As student debt load grows, its doubled since 2007, most universities aren’t offering sufficient financial education programs to help students understand this financial burden, according to a new report whose authors include two Kansas State University professors.
“Financial issues are one of the top reasons, if not the No. 1 reason, that students drop out of college,” said Sonya Britt, associate professor of family studies and human services and program director of personal financial planning at the university’s College of Human Ecology. “Thirty percent of students who have student loans drop out of college, which is a pretty alarming percentage.”
Britt and Dottie Durband, the new director of Kansas State University’s School of Family Studies and Human Services, are among the co-authors of the white paper “Financial Literacy in Higher Education: The Most Successful Models and Methods for Gaining Traction.” The purpose of the paper was to identify some of the programs universities might be able to use to integrate financial education into their campuses. The paper also identified a need for financial education at universities, noting that many universities do not have a program.
“Most of the students who enter college don’t get financial literacy courses when they’re in high school, so many students aren’t familiar with basic money management skills such as making payments and the awareness of how fast credit card debt accumulates,” Britt said. “There’s a lot of need but not a lot of resources for college students currently.”
At Kansas State University, Powercat Financial Counseling provides free information and education to students, as well as access to the financial literacy website Salt. The university’s also offers a personal financial planning program focuses on research and education in the areas of financial counseling and financial therapy.
The report outlines a variety of models of successful programs in higher education including, interactive online programs, classroom-based programs, game-based education, event-based programs and individual counseling.
Different programs work for different institutions, but no matter which you choose, Britt says to start small.
“Universities could offer one-time events or monthly events where they bring in professionals that could give pro bono advice to students,” Britt said. “The university also could promote a number of free resources already available to students.”
The Consumer Financial Protection Bureau estimates student loan debt is about $1 trillion, surpassing credit card debt and comprising the second largest form of consumer debt behind mortgages. For students entering college, Britt suggests doing your homework before borrowing.
“Use the U.S. Bureau of Labor Statistics website to determine the salary of your desired job after college,” Britt said. “Then use the online calculator to estimate what your monthly payments will be based on the amount of student loans borrowed. This will give you a better idea of how much those students loans will cost you in the long run.”
Story from Kansas State University / Lindsey Elliott