College is the first step on the student’s path into their independent life. Having broken free from their parents, at last, they need to learn how to live on their own and master a lot of things, including financial management skills. Research has shown, however, that millennials are characterized by incredible diseconomy in addition to a heightened dependence on information and technologies, both of which are considered to be vices rather than virtues.
The level of students’ financial literacy
In the adult world, financial management is one of the most important skills. The first-time students are going to learn this simple truth in the first place the day they have been admitted to a college and left their parents’ house. Ironically, the majority of them are sure that they are good at handling their funds while the surveys have consistently proven the opposite. Indeed, students’ saving and spending behaviour demonstrates their insufficient financial management skills with the majority of them being unable to set and stick to a budget.
Numerous surveys conducted in the course of the past two years by the financial institutions in various universities among thousands of students show that almost half of the respondents do not put aside money having less than £100 in their bank accounts and almost the same percentage constantly borrow from family and friends and spend more than they have. About a quarter of them do not pay their bills timely and more than a third do not make their full card balance pay-offs monthly, with about the same number not even reading their credit card reports. When it comes to more serious questions concerning the paid interest rates or the paying off of the loans, the situation is even worse since more than half of all the surveyed students have no idea how to answer them. These distressing findings lay emphasis on the problem of insufficient financial literacy among the students and the dire need to address it ASAP.
How to assist students with financial issues?
While in college or university, students have loads of commitments and obligations that often require substantial assistance. They are constantly looking for resources that can offer aid with home assignments, MBA essay help, counselling on medical and healthcare issues, and loads of other useful services. In addition to all these, they also require financial management supervision since they often face considerable challenges while filling in the federal government financial aid form aimed at determining their eligibility for grants.
Very often, it may be embarrassing to turn for help to college financial officers or other relevant authorities and administrators. Moreover, some students say that filling out these forms with family members does not make it any simpler. Parents would most often reprimand for not knowing some answers instead of really helping. At the same time, experience shows that going through the process and trying to figure out the answers to the tricky financial questions may be much easier with peers since youngsters are more inclined to listen to someone similar to them and with the same problems but with a bit more experience.
Peer-to-peer financial literacy programs
As a result, financial aid offices in many colleges started to recruit students to help each other in solving financial issues, forming special peer-to-peer programs. Many students admit that hearing recommendations on savings and information about the loans and interest rates from someone younger is totally different.
They share the same way of thinking and communication, and it is easier to share some ideas and to open up in such conversations. Such sessions also engage hands-on learning opportunities and reflect-and-apply questions to facilitate follow-up discussions. Through group encouragement and reinforcing conversations, students learn to form positive financial behaviour faster. Moreover, there is a range of relevant online resources to learn about complicated financial issues.
Such peer-to-peer educational programs on financial literacy back up the efforts of adult counsellors to enhance students’ knowledge and skills in managing their funds. In addition, peer advisors are cheaper than full-time professionals since they mostly operate on a volunteer basis, which is another benefit for colleges. Consequently, the idea is becoming more and more popular.
Higher educational establishments also have another, more serious, interest in financial literacy programs. The problem is that students, being not so skilled in managing their money and illiterate in serious related issues, tend to postpone, delay, or miss their pay-offs. As a result, their poor financial knowledge has a positive correlation with loan default rates, which is negatively reflected in schools. The increased financial literacy may help to improve the situation.
Although the outcome is not yet clear since the information has not been gathered yet providing only scarce data, some schools have already noticed the drop in their student loan default rate. Of course, there is no proof that the main reason for this improvement is the peer-to-peer financial literacy programs. However, the initiative definitely makes its contribution to the enhancement of students’ awareness of their debts and financial situation, reducing stress for both themselves and their colleagues.