New Iontuition Report Compares the Top Trends in College Financial Literacy Programs
Posted By Terri Williams on February 29, 2016 at 11:00 am
While there’s little debate that a college degree generally leads to a improved quality of life, the various costs associated with obtaining that piece of paper can also be life-changing – and not for the better. Student loan debt has topped the $1.3 trillion mark, and this generation of college students and graduates is inundated with credit card offers and seduced by 24/7 marketing campaigns that promote instant gratification on a delayed payment plan.
Without an understanding of the effects of their financial decisions, many college students will be saddled with unnecessary debt for years, and may ruin their credit in the process.
Some colleges place a premium on providing financial literacy programs for students, but these efforts are not consistent across the board. The iontuition 2016 Financial Literacy Trends on Campus report contains survey results of financial aid specialists, managers, and directors at more than 50 proprietary, public and private schools, along with the responses of a handful of college deans and presidents. Below are selected excerpts from the report on college financial literacy programs.
Importance of financial literacy
95% of respondents believe that the financial aid office has a responsibility to educate students about financial literacy.
However, when asked about the priority their school places on financial literacy in 2016, their responses were as follows:
|High priority||Somewhat of a priority||Low priority|
It is encouraging that schools plan to dedicate financial and human resources to financial literacy:
|73%||Either have or plan to have a dedicated person or team overseeing their financial literacy program|
|48%||Already do or plan to outsource their financial literacy program|
|44%||Already do or plan to assign budget dollars to their financial literacy program|
However, most of the schools have plenty of room for implementing or improving their program:
|19.30%||Have a strong financial literacy program|
|55.26%||Have a program, but it could be improved|
|15.79%||Don’t have a program, but plan on implementing one|
|4.39%||Don’t have a program, and don’t plan on implementing one|
Differences between top performing vs. average performing schools
Top performing schools self-identify as having a strong financial program. Regarding student loan default rates, compare their stats to those of average performing schools:
|Self-reported student loan default rates||Top performing schools||Average performing schools|
|Less than 5%||13.64%||22.83%|
|5.0% – 10%||45.45%||22.83%|
|10.1% – 15%||13.64%||18.48%|
|15.1% – 30%||27.27%||33.70%|
|Greater than 30%||0%||2.17%|
The top performing schools also place a higher priority on financial literacy, are more likely to assign budget dollars, and have a dedicated person or team and/or outsource the financial literacy program.
In addition, top performing schools are more likely to use various channels to communicate with students:
|Methods of communicating||Top performing schools||Average performing schools|
|New student orientation||54.55%||57.61%|
The top challenges facing schools are as follows:
|Top performing schools||Average performing schools|
|Better awareness of the program among students||22.73%||17.39%|
|More collaboration with faculty||9.09%||5.43%|
|Resources and buy-in to implement a program||4.55%||10.87%|
|Better financial literacy tools||4.55%||9.78%|
Iontuition is a subsidiary of Ceannate Corp, and GoodCall asked Balaji “Raj” Rajan, CEO of Ceannate Corp, to provide commentary on the report.
Rajan says the report’s finding are encouraging, but there is always room for improvement in financial literacy education. He sees a lot of forward momentum, especially since the respondents agree overwhelmingly that it is their responsibility to provide financial education to their students, and they’re dedicating money and manpower to this end. “However, student engagement is a challenge and many borrowers lack the knowledge needed to be successful in repayment, so it’s time to re-focus our efforts on making sure the resources provided truly resonate with students,” says Rajan.
Technology could certainly improve the progress of a school’s financial literacy program. Since today’s students are digital natives, Rajan believes that schools should focus on this avenue to reach students. “Technology is a low-cost way to connect financial aid offices with students both during and after school for live counseling support, loan monitoring, and repayment optimization.”
The report found a definite link between financial literacy and student loan default rates, and it also found that financial aid professionals tend to communicate less effectively with students after graduation. “But with the range of communication technologies and techniques available in the marketplace today, financial aid offices shouldn’t let time or distance stop them from communicating effectively with their former students,” says Rajan.
He believes that it is important for colleges and the private sector to continue collaborating and improving the financial literacy process. “A one-size-fits-all approach just doesn’t have the impact needed to engage today’s student, and it doesn’t need to be that way; with creativity and flexible technologies, information can be customized to meet the evolving needs of student borrowers.”