Improving Student Financial Literacy

5 min read

Julia Sachs

For American students, it isn’t uncommon to enter university with zero financial literacy background as few K-12 schools in the United States require it in their curriculum.


With the student debt crisis hitting an all time high in the United States, reaching a total valuation of over $1.7 Trillion USD, the conversation on how to encourage student financial literacy is long overdue. For American students, it isn’t uncommon to enter university with zero financial literacy background as few K-12 schools in the United States require it in their curriculum. For international students who may be educated in financial literacy in their home country, navigating the US credit system may be a foreign concept that leaves them vulnerable to predatory lending practices. Schools and universities can work together to address student financial literacy on campus, and make student finances a priority when navigating advertising at and around campus events.  

Why improve student financial literacy?

Improving student financial literacy has many benefits outside of simply helping students avoid ruining their credit scores. Proper financial literacy helps avoid multi-generational financial issues because one generation of financially literate people tend to pass their knowledge onto the next. This is why many will commonly refer to financial literacy as a privilege reserved for the wealthy, because having a family that understands the topic often comes from families that, historically, have money to begin with. Proactively addressing financial literacy reduces the stigma around conversations about money and encourages individuals to help one another by discussing money regularly and without hesitation. 

A 2021 study titled “Money Matters on Campus” by AIG Retirement found that 6 in 10 students have either already taken out or intend to take out loans to cover their tuition and student fees, but that only 65% of those students intend to pay the loans off on time or at all. The study was conducted among 30,000 students across 440 college institutions throughout 45 states in the United States, and provided strong insight into the financial literacy needs of students on college campuses. 

If anything, the survey proved that students either don’t understand the risks of taking on loans early on in their lives, or don’t foresee the consequences as having an impact on their lives later on. As in, students may understand the risks of taking on a loan with no intention to pay it down within the agreed terms but don’t believe that their credit will ever be of use, or that financial goals are even within the realm of possibility for their future. Students may understand that risking their credit could impact their lives negatively later on, but lack the financial literacy skills to understand how meeting their own goals—like owning a home or a car—are within the realm of possibility.




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On Campus

In college, financial literacy classes and programs encourage good life skills by teaching students simple concepts like budgeting or investing. Once they enter the workforce, students are often lost on how to navigate foreign topics like retirement funds, calculating annual raises, investing in the stock market and even taking on a credit card. When students learn about these concepts in school, they’re able to gain more financial independence when they’re prepared to take on more financial responsibility after college. Colleges and Universities can help prepare their students by requiring or, at the very least, offering and encouraging financial literacy courses throughout the entirety of a student’s college career. 

Like other skills such as mathematics or reading, financial literacy is a skill that must be compounded over time for students to get the most out of their education. Just as you wouldn’t introduce calculus to a student that has no prior experience in mathematics, or ask a kindergarten level reader to take on Hamlet, you shouldn’t expect students to understand complicated financial literacy topics early on in their financial literacy education. 

Financial literacy is a skill that must be formed over time. Start slowly by introducing basic concepts in an introductory course and advance students slowly, even if the concepts are all packed into one semester. Realize that many students may be starting their financial literacy education from the very bottom, so don’t expect students to grasp more complicated topics right away. Just like logic and reading, financial literacy should be looked at as a necessary life skill in helping students succeed after graduation.

At the very least, encouraging students to read guides on financial literacy can pique their interest in the topic to encourage them to learn more in their free time. Guides like this one offer basic information on budgeting and financial literacy concepts, helping students get a basic understanding of how to navigate money in their own lives. 

After Graduation

Beyond financial literacy, colleges and Universities can encourage an understanding of the risks around going into debt. Financial planning services on campus can spend some time discussing with their students the risks of going into debt, as well as the importance of having a plan to pay off debt when the time comes. For international students that may be navigating the US credit and loan system for the first time, this knowledge and understanding is particularly important. 

Predatory lending services such as credit card companies and major banks often look at students with hungry eyes, knowing that many are in desperate financial need with little other options beyond loans and credit cards. Colleges and Universities absolutely have a moral obligation to, at the very least, educate young consumers on the risks of taking on debt and credit lines at a young age if they’re going to allow these lenders to advertise on campus. 

The benefits of financial literacy are far reaching and can do more than just give students the fundamental knowledge that they need to do things like take out a loan or save for their future. Having a good understanding of financial concepts can help them do things like save for a home, a family, or even set their future children up for success in their own studies. Financial literacy gives students more confidence, and can help them make better financial decisions later in life. 

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