About half (48 percent) of Millennials still receive financial help from their parents, as do 29 percent of Generation Xers, according to a new survey from Varo Money. If today’s college freshmen plan to continue this trend, they may not be motivated to build their own financial knowledge and start developing wise financial habits.
But learning to manage one’s own finances is an important part of becoming an educated adult—and helping to build and maintain a thriving society. U.S. residents rank 14th globally when it comes to financial literacy, and only 57 percent passed a basic financial literacy test, research shows. And as more students leave college with student debt, it’s increasingly important for them to understand their responsibilities for repayment. Even if they need help from time to time, developing financial knowledge while in college is important.
Here are three ways institutions are motivating incoming students to learn about finances.
- Make It a Game
At Champlain College in Burlington, Vermont, every student is required to participate in financial education programs and events throughout their college careers. Those experiences include simulation exercises such as the “Game of Life,” in which each student is assigned a salary based on his or her major and turned loose in a room full of options—booths that offer apartments, homes, groceries, insurance, transportation and other life necessities. After students have made decisions about the amounts they will spend on each necessity, they must go to the final station, where they “pay” taxes, student loan payments and contribute to a retirement plan—which requires many to rethink their choices.
“We just don’t think we’re doing our job if a student leaves college without an understanding of finances and how to manage successfully,” says John Pelletier, director of the Center for Financial Literacy at Champlain. “So we have some personal finance requirements that students must participate in every semester. They have core classes, major and minor classes, and then these life skills requirements in order to graduate.”
- Sneak It into Other Courses
A number of other colleges and universities include financial education modules in their freshman experience courses. In addition, more and more institutions employ financial educators who are available to present on various financial topics to classes or organizations across campus. For instance, a professor in a liberal arts field may request a financial educator to talk to her class about how to manage finances as a self-employed artist.
- Make It Personal
Student loan debt has increased significantly, but many students remain unaware of their specific loan obligations until after they’ve left campus. Some institutions are finding that students take financial literacy discussions more seriously when the information applies to them personally.
For instance, a few years ago, Indiana University started sending out a “debt letter” to each student. The letter details the student’s total amount of debt and repayment obligations, including interest. “When we initially created the debt letters, there was concern that the letters would discourage students from continuing to attend,” says Philip Schuman, director of financial literacy at Indiana. “But there has been no detrimental effect; people have appreciated the transparency. We’re helping them be more proactive about their debt.”
Learn more about how to teach college freshmen about finances—and what they need to know - by taking a look at other institutions’ successful efforts. Start by visiting Indiana University’s Money Smarts and Champlain College’s Center for Financial Literacy.
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