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Presented by: Gina Lucente-Cole, Financial Education Consultant gcole@asa.org

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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Presented by: Gina Lucente-Cole, Financial Education Consultant gcole@asa.org

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  1. Welcome toWhat Students Really Think of Financial Literacy Presented by: Gina Lucente-Cole, Financial Education Consultantgcole@asa.org

  2. Agenda Background and Methodology Key Findings Conclusions and Implications Questions 2

  3. 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

  4. 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.

  5. 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

  6. Debt Awareness

  7. 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%

  8. Do you have any other debt besides student loans? Credit Card Auto Loan None Mortgage Other Home Equity

  9. Paying for College and College Choice

  10. 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%

  11. 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%

  12. “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

  13. Student Loan Knowledge

  14. 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)

  15. What do you know about your student loans?

  16. What types of information about your student loans would/do you find helpful?

  17. Attitudes Toward and Experience with Debt and Financial Education

  18. “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

  19. “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

  20. Sources of Information

  21. How do you get information about financial matters in general?

  22. Whom do you rely on for advice about paying for college in general?

  23. Self-Grading of Financial Literacy

  24. 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.

  25. Financial Situation

  26. Financial Burden: Which Best Describes You? (%)

  27. “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

  28. Financial Literacy Education

  29. 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

  30. 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

  31. 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

  32. In what way would you prefer to learn about financial literacy topics?

  33. 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%

  34. Conclusions and Implications

  35. 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

  36. 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

  37. 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

  38. 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

  39. 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%.

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