LendEdu, an online marketplace designed to offer education loan borrowers understanding of their finances and loans with no damage their credit, has released its 2016 College Students and Personal Finance Study — and the results show a higher degree of financial uncertainty among college students.
The study surveyed current university students on basic personal finance knowledge and tried to gain understanding of how they are managing money. Laptop computer is comprised of results reported from 455 undergraduate and graduated pupils at three different four-year institutions around the East Coast. Each respondent answered 25 questions related to finances and money management. All of the information provided was?self-reported, and the survey team was administered by LendEdu.
In its introduction, the survey acknowledges a general lack of financial literacy in the United Sates. Currently, only 17 states require high school students to take a category in personal finances. Unsurprisingly, the results exhibited students \”lacking basic knowledge and confidence\” on financial matters. The researchers hope their findings will impel educators and policymakers to include high formalized coursework on personal finances in high schools, colleges, and universities.
Students reported widespread uncertainty within their ability to manage their finances. Only 8% of scholars gave themselves an \”A\” in terms of successfully managing their money, while 59% of respondents would grade themselves with a \”C\” or worse. Moreover, nearly half of respondents (43%) said they do not keep track of monthly spending, and more than half of students (58%) aren\’t saving money each month.
In terms of expenditures, 38% of students cited food as their biggest monthly expense, and the other 25% ranked alcohol/drugs. By finding out how to manage money better, students would likely save heavily on these expenses and then devote it with other costs associated with being a student, like rent, which 29% of students identified as their biggest monthly expense.
Largely, students are not pulling in high incomes. 27% of scholars reported that they do not have a resource of income, while another 40% of scholars were working part-time or had an on-campus job. The truth that students are not making much money adds greater emphasis towards the need for financial literacy. Students must learn to make the most of limited funds.
Perhaps most pressingly, students report widespread ignorance about more complicated financial issues that will impact them upon entering the workforce. For example, 74% of students believe that the interest rate paid on a savings account is larger than 1%, with 10% believing it\’s somewhere between 5% – 7%. They are wildly optimistic expectations about rates of interest, which typically fall well below 1%. Additionally, 60% report having minimal or no knowledge about financial investments, and nearly half of respondents (48%) reported having minimal or no knowledge when it comes to retirement savings.
The report makes pay off the urgent requirement for financial literacy coursework. Merely a handful of many years of a person\’s life?is spent as a student; financial literacy is essential for a successful and meaningful professional and personal life beyond college. Thus, a strong, working knowledge of personal finance won\’t improve one’s livelihood like a student but will greatly serve them as working adults who save, invest, and pay with credit.
The full outcomes of the survey can be found online.