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Welcome to What Students Really Think of Financial Literacy. Presented by: Gina Lucente-Cole, Financial Education Consultant gcole@asa.org. Agenda. Background and Methodology Key Findings Conclusions and Implications Questions. 2. Background.

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Presentation Transcript
agenda
Agenda

Background and Methodology

Key Findings

Conclusions and Implications

Questions

2

background
Background

American Student Assistance believes Education Debt Management is a way to empower students with a continuum of information and learning that will positively impact student loan payback and build a foundation for students’ lifelong financial wellness.

Research was conducted so we can be more assured that we have both detailed information and responsive programs to meet the needs of our various constituents.

3

research
Research
  • Research with undergraduates and graduates of 4-year public and private universities to:
    • Gauge perspectives and knowledge of financial literacy.
    • Explore attitudes toward and experience with debt and financial education.
    • Understand what is important to the student experience, particularly regarding education debt.
methodology and demographics
Methodology and Demographics

10 minute web survey

900 undergraduate and graduate borrowers from ASA’s portfolio

Half of the surveys went to in-school or grace status—half went to in repayment status

15 minute web survey

1850 graduates

Half of respondents with outstanding college debt—half without outstanding college debt

50% ages 21–25, 25% ages 26–30, 25% ages 31–37

Anecdotal information from student advisory group and student focus groups

5

are you aware of how much student loan debt you have

Yes, I know the general amount-within a few thousand dollars

Yes, I know the exact amount.

No, I have no idea how much.

I do not have student loans

Are you aware of how much student loan debt you have?

0%

9%

55%

36%

do you have any other debt besides student loans
Do you have any other debt besides student loans?

Credit Card Auto Loan None Mortgage Other Home Equity

paying for college
Paying for College
  • Two-thirds (65%) of respondents took out some form of student loan to pay for their college education.
  • Note that 19% of respondents who were responsible for paying their student loans have actually paid off these loans since taking them (included within the 65% who had taken out some form of loan to pay for college).

NO = 35%

YES = 65%

i chose my college based on what i my family could afford ratings on a 5 point agreement scale

Total

With Student Loans Without Student Loans

Public Private

Student Loan Status

College/University Type

Agree Strongly/Somewhat Neutral Disagree Somewhat/Strongly

“I chose my college based on what I/my family could afford”% Ratings on a 5-point Agreement Scale

30%

37%

33%

40%

46%

29%

28%

27%

27%

25%

41%

36%

39%

29%

33%

slide12

“I or my family borrowed what I needed in order to go to the college of my choice”% Ratings of 5 and 4, Combined, on a 5-point Agreement ScaleBase: Those with outstanding student loans

Total

21-25

26-30

31.37

White

Non-White

Female

Male

Public

Private

Age

Race

Gender

School Type

what do you know about your student loans please check all that apply
What do you know about your student loans? Please check all that apply.
  • The number of student loans I have
  • The loan balance(s)
  • The total amount(s) of my monthly payment(s)
  • The due date(s) of my monthly payment(s)
  • The name(s) of my servicer(s) (the company I send my payments to)
  • The name(s) of my lender(s)
  • The interest rate(s)
  • The type of repayment plan I am using
  • What will happen if I miss one or more payments
  • How long it will take to pay off my student loans(s) at my current rate of payment
  • I have some knowledge about my student loan(s) but would like to know more
  • I need to know a lot more about my student loan(s)
slide18

“Until I had to start paying back my loan, I didn’t think about how I was going to afford it”

Base: Those with Student Loans

Total

21-25

26-30

31-37

White

Non-White

Public

Private

49%

21%

30%

48%

19%

33%

Age

45%

23%

32%

56%

22%

22%

46%

22%

32%

Race

18%

26%

56%

49%

20%

31%

School Type

48%

21%

31%

Agree Strongly/Somewhat Neutral Disagree Somewhat/Strongly

slide19

“Student loan debt has directly impacted the choices I’ve had to make (job, living, etc.)”

Base: Those with Student Loans

Total

21-25

26-30

31-37

White

Non-White

Public

Private

54%

22%

24%

59%

20%

21%

Age

50%

25%

25%

49%

23%

28%

55%

20%

25%

Race

26%

23%

51%

53%

21%

26%

School Type

56%

22%

22%

Agree Strongly/Somewhat Neutral Disagree Somewhat/Strongly

success of financial literacy program
Success of Financial Literacy Program

Suggests that Fin Lit programs contribute to more informed grads

Those without loans are most confident in all tasks

Weaknesses: Future planning, loan shopping, budgets, fraud/theft

24

*Base: Those who had financial literacy or wellness programs offered to them in college.

slide27

“I’d like to save more, but paying back my student loan takes a lot every month”% Ratings on a 5-Point Agreement ScaleBase: Those with Student Loans; n=923

10%

8%

14%

11%

16%

16%

20%

17%

21%

21%

14%

14%

19%

17%

14%

14%

18%

17%

19%

22%

69%

66%

78%

76%

70%

70%

60%

69%

63%

57%

21-25 26-30 31-37

<$50K $50K-$75K $75K-$100K $100K+

Public Private

Total

Age

Household Income

School Type

Agree Strongly/Somewhat Neutral Disagree Somewhat/Strongly

attitudes toward debt and financial education
Attitudes Toward Debt andFinancial Education

Those with loans recognize:

Benefits of financial counseling from college before graduating.

Difficulties of managing money to pay loan.

Attitudes toward Debt and Financial Education

% Rating 5 and 4 on 5-point Agreement Scale

*Asked only of those with student loans.

29

participation in and value of financial literacy program
Participation in and Value of Financial Literacy Program (%)
  • Participation higher among those with student loans
  • Participation seems to enhance likelihood to donate to their college
slide31
Which financial topics do you think are the most important for a student to know? Please select three.
  • Budgeting
  • Savings and banking
  • Credit scores and reports
  • Managing credit card debt
  • Credit cards and consumer fraud
  • Financing higher education
  • Making large purchases—such as a home or an automobile
  • Renting vs. owning a home
  • Insurance and taxes
  • Investing/long-term planning
slide34
Appeal of Having College/University Offer Programs or Courses on Financial Literacy or Wellness to Graduates

Not at all appealing 3%

Not very appealing 7%

Very appealing 32%

Neutral 23%

Somewhat appealing 35%

learnings
Learnings

Those who wish to attend a particular college find the means to do so.

The majority of students and families borrow what they need to go to their college of choice, rather than a college that is “affordable” – 64%.

Students recognize that they need financial literacy earlier.

The majority of borrowers believe the school has an obligation to provide basic financial literacy tools/resources before graduation – 74%.

Early support is important because less than one third of borrowers understand their repayment options after they graduate – 31%.

Lack of understanding these options leads to repayment problems – 41% of borrowers over the last 5 years were delinquent and/or defaulted.

36

learnings1
Learnings

Those with loans…

Say they need to be more careful than others about managing their money – 71%.

Are concerned about the impact of loans on future – 54%.

Didn’t think about how to pay back their student loans until time of repayment – 49%.

Those without loans are more accomplished than those with loans on:

Savings/retirement planning.

Credit card use.

Role of credit.

37

learnings2
Learnings

More people with student loans took financial literacy programs than those without (if offered), but those without loans have found them more successful in helping them than those with loans (65% versus 49%).

The weakest areas in financial literacy/wellness:

Budgeting.

Shopping for personal loans.

Protection from identity theft and fraud.

Development of saving/retirement plans.

Financial literacy helps empower alumni to make adult choices and to be independent.

Alumni recognize that “financial knowledge is power,” but they are not confident translating this from basic tasks (e.g., checking account management, simple savings accounts, loan repayment mandates, credit card use) to more complicated life management skills (e.g., budgeting, shopping for loans, investing, protection from identity theft and fraud).

38

implications
Implications

Value in encouraging financial literacy in the college curriculum

Having college-provided courses/programs available is appealing to 67% of respondents

Donors find this idea slightly more appealing than non-donors.

Those with student loans are no different than those without.

There is room for more robust financial skills

The messages about paying off their student loans and about reasonable use of credit cards have come through.

They know about day-to-day tasks (paying down loans, credit, maintaining checking accounts).

BUT Insecure about planning for their future.

39

implications1
Implications
  • Financial literacy could be an avenue to reach out to alumni
    • The idea of offering financial literacy programs to graduates of colleges is quite appealing – 67%.
    • Could be an opportunity to partner with Alumni Relations and/or the Development Office on campus.
  • Consider college “branded” financial wellness curriculum provided by ASA
    • Online resources were chosen most often as the most preferred way to learn about financial literacy – 60%, while school-sponsored workshops in person with an instructor were chosen as the next preferred mode – 47%.