As students prepare to begin college, they are also often taking more responsibility for their finances.
Even if parents pay for tuition, students may have to pay for meals, entertainment, books, gas, and clothing.
A majority will also make decisions about student loans (69 percent)1 and credit cards (59 percent)2.
Unfortunately, studies3 show that these young adults do not have the necessary financial knowledge or skills, leaving them floundering and stressed.
Student Financial Stress
The Student Financial Wellness Survey’s results4 show that students are worried about paying tuition, meeting monthly bills, and student loans – and for good reason.
The same study found that three out of four students have run out of money in the past 12 months, with 34 percent running out five times or more.
Financial stress in students leads to poor:
- Physical health5 – Fatigue, stomach issues, headaches, and chest pains
- Mental health6 – Hopelessness, overwhelmed, mentally exhausted, depressed, and anxious
- Coping behaviors7 – Smoking, drinking, drugs, overeating, and oversleeping
These problems ultimately lead to poor educational outcomes.
According to the National College Health Assessment8, students report that financial stress causes them to receive lower grades, study less for tests, drop courses, and even drop out of school.
That’s why helping incoming students understand financial wellness concepts and learn valuable financial skills is so important.
Learn what has become one of the most desired college student programs for 2021.
Offering Financial Advice
Colleges and universities are sitting in a prime spot to offer incoming students advice to help them manage their personal finances.
As they learn strong financial habits and make wise financial decisions, they will be able to create a stronger financial future.
So, this year, when students arrive on campus, consider offering them financial advice as part of their welcome package.
Here are eight solid pieces of advice:
Create a Budget
If students don’t have a plan, then they are planning to fail.
At the very least, students should know what their monthly spending limit is and keep track of their earning and spending.
Think Before You Spend
Once money is spent, it is gone forever.
If students can stop and think before spending, they have the opportunity to make informed choices.
In this way, they will have money when they need it.
Many students spend money on entertainment, so this would be a good place to list the free student events offered on campus, as well as any local student discounts.
When colleges and universities offer a holistic financial wellness program, students are able to make more informed financial decisions
Saving Should Come First
When a student gets a paycheck or a check from mom and dad, they should immediately put some of that money into savings.
The Student Financial Wellness survey found that 63 percent of college students currently have no way to get $500 if they needed it.
Having an emergency fund will help students pay for unexpected costs and keep them from running out of money mid-semester – and, according to iGrad data, having an emergency savings account reduces financial stress.
Learn About Your Future
Before settling on a particular major, students should investigate the job opportunities associated with that degree.
What kinds of jobs are available?
How many jobs are available?
How much do entry-level employees make?
This will help them make more informed financial decisions.
Evaluate Student Loan Debt
The rule of thumb says that a student’s loan balance at the end of school should be no more than the anticipated annual salary upon graduation.
This will help keep student loan payments below 15 percent of a student’s take-home pay.
Instead of taking on greater debt, students may consider working part-time, taking summer employment, seeking scholarships, or potentially changing their major.
iGrad recently launched Student Loan Debt Letters in an effort to make students more aware of their current student loan balances and future payments after graduating.
Finish School On Time
Students need to understand that if they do not finish school, they will still have the responsibility of paying off their student debt.
Paying off debt without a degree is difficult because the likelihood is that they won’t have a good-paying job.
Additionally, finishing school on time will also save them money. Each semester in school means more loans, and more loans mean more debt.
Be sure to provide students with the contact information for the Financial Aid Office and Academic Counseling to get the needed guidance.
To learn more about how providing a financial wellness program can increase graduation rates, check out "Do Financial Literacy Programs Increase College Graduation Rates?"
Participate in the School’s Financial Wellness Program
Students who participate in financial wellness programs learn how to create a budget, understand their financial aid, make appropriate decisions about student loans, save for emergencies, understand how to handle credit cards, get out of debt, and create new financial habits.
By offering students financial wellness, you can help students become financially self-sufficient while completing their degree – a skill that will serve them well throughout their lives.
1 -https://studentloanhero.com/student-loan-debt-statistics/
2 -https://www.salliemae.com/about/leading-research/majoring-in-money/
3 - https://www.masterstudies.com/article/what-is-financial-literacy-and-how-can-you-improve-yours/
4 -https://www.trelliscompany.org/wp-content/uploads/2019/06/Fall-2018-SFWS-Report.pdf
5 - https://www.mayoclinic.org/healthy-lifestyle/stress-management/in-depth/stress-symptoms/art-20050987
6 - https://www.acha.org/documents/ncha/NCHA-II_SPRING_2019_US_REFERENCE_GROUP_EXECUTIVE_SUMMARY.pdf
7 - Ibid
8 - https://www.acha.org/documents/ncha/NCHA-III_Fall_2019_Reference_Group_Executive_Summary.pdf
