For many students, college is their first opportunity to set their own schedule, take responsibility, and pay bills.
It is a lot to handle.
There is a lot of pressure to succeed in college to set up a good career. But college success is more than just studying hard.
Surprisingly, something other than studying can have a big impact on college achievements – financial health.
Besides academics, a student’s financial health and literacy may be the biggest factor to their success.
Here are four ways financial wellness is key to a college student’s success.
1. Don’t be a fool; stay in school
College students with good financial education are more likely to return for consecutive semesters of school.
According to one study, taking a personal finance course was associated with a 22% greater likelihood of returning to school the next year.1
Solid knowledge of how to manage money helps keep the cost of college from becoming overwhelming.
And the cost is the number one reason students drop out, surpassing even academic failure.2
Plus, financial wellness helps prevent academic failure, making it useful for preventing both main reasons for students leaving college early.
2. Get good grades
Students with high financial stress generally have lower grade point averages than those who are not stressed about money.3
Greater financial literacy and self-efficacy are associated with lowering financial stress.4
So, greater financial literacy leads to greater academic success.
Maintaining a high GPA is key to qualifying for certain grants, scholarships, and financial aid.
It also helps students get admitted to competitive graduate school programs.
Plus, students with a high GPA are more likely to graduate on time, which leads us to…
3. Stay on schedule
As with academic performance, financial stress has a negative impact on graduation timelines.
One study showed that students with high financial stress are more likely to take longer than four years to graduate.5
On-time graduation has a number of benefits:
It marks the transition from spending money to earning money. Becoming a wage earner earlier means more years to earn.
It reduces the cost of college by reducing the time spent at college.
Graduating on time is also associated with lower student loan defaults.
4. Know before you go
Speaking of student loans, they are pervasive in the U.S. More than half of all college students take on loans to pay for school, and 44.7 million people are carrying that debt.6
Loans are common, but nearly half of college students with loans do not know what their payment will be after graduation.7
Students who have good financial literacy are more likely to understand their loans and are likely to make better education decisions.8
All these factors weave together, but there is one underlying theme: financial literacy is a big contributor to college success.
That is why the Financial Literacy and Education Commission suggests colleges implement financial education and wellness programs.
These programs help reduce financial stress.
Which, as we have seen, can lead to:
- Increased student retention
- Greater academic achievement
- On-time graduation
- Lower student loan defaults
There are many things to learn in college. But clearly, financial literacy should be one of the main ones.
Colleges, and their students, could benefit from implementing financial wellness initiatives to help teach skills like budgeting, investing, and saving. Financial wellness can help lead to success in college and beyond.
1 - https://digitalcommons.wku.edu/cgi/viewcontent.cgi
2 - https://files.eric.ed.gov/fulltext/EJ1088924.pdf
3 - https://www.researchgate.net/profile/Stuart-Heckman/publication/271109392_Factors_Related_to_Financial_Stress_among_College_Students/links/5526b57b0cf229e6d635a8f7/Factors-Related-to-Financial-Stress-among-College-Students.pdf
4 - http://www.aup.edu.ph/alumni/wp-content/uploads/RJ2.pdf
5 - https://journals.sagepub.com/doi/abs/10.2190/CS.16.3.c
6 - https://studentloanhero.com/student-loan-debt-statistics/
7 - https://cssl.osu.edu/posts/632320bc-704d-4eef-8bcb-87c83019f2e9/documents/2020-scfw-key-findings-report-combined-accessible.pdf
8 - https://ir.library.louisville.edu/jsfa/vol49/iss1/4/
