Survey of college students shows need for financial literacy requirement

Stefanie Botelho's picture
Friday, April 11, 2014

The second-year results of Money Matters on Campus, a survey of 65,000 first-year college students across the U.S., show that policy makers, practitioners and educators should encourage more and differentiated financial literacy education components in K-12 environments. Further, results indicate that colleges and universities should provide financial education early on in the college experience to maximize the likelihood that students will make sound financial decisions and increase their chance of degree completion.

The study—conducted by EverFi and sponsored by Higher One—surveyed students on banking, savings, credit cards and school loans, as well as a series of questions designed to assess students’ financial knowledge. Researchers found significant differences in the financial capabilities of students based on age, race, gender and institution type—as well as data that supports mandatory financial literacy education in high school, highlighting the strong connection between knowledge, attitudes and behaviors in this area.

In fact, findings show that students who received financial literacy education in high school scored significantly higher than their peers on financial knowledge questions and are significantly more responsible when it comes to money.

Further, while no group of students scored particularly well on the knowledge-based questions, with students on average getting 2.3 out of six questions correct, financial knowledge significantly increased with responsible fiscal attitudes and behaviors, age, high school financial literacy education experience and socio-economic status. And while males scored higher on the financial knowledge questions, females exhibited more responsible fiscal behaviors overall.

“These results show the need to start financial literacy education in the K-12 setting and for institutions to provide educational programs early on in a student’s college experience that take into account attitudinal, behavioral and demographic differences,” said Mary Johnson, Director of Financial Literacy and Student Aid Policy at Higher One. “It’s critical that young adults receive a sound financial education as they make long-lasting decisions about college and how to finance their education.”

Student responses to this year’s Money Matters on Campus survey support last year’s results that several predictive actions and attitudes indicate positive or negative outcomes on a student’s fiscal behaviors. For instance, having a checking account was again found to significantly predict fiscal behaviors such as budgeting, saving and managing debt. Additionally, this research shows that as credit card debt and/or school loan debt increased, students were more likely to demonstrate unhealthy attitudes and behaviors towards spending, saving and debt.

“Money Matters on Campus outlines implications for practitioners and investigators in the financial literacy space to help turn these findings into actionable plans and positive outcomes,” said Daniel Zapp, Ph.D., Director of Research at EverFi. “The replication of data across two years of this study provides strong evidence to support the recommendations that financial literacy efforts on the post-secondary level need to be augmented with behavioral components to increase their impact on real world decision-making.”

Traditional financial literacy education focuses primarily on providing simple financial knowledge and reactionary tools, without accounting for a student’s individual attitudes, motivation and behaviors. Money Matters on Campus details the need for a new, proactive approach to financial literacy education based on identified existing attitudes and behaviors and provides data that can be used to create and implement such approaches.

A full copy of Money Matters on Campus, as well as an infographic summarizing the report’s key findings, can be downloaded at www.moneymattersoncampus.org.

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About Higher One

Higher One Holdings, Inc. (NYSE: ONE) partners with colleges and universities to lower their administrative costs and to improve graduation rates. We provide a broad array of payment, refund disbursement and data analytics and management tools to institutions that help them save money and enhance institutional effectiveness. And for students, we offer financial literacy programs and convenient, flexible and affordable transaction options to help them manage their finances. Higher One is a leader in higher education, supporting more than 1,900 schools and 13 million enrolled students. More information about Higher One can be found at www.higherone.com.

About EverFi, Inc.

EverFi, Inc., is the leading education technology company focused on
teaching, assessing, and certifying K-12 and college students in the critical skills they need for life. The company is powering a national movement in 50 states that enables students to learn using the latest technology, including rich media, 3D gaming, simulations, social networking, and virtual worlds. EverFi’s AlcoholEdu® for College is one of the few education technology programs proven to reduce student alcohol use and negative consequences, as demonstrated through independently conducted, empirical research funded by the National Institutes of Health. EverFi has reached more than 7 million students with its online learning platforms. Learn more at www.everfi.com.

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Kyle Gunnels

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