College is an exciting time for many students as they embark on a journey to achieve their academic and career goals. However, the transition to college also brings new financial responsibilities that can be overwhelming for some. A recent study found that only 17% of students feel confident in their financial knowledge.1
As a financial aid director, it's essential to prioritize financial literacy education to ensure that your students are equipped with the skills they need to make informed financial decisions.
In this article, we'll explore the importance of financial literacy in higher education and how iGrad can help you support your students.
What Is Financial Literacy
Financial literacy is the ability to understand and manage personal finances effectively. It involves knowing how to make informed financial decisions, manage money, and invest for the future.
In today's quickly changing society, financial literacy is crucial for individuals to achieve financial stability and avoid debt.
Financial literacy is especially critical for college students, who are making significant financial decisions that can impact their future for years to come. A lack of financial literacy can lead to students taking on excessive debt, failing to save for the future, and not managing their finances properly.
Therefore, it's essential for colleges and universities to prioritize financial literacy education to ensure that their students are making informed financial decisions.
The Desperate Need for Financial Literacy
Despite the importance of financial literacy, a staggering number of students and young adults are not prepared to manage their money effectively.
According to a survey of 30,000 people held by AIG Retirement Services and EVERFI, almost half of college students reported feeling unprepared to manage their finances.1
And these concerns are not unfounded.
The National Financial Educators Council found that a vast majority of millennials are graduating with at least one debt, and over half of them worry about their ability to pay back student loans.2
It's alarming that young people are expected to succeed in the modern world without having the necessary skills to manage their finances. Financial literacy should be a fundamental skill taught in schools to prepare students for life outside of the classroom.
How can we expect young people to succeed when they lack the basic knowledge to handle their money?
The need for financial literacy is even more pressing when we consider the debt burden that many college students carry. Without the necessary financial skills, students may struggle to manage their debt or pay off their loans, leading to long-term financial consequences.3
It's time for schools to prioritize financial literacy education to equip students with the knowledge and skills they need to navigate their finances effectively.
The Benefits of Teaching Financial Literacy
By equipping students with essential financial knowledge and skills, they can better navigate the complex financial landscape and make sound financial decisions.
Teaching financial literacy to college students has several key benefits, including:
- Lower Student Loan Debt: Students who understand financial literacy concepts are less likely to take on excessive student loan debt.
- Improved Financial Health: Students who learn financial literacy skills can make better financial decisions, resulting in improved financial health and stability.
- Higher Graduation Rates: Financial stress can negatively impact a student's academic performance and lead to dropping out. By teaching financial literacy, colleges and universities can improve graduation rates.
- Better Career Preparedness: Financial literacy skills are essential for navigating the job market and making informed decisions about job offers and salary negotiations. Students who understand financial concepts are better prepared to enter the workforce.
- Improved Personal Relationships: Financial problems can put a strain on personal relationships. By teaching financial literacy, students can learn how to communicate effectively about money with their partners, friends, and family members, leading to stronger and healthier relationships.
- Long-term Financial Security: Financial literacy skills learned in college can have a significant impact on a student's long-term financial security. By understanding how to manage their money effectively, students can save for retirement, invest in their future, and build wealth over time.
What We Can Do
Colleges and universities can play a significant role in promoting financial literacy among their students. Here are some of the ways we can help:
- Financial Literacy Courses: These courses can cover topics such as budgeting, debt management, saving, investing, and taxes, among others.
- Workshops and Seminars: These can be conducted by experts in the field or by partnering with financial institutions. Students can learn practical skills that they can apply to their daily lives.
- Counseling and Support Services: This can include providing resources such as financial aid, scholarships, and emergency funds, as well as connecting students with financial advisors or counselors.
- Collaborate with Alumni Networks and Employers: Collaborations can help provide job and internship opportunities for their students. These opportunities can provide students with practical experience in their fields of study and financial independence, allowing them to apply the financial literacy skills they have learned.
iGrad Financial Wellness Can Help
iGrad is an online financial wellness platform that can help colleges and universities provide financial literacy education to their students. The platform offers a range of resources, including financial education courses, budgeting tools, and personalized financial coaching.
iGrad's financial education courses cover many topics, including budgeting, credit management, student loan repayment, and investing. The courses are engaging, interactive, and accessible to all students, regardless of their financial literacy level.
Several colleges and universities have already implemented iGrad on their campuses and have seen significant results.
Several studies have shown that students who complete high-quality financial literacy courses show an improvement in financial literacy skills, a reduction in credit card debt, and an increase in savings.4
Students can’t wait any longer for proper financial education, the time to help is now.
1 - https://everfi.com/wp-content/uploads/2019/05/MoneyMatters-2019.pdf
2 - https://nypost.com/2023/03/30/dollars-and-sense-the-time-is-now-to-teach-students-financial-literacy/
3 - https://www.forbes.com/sites/forbesfinancecouncil/2022/10/11/should-schools-teach-financial-literacy-classes/
4 - https://files.eric.ed.gov/fulltext/EJ1161909.pdf