-time employment, increasing the time needed to graduate, and lowering academic performance. More so, these outcomes often exacerbate the financial capabilities of college students by reducing their marketability, accumulating even more debt, and postponing full time employment post-graduation.
Luckily, the study does have good news. For example it reveals that financial counseling services are beneficial with 67 percent of students remembering the entrance counseling they received for their student loans, and 79.5 percent say that the financial counseling was helpful or somewhat helpful. Furthermore, although past studies suggest that most college students do not have or follow a written budget, the Study on Collegiate Financial Wellness did find that over half of all students reported they frequently or always follow a budget. Further research clearly needs to be done in the realm of the financial behaviors and consequences of college students; however this Study on Collegiate Financial Wellness begins the conversation regarding how colleges and universities can more effectively work with students, in order to improve their financial education, reduce financial stress, and improves their overall quality of life.