Requirements for financial literacy education
Kris Alban, Vice President of iGrad
What trends related to financial literacy are emerging?
Financial literacy will likely become a mandatory initiative for colleges in the near future. We expect the next higher ed reauthorization to require financial literacy initiatives for student loan borrowers. Many students taking out loans right now don’t understand enough about what they’re getting into. They often borrow amounts that far exceed the earning potential for their chosen field of study.
When should financial literacy education begin?
Colleges should begin financial literacy initiatives as early as possible, during the entrance counseling process and in orientation. By introducing this at an early stage, students will understand that it is an important topic. Introduce it early, and reinforce it often.
How does one choose a financial literacy solution?
There is no one-size-fits-all solution. Many initiatives are not effective because they offer little more than an information link on a student portal. We see the most success from schools that involve multiple administrative departments and weave financial literacy lessons into various administrative processes. Whatever form the financial literacy program takes, it must be interactive. Financial literacy is 10 percent knowledge and 90 percent state of mind; many students know all of the information, but still make poor decisions. Presenting the lesson in an interactive way forces the student to apply the information to their own situation. Research tells us that this interaction is what leads to the behavior change we need for financial literacy education to be effective.
For more information, visit www.Schools.iGrad.com.