The Importance of Financial Literacy

Spring is a time for students, and their families, to be planning how they will pay for higher education for the next school year. Being educated on these types of finances can be crucial in reducing poor financial outcomes. With April being National Financial Literacy Month, we here at Nelnet Campus Commerce thought this would be an excellent time to share some useful information about financial literacy.

Today’s higher education students tend to feel unprepared to manage their finances, and some have already accumulated high amounts of debt, including credit card debt, according to a recent survey by EVERFI. The US Department of Education (ED) shares that students who receive personal finance education in line with their goals may be more likely to retain the information and use it to make informed financial decisions. Introducing the concepts of financial literacy may need to begin before students are admitted or preparing to obtain their higher education. Research from FutureSmart, a program by the MassMutual Foundation, shows strong evidence that financial education is effective – and necessary – for students as young as middle schoolers.

Many institutions have financial education initiatives in place for future and current students. According to ED, the University of Central Florida has a program called Centsible Knights. This program provides students with the information that they need to enhance their knowledge of personal finance and to make strong financial decisions. There are other organizations, like the Higher Education Financial Wellness Alliance (HEFWA) and the national financial education web site, MyMoney.gov. HEFWA brings together professionals dedicated to helping students develop strong financial habits. They promote responsible college financing and give students skills needed to be financially successful in and out of school. MyMoney.gov was established by the Financial Literacy and Education Commission under the Fair and Accurate Credit Transactions Act of 2003. This commission sets strategic direction for policy, education, practice, research, and coordination so that all US students can make informed financial decisions.

Higher education institutions may not realize there is a connection between enrollment numbers and financial literacy. Inside Higher Ed and College Pulse conducted a survey, Student Voice, which showed nearly two-thirds of students are either very worried (35 percent) or somewhat worried (29 percent) that a financial setback, like the COVID-19 pandemic or loss of employment, could result in them needing to leave college. Only 30 percent of survey respondents believed their higher education institution has adequate support in place for students facing a financial crisis. Institutions have a responsibility to not only prepare their students academically, but also financially. By offering financial wellness support like navigating personal finances, emergency aid funds, and education on personal finance now and after graduation, institutions can assist their student with financial literacy and help keep them enrolled.

At Nelnet Campus Commerce, we offer a variety of Tuition Management Solutions, including Payment Plans, which can keep students enrolled and help you manage (and resolve) past-due accounts in-house. Also, we’re partners with GradGuard, whose mission is to help higher ed institutions protect their students and families from preventable financial losses with their tuition insurance program.

What to learn more about what another institution is doing for financial literacy? Read our blog: MoneySmarts U: Financial Literacy Made Fun

For additional information on financial literacy, view our webinar: Meeting the Financial Literacy Imperative