A university's reputation isn't dependent upon large names who have attended or taught at the institution. It's about each student's success both on campus and post-graduation.
However, it's also vitally dependent on the economic and financial well-being of its student body. Universities are increasingly being judged not just by their output in academic achievement but by how successfully they can equip students for financial wellness and long-term success.
But how is this accomplished, and how does this benefit the university down the line? In this article, we will cover the importance of financial wellness, and explore the significant and lasting effects student financial wellness has on a university's reputation.
Defining Student Financial Wellness
Many assume that financial wellness refers to how much money an individual makes or their current spending habits. While these are important factors in a person's financial stability, they are only a small piece of the puzzle.
Financial wellness should be seen as a comprehensive system that considers budgeting, debt management, savings strategies, creditworthiness, investing know-how, risk prevention, and planning for retirement.
If your students lack any one of these skills, their financial health will not be as secure as more financially literate peers. Universities are uniquely positioned to support students by providing them with the financial education they need to be successful – and smart – with their money.
The Link Between Financial Wellness and University Reputation
The connection between student financial wellness and university reputation may not be inherently obvious, but it is nonetheless powerful and far-reaching. When looking at the relationship between the two, there are many ways in which financial wellness can positively or negatively affect an institution’s reputation.
The institution's retention and graduation rates are the most obvious factor in a university's reputation.
Well-known organizations that publish college rankings (i.e., U.S. News) consider factors such as financial resources per student, alumni giving rate, first-year student retention rate, and six-year graduation rate.1 A student's financial well-being has a role in each.
For example, alumni engagement and donations are directly tied to student success. How can these alumni give back to their alma mater if they cannot afford rent or student loans? If these students are struggling financially, it's far less likely that they'll be able to pay their annual tuition.
Debt as a Barrier
In addition, if a student is dealing with unmanageable debt or other financial concerns, they are more likely to struggle in their academics and eventually drop out of school.
Recent studies report that over two-thirds of college dropouts left their university due to financial troubles, and 79% of students postpone graduation for the same reason.2
This all contributes to a university's low graduation rate and poor retention rates, making them an undesirable prospect for potential students and employers alike.
On the flip side, when universities support students’ financial wellness through initiatives, learning resources, and coaching, they can help promote their students' success both inside and outside of the classroom.3
In doing so, these universities have a better chance of improving their reputation, as their students will be in a better financial position post-graduation.
Key Factors That Influence University Reputation Through Financial Wellness
These critical factors surround the link between a comprehensive financial wellness program and a university's standing in the eyes of students, parents, and the broader educational community.
Graduation Rates and Student Loan Debt
Money struggles and financial stress don't only start when a student has finished college.
According to Johns Hopkins University, financial stress can have a significant negative impact on academic performance.4 Improperly handled student loan debt can prevent a student from graduating on time (or even at all). For many universities, providing comprehensive financial services to students can help improve graduation rates.
Colleges of all sizes have started to adopt this mentality into their student services – a prime example being Penn State. The Solokov-Miller Family Financial and Life Skills Center offers various services for students, such as an individual financial coaching program, tailored budgeting plans, debt management solutions, and more.5
By introducing initiatives that can help reduce or eliminate a student's post-college debt burden, universities are encouraging fewer students to abandon their studies due to unaffordable loan repayments.
Alumni Achievements and Financial Support
In addition to helping with graduation rates, reducing student loan debt can also increase the “reach” of potential alumni engagement and donations. Many institutions depend upon alumni contributions to fund improvement projects or provide scholarships for incoming freshmen.
If students aren't left with ridiculous amounts of interest accruing on their loans post-graduation, they become more likely candidates for long-term donations back to their alma mater. With that added funding, even more prospective students have access to the same degree of education in the future.
With increased engagement more likely, as well, these graduates serve as success stories for current students to aspire towards.
Employer Perceptions and Partnerships
A university's reputation speaks volumes about its overall quality as an institution. When universities are viewed positively within communities (by supporting their current and former students), it opens up new avenues that may otherwise have been closed off – for both alumni and the university itself.
For example, when a university takes a proactive approach towards helping students with their degree financial wellness, it displays that they are investing in the future of the school and its students – which employers will take note of.
This future-ready skill set could lead to potential opportunities for both current and former students, such as graduate job postings or internships.
The more employers recognize these universities as positive institutions, the better their reputation becomes for potential recruits – ushering in invaluable exposure and recruitment opportunities going forward.
Strategies for Enhancing Student Financial Wellness
If your university is looking to boost undergraduate financial literacy and well-being, many steps can be taken toward making this goal a reality.
Identifying Areas of Improvement
It's important to first assess where students are currently in terms of their financial literacy. Understanding how knowledgeable students already are can help create a plan of action for the areas that need improvement. This could also include identifying potential services or initiatives that could be beneficial to the student body.
Implementing Financial Literacy Programs
Once the areas requiring support have been identified, implementing specific services is essential. These could range from budgeting and debt-repaying strategies to more complex investment advice or credit-building guidance.
These services will arm students with improved financial skills for their future while simultaneously making the university look proactive in addressing an issue that faces most universities today.
Offering Resources and Support Services
In addition to a comprehensive financial wellness program, universities should consider offering resources specifically tailored to students' needs.
This could involve creating specific scholarships, grants, or loans geared towards financially savvy strategies so that they can pay off their tuition and other associated costs as quickly as possible.
Leveraging Technology and Customizable Platforms
Technology is an incredibly important tool in helping students manage their finances. Some universities offer apps or websites that allow students to create custom budgeting systems and view additional resources.
Online platforms like iGrad, which offers a customizable and interactive platform, are the perfect way to reach out and help students of all backgrounds.
Measuring the Impact on Reputation
Ongoing assessments and data-driven decision-making are critical for the long-term success of any college financial wellness program.
By regularly evaluating the efficacy of programs and services, universities can ensure that their efforts positively impact student financial literacy and ultimately improve your university's reputation.
Using digital tools and metrics, institutions can gain valuable insight into the state of their financial wellness programming. This is done by monitoring trends in unit retention rates, graduation rates, employer perceptions, and alumni engagement.
Additionally, feedback from students is vital for gauging the success or failure of initiatives offered by their respective schools, as it’ll provide a ground-level playing field with which to make decisions moving forward.
The Role of Financial Wellness in a Competitive Higher Education Landscape
Student financial wellness is gaining increasing importance among universities worldwide – both due to its direct impact on students' lives and its contribution to the larger goal of enhancing an institution’s reputation.
It's no longer enough for universities simply to impart textbook knowledge – they must also equip their students with the skills they need for lifelong fiscal security and stability.
For universities to be viewed as top institutions and attract the best students, an effective student financial wellness strategy is essential. This goes far beyond offering basic budgeting advice – institutions need a thorough plan that covers everything students will need to achieve holistic financial wellness.
Universities can see lasting and significant improvements in their reputation by helping to arm students with valuable financial literacy skills needed for success both on campus and after graduation. For universities who wish to remain competitive, this is an invaluable investment toward the future. To learn more about how iGrad can help, request a demo.
1 - https://www.usnews.com/education/best-colleges/articles/how-us-news-calculated-the-rankings
2 - https://www.thinkimpact.com/college-dropout-rates/
3 - https://digitalcommons.wku.edu/diss/140/
4 - https://muse.jhu.edu/article/715315
5 - https://financialliteracy.psu.edu/
