Financial literacy programs have quickly emerged as a fundamental component of higher education, underlining the significant role they play in tackling the battles many students face concerning finances. This realization has set the stage for an important consideration: Can investing in university-wide financial literacy programs result in a maximized return on investment (ROI)?
As the Harvard Business Review highlights,1 financial confidence not only benefits individuals but can also produce substantial business outcomes.
This article gives a deep dive into the case for financial aid directors to invest in customizable financial literacy programs, explaining the link to student success and improved graduation rates.
The Rising Value of Financial Wellness in Higher Education
Programs for financial wellness are fast becoming a sought-after provision among American college students. This shift is underscored by a 2019 EVERFI study, which revealed that of around 30,000 students surveyed from over 440 institutions nationwide, just 53% felt prepared to handle their finances.2
Illustrating the connection between financial wellness and student success facilitates understanding of its importance. The key benefits include:
- Lower student loan default rates: Financially literate students are more equipped to handle debt responsibly, hence decreasing default rates.
- Improved graduation rates: Students with enhanced financial understanding can make sound decisions, enabling academic focus without monetary worries.
- Smart borrowing: Knowledgeable borrowers make informed loan choices, contributing to healthier financial futures.
The far-reaching implications of financial literacy extend to the university's reputation. Robust financial wellness programs signal institutional commitment to student success, strengthening prospective student appeal and ultimately contributing to an enhanced university image.
In fact, an iGrad research analyzing financial literacy in universities unearthed compelling evidence that bolsters this argument. The data indicates that 17.3% of higher education institutions with an implemented financial literacy program witnessed that their students borrowed less than the maximum amount awarded to them at least half of the time. This contrasts with only 12.6% of institutions where no such program exists.
Defining ROI in the Context of Financial Literacy Programs
Understanding ROI metrics about financial literacy initiatives involves assessing the following factors:
- Impact on student mental health: Reduced financial stress can lead to improved mental well-being and overall student satisfaction.3
- Contribution to retention rates: A student experiencing financial stability is more likely to stay enrolled and complete their education.
- Influence on alumni engagement: Students impacted positively by financial literacy initiatives are more likely to remain engaged as alumni, giving back to the institution in various ways.
In short, viewing a financial literacy program as more than a monetary investment – but also a proactive tool for shaping a thriving student body and alumni network – reveals the significant ROI potential of such initiatives.
Identifying the Financial Benefits for Universities
Does a university's fiscal health stand to gain from bolstering its investment in financial literacy programs? Absolutely.
By significantly reducing student loan default rates, universities can realize potential cost savings, yielding tangible financial benefits. Enhancing financial literacy also positively influences student retention and escalates graduation rates, underpinning the institution's fiscal stability.
An abundance of universities with successfully integrated financial literacy programs lays testament to this model's efficacy – a convincing argument for others to emulate.
Aligning Financial Literacy with University Goals
For the maximum effectiveness of financial literacy initiatives, these programs must be rigorously aligned with broader university objectives. These initiatives not only bolster the fiscal acumen of students but also reinforce the overall mission and values of the institution. By encouraging responsible fiscal habits, universities inherently promote their commitment to holistic student development.
Universities such as Texas Tech and the University of North Texas have seamlessly embedded financial literacy within their academic structure, generating these impressive results:
- At Texas Tech, their Red to Black program has demonstrated how customized, peer-led financial coaching and even free tax preparation can enhance student success, resulting in better retention and graduation rates.4
- In the same vein, the University of North Texas's Student Money Management Center provides financial education resources that have contributed to a significant decrease in student financial stress.5
These instances make it clear: aligning financial literacy programs with university goals doesn't just create responsible citizens – it breeds institutional success.
To gain further insight into the transformative impact of financial literacy programs, we invite you to explore more success stories. iGrad has compiled a comprehensive list of case studies cataloging universities that have truly made a difference in their students' lives through such initiatives.Download iGrad's collection of Best College Financial Literacy Programs
The Customizable Advantage: Tailoring Programs for Maximum Impact
Customizable financial literacy programs present an innovative approach to tackling student financial literacy. They reflect the recognition that to serve different student populations effectively, a one-size-fits-all approach is less effective.
Meeting Unique Needs
Customization allows institutions to tailor their financial literacy programs to meet their unique needs and those of their students. By doing so, these programs can address specific financial literacy gaps among different cohorts of students, yielding more robust results.
The Impact of Flexibility
The beauty of customizable programs lies in their flexibility. As universities accommodate a diverse student body and face fluctuating economic circumstances, these programs can be readily adapted.
Adapting to Change
With ever-changing student demographics and evolving financial landscapes, the ability to customize financial literacy initiatives ensures that universities can navigate through these shifts, effectively equipping students for financial success, irrespective of prevailing economic conditions. This adaptability is an undeniable strength of customizable programs.
Demonstrating Measurable Outcomes
One of the best approaches to legitimizing the impact of financial literacy programs is through tracking and measuring their outcomes. By quantifying the success of these initiatives, universities can further justify their investment, showcasing undeniable and tangible results.
This demonstration of measurable outcomes not only substantiates the program's efficacy but also highlights its significant role within the higher education landscape.
iGrad shares illustrative case studies that demonstrate how universities can measure the positive outcomes of their financial wellness initiatives. Two such universities are the Grand Valley State University (GVSU) and Johnson and Wales University (JWU).
The Grand Valley State University Initiative
GVSU significantly invests in their financially disadvantaged TRIO and STEM-Health students through an interactive, customized financial wellness program. This initiative aims to augment these students' financial acumen, thereby reducing school drop-out rates, often linked to financial hardship.
National data indicates a mere 20% degree achievement rate for TRIO-eligible students within six years.
GVSU's financial wellness program has sought to tilt this scale by focusing on lowering student loan default rates, decreasing financial stress, improving academic performance, and raising graduation and literacy rates.
The Johnson and Wales University Approach
Over the past decade, JWU has provided financial wellness offerings to its students, alumni, and staff, educating over 25,000 individuals. JWU's multi-tiered program includes introductory first-year seminars, one-on-one financial planning counseling, and exit counseling for graduating students. Their comprehensive efforts have led to an enhanced understanding of student loans among their student body and a noteworthy decrease in default rates. LendEDU recognized their impactful efforts in 2017.
Both universities illustrate the tangible, measurable impacts that comprehensive, tailored financial wellness initiatives can achieve. Through their distinct but equally successful programs, they demonstrate the potential power of these initiatives to transform student lives and bolster university reputation.
And There’s More Than Just That
Meanwhile, data-driven insights also play an integral role in facilitating continuous improvement and optimization of financial literacy programs. By regularly analyzing the outcomes of these programs, universities can calibrate their strategies to achieve more efficacious results.
Partnering with a reliable B2B company can significantly enhance the implementation and ongoing management of these programs. Such partnerships often come with sustained support and resources, streamlining the process for universities while ensuring the adoption of industry best practices.
Ultimately, these measures help universities stay ahead of the curve, continually taking their financial literacy programs to greater heights.
How iGrad Can Help
This enlightening exploration underpins the value of financial wellness programs and their indubitable ROI – an important consideration for every financial aid director.
Initiatives aimed at bolstering financial literacy possess the potential to yield tangible, measurable outcomes that extend as far as reducing student loan defaults, increasing graduation rates, and fostering smart borrowing habits.
The powerful strand of customization runs through these programs, ensuring they keep pace with the unique and evolving needs of universities and their students. The designs of these initiatives are not fixed. Instead, they flex and adapt to accommodate fluctuating financial landscapes while remaining aligned with broader university objectives.
Because of this, their impact resonates – not only on the financial stability of individual students but also on the overall fiscal health and reputation of the university.
Are you ready to make a difference in your university's financial landscape and drive student success with a customizable financial wellness program? Schedule a demo with iGrad today. Let's navigate this important journey together towards empowering your students with the financial literacy skills they need for life.
1 - https://hbr.org/2020/06/providing-financial-services-to-employees-is-a-win-win
2 - https://everfi.com/wp-content/uploads/2019/05/MoneyMatters-2019.pdf
3 - https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8806009/
4 - https://www.depts.ttu.edu/r2b/inthenews.php
5 - https://moneymanagement.unt.edu/index.html