Now more than ever, college students are concerned about the financial impact of getting a higher education. According to Trellis’ Fall 2019 Student Financial Wellness Survey of over 25,000 college students, three in every five students worry about having enough money to pay for their education, and around a quarter of them don’t know how they’ll pay for their next semester of college—let alone three or four more years.
But university administrators and staff can create an environment that calms students’ anxieties about paying for college and prepares them for their financial responsibilities. Here are a few things senior administrators and other support staff can do to teach students the skills they need to manage their personal finances and student loan obligations both throughout college and after graduation.
Make financial literacy education mandatory for college students
First-year academic advising sessions can help students plan their academic calendar for the next two to four years. In addition, first-year mandatory financial literacy education can help them make a financial plan to pay for their education and get to know their college’s financial resources.
Clear and timely financial literacy education, especially when provided by peer educators, is shown to be highly effective at teaching college students essential personal finance skills. That’s why it’s recommended as a best practice by the U.S. Financial Literacy and Education Commission for higher education institutions.
Support college students’ financial wellness in emergencies
Student financial wellness is a key factor in successful college completion. When faced with a $500 emergency expense, many students wouldn’t be able to cover the cost out of pocket. This situation can lead students to borrow more loans to pay for school. Worse, they may have to choose between paying tuition to stay enrolled or stopping out to use their money to cover an emergency expense.
Keeping students on track means creating accessible emergency funding opportunities for moments like these. It may not be enough that students understand the personal financial obligations of their education. Emergency funding can help to reassure students that their plan to finish school won’t be derailed because of uncontrollable circumstances.
Teach college students how to save
Showing students how to weather financial emergencies can be used in combination with direct aid, and faculty and staff can use their positions to create environments that encourage students to get in the habit of saving.
One such program at Austin Community College aims to help students build their savings for the future. After opening a savings account in the student’s name, the college contributes small amounts of cash to the student’s account when he or she reaches certain goals, such as meeting with a financial coach or setting up automatic savings deposits.
Show the connection between major, graduation, and student loan repayment
Making sure students understand the connection between their college major and their potential first job is critical, as many college students see higher education as a steppingstone in their path to better career outcomes.
The relationship between major and potential first-year career earnings for graduates with similar majors can inform students about the implications of borrowing student loans.
According to a report from the Brookings Institute, some majors can expect to use a smaller percentage of their first-year career earnings to pay back student loans, such as engineering and computer science majors, compared to other majors with lower first-year career earnings, such as drama and fine arts majors.
Guide students with career outlook and student loan repayment in mind
Career planning sessions allow faculty and staff to demonstrate to students the career prospects and student loan repayment dynamics of their major choice.
Sharing resources like the Occupational Outlook Handbook and College Scorecard with students can offer insights on potential career earnings, education requirements for certain jobs, and student loan repayment outlook by major.
Keep in mind, career and academic planning sessions may need to account for the sheer number of options available to students. With more than tens of thousands of degree options at colleges nationwide, students have choice overload. If the result of a planning session is that a student is deterred from their initially chosen major, a critical next step for advisors may be to guide students toward a better-fit major.
More structure early on through academic, financial, and career planning sessions can be a remedy to this issue. Instead of taking a variety of classes that may not be counted toward their credential, students can benefit from a set path that doesn’t increase their tuition bill unnecessarily. Paired with involved, empathetic leadership, these approaches can help cultivate an environment that instills the importance of financial wellness in college students. From managing personal finances to understanding the obligations that come with their student loans, students can succeed throughout college and post-graduation when they get to know the essentials of financial literacy early on.