7 Apr, 2015
Survey: U.S. College Student Loan Amounts, Financial Stress Levels on the Rise
WASHINGTON–(BUSINESS WIRE)–April 02, 2015 – The third-year results of Money Matters on Campus, a survey of 43,000 college students across the U.S., show that students are taking out more and larger student loans, yet report feeling less prepared to manage their money than any other aspect of college life. Further, though students reported a higher level of financial experience than in previous years of this study, they did not report increased levels of responsible financial behavior.
For three years, EverFi and Higher One have conducted extensive research into the financial attitudes, knowledge and behaviors of college students. This year, approximately 43,000 students from two- and four-year institutions were surveyed on issues related to banking, savings, credit cards and school loans, as well as an assessed on financial knowledge. This year’s data uncovered alarming trends in the levels of stress students face in regards to student loans and money management.
Only 58 percent of students from four-year institutions said they were prepared to manage their money, while 12 percent of respondents said they never check their bank balances because they are too nervous. Additionally, 16 percent of student respondents lived paycheck to paycheck and yet only three-quarters stopped spending when their bank account balances were low.
“Students reported feeling least prepared for the financial aspects of college, even as student loan debts continue to grow at an alarming rate,” said Mary Johnson, vice president of financial literacy and student aid policy at Higher One. “The results suggest we must start financial literacy education before students enter college and continue to teach its importance throughout a student’s college career—it is imperative that students know the impact student loan debt can have later in life.”
Related to financial knowledge, students who reported having a checking account, especially an individual account, were more prepared to make healthy financial decisions than those who were unbanked. This was especially true among the community college sample, where banked students answered 2.54 (out of six) financial knowledge questions correctly compared to 1.97 (out of six) for unbanked students. This strongly suggests increased experience with “transactional” bank accounts early on would be of great benefit to promoting financial self-efficacy while in college.
Surprisingly, results showed that even as young adults are increasingly connected to digital devices, only 14 percent of students reported having used any form of money management app to keep track of finances.
“Money Matters on Campus sheds light on some startling trends that underscore the need to provide highly connected young adults with education and resources that will help them navigate the complex financial world we live in,” said Tom Davidson, founder and CEO of EverFi. “Financial education should focus on providing personalized, interactive, mobile-friendly learning experiences that allow students to practice good financial decision-making in a safe environment.”
In line with results from last year’s study, students who took a financial literacy course in high school were 10 percentage points more likely to report being prepared to manage money in college than those who did not report any previous financial literacy education.
“We know first-hand that students are never too young to start developing these essential real-world skills and capabilities,” said Nan Morrison, president and CEO of the Council for Economic Education. “If opportunity and prosperity are to remain hallmarks of the American way of life, we must make sure our young people are anchored in a sound understanding of the economic and financial landscape they face in the 21st century.”
To expand the breadth of the survey’s insights this year, a sample of approximately 1,000 community college students was also compiled. Community college students reported fewer (44 percent versus 63 percent) and smaller student loan balances than their four-year counterparts. Additionally, the students in the community college sample were more likely to have multiple credit cards/higher outstanding balances and more likely to worry about financial issues than students at four-year institutions.
A full copy of Money Matters on Campus, as well as an infographic summarizing this year’s key findings, can be downloaded at www.moneymattersoncampus.org.
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