The positive impact of financial literacy programs has been proven time and time again, with studies showing that strong financial literacy helps to increase graduation rates, reduce financial stress, and more.1 Yet so many college-age adults still struggle to make responsible financial decisions.
College students today need more than just lecture-style classes on financial topics – they need comprehensive education in order to understand their finances.
So why are some financial literacy programs failing miserably at accomplishing this?
In this article, we will explore what causes college financial literacy programs to fall short of their goals and analyze ways that universities can adjust their approach to help students achieve long-term financial stability.
1. Lack of Engagement
One of the main reasons financial literacy programs fail is due to a lack of engagement from college students.
For many, money management topics are seen as boring or irrelevant to their lives, and students may feel too overwhelmed by the amount of information being presented in class.
Because of this, they may tune out lectures instead of actively participating in class activities and discussions that would help bring the material home better. This means that these classes become nothing more than exercises in memorizing facts rather than having any meaningful effect on real-world financial decisions.
One potential solution? Gamification.
A recent study from the University of Colorado - Denver found that even in their adult years, college students are able to acquire skills and retain content better when educators incorporated games and play into the curriculum.2
2. Lack of Personalization
Another factor in the failure of college financial literacy programs is that these classes are often too theoretical for students to apply to their own experiences.
Without a personalized approach, students may be overwhelmed by the sheer amount of information they need to know, without understanding the practical applications it can have on their lives.
One way universities could improve financial literacy instruction is by providing more services tailored specifically for college students.
One-on-one counseling has become more commonplace across colleges nationwide, but the focus is usually on connecting the student with general resources rather than direct, relevant financial advice.
Creating open discussion sessions about each student's finances – whether they need help with entrance loan counseling, smart borrowing, or even investing – can help students apply what they’ve learned according to their own unique situations.
Not every student thrives in the same environment – so why not offer online instruction?
The EDUCAUSE Student Technology Use study found that 73% of college students currently use their phones to access and manage their money,3 so the learning environment that works best for them may be online, mobile-friendly education courses.
3. Inadequate Follow-Up & Real-World Application
Finally, one of the main problems with college financial literacy programs is that often, there isn’t enough follow-up or support after the class.
Students are struggling to manage their finances post-college. According to the Education Data Initiative, over a million student loans enter default each year, with 11% of new graduates defaulting in the first 12 months of repayment.4
If universities are serious about educating students on money matters (as well as achieving lower student loan default rates and delinquency rates), then they must also commit to supporting these young adults beyond the classroom.
Students need tangible examples of how to financially navigate life after graduation, and they can benefit from ongoing access to financial counseling and educational resources when they get out in the real world.
Additionally, students also need to be taught a "money mindset." Financial literacy is not just about reading spreadsheets and balance sheets, but it’s also about setting and reaching personal financial goals.
Coaching that emphasizes thinking about their money in the long term – such as budgeting effectively, planning for retirement, and tackling debt in today’s competitive economy – can give students a sense of control and long-term success.
How to Reach College Students
It's clear that traditional college financial literacy programs are failing college students and are in desperate need of improvement. To ensure student success, universities need to show that financial literacy is useful, engaging, and accessible.
That’s why iGrad has created its Financial Wellness platform for colleges and universities across the country – a comprehensive program tailored towards student needs that provides real-world application of personal finance concepts.
Complete with tools like online courses on cash management, budgeting, credit scores, and more, iGrad's Financial Wellness platform gives students the resources to make smart financial decisions and become successful in managing their money today and in the future.
Contact iGrad for a demo today, and give your university's students the knowledge they need to achieve financial success.
1 - https://digitalcommons.wku.edu/diss/140/
2 - https://www.sciencedaily.com/releases/2021/06/210614185602.htm
3 - https://library.educause.edu/topics/student-success/student-technology-use
4 - https://educationdata.org/student-loan-default-rate