How financially literate are college students?
In fact, according to research, more than 40 percent of college students are not equipped with financial literacy knowledge and skills. Top personal finance concerns among college students include the cost of higher education, student loan debt and credit cards.
It encompasses a wide range of topics related to managing money, including budgeting, saving, investing, borrowing, and retirement planning. Financial literacy is essential for individuals to navigate the complex world of finance and make sound financial choices that align with their goals and values.
The Ohio State University's National Student Financial Wellness Study found that 72 percent of college students experience financial stress stemming from the fear of being unable to meet tuition costs (60 percent) and meet monthly expenses (50 percent).
In a survey of about 30,000 college students from more than 440 schools across the country, only 53% said they felt prepared to manage their money, according to a 2019 report by EVERFI, sponsored by AIG Retirement Services.
According to the US National Association of Plan Advisors (NAPA), Gen Z has the lowest level of financial literacy, with only 28% of questions being answered correctly on average.
The majority of college students (71%) report they have a personal financial goal they are working towards, 60% have a job, and half (50%) keep a personal budget. In addition, 44% report saving in college while 14% also invest.
Just under two-thirds of Americans (64%) are financial literate, while over one in three (36%) are not. Financially literate Americans are led by Baby Boomers (71%), Gen X (63%), and Millennials (59%) while Gen Z (42%) trails behind.
Based on research from ThinkImpact (2021), 38% of students admit to dropping out because of financial pressure. Provided the increasing expenses of higher education as well as the difficulty of finding scholarships, grants, and financial aid, low-income students often cannot keep up with university demands.
Most college students work—many full time—while supporting themselves through school. The facts about working adults: 64% of college students work, and 40% work full time. 49% of college students are financially independent from their parents.
Forty-one percent said they “never” or “rarely” did so. Students do not receive much formal education on handling their finances before college, the survey found. Only 17% said they learned to budget in school, while 42% learned to do so from their parents or other relatives, and 37% taught themselves.
How much money does the average college student have in their account?
And it seems college completion makes a difference, as those with college degrees have a median of $23,370 in transaction accounts, much more than the $5,200 median of those with some college but no degree.
Financial distress is prevalent among undergraduates nationally, with almost three in four students experiencing financial difficulties in the past year, according to the fall 2022 Student Financial Wellness Survey.
| Education | Median bank account balance | Mean bank account balance |
|---|---|---|
| No high school diploma | $900 | $9,130 |
| High school diploma | $3,030 | $23,380 |
| Some college | $5,200 | $33,410 |
| Bachelor's degree | $23,370 | $116,010 |
Financial literacy tends to be low within each of the five generations, but particularly so among Gen Z. Two-thirds of Gen Z could answer only 50% or less of the index questions correctly. Within Gen Z, financial literacy tends to be lowest among those who have never attended college.
Gen Zers are having a harder time making ends meet, let alone building wealth. Roughly 38% of Generation Z adults and millennials believe they face more difficulty feeling financially secure than their parents did at the same age, largely due to the economy, according to a recent Bankrate report.
Gen Z faces unique financial challenges compared to older generations. College graduates earn 10% less compared to their parents, recent research found. High inflation — and affordability concerns among Gen Zers — extend beyond U.S. borders.
Research has found that 88% of millionaires graduated from college, and 52% have a master's or doctoral degree.
Public colleges have an average graduation rate of 63 percent, and private nonprofit schools have a rate of 68 percent. Women are more likely than men to graduate within six years of starting their degree program.
You do not need a lot of money to start investing. You can start investing in a retirement plan with any amount of money. If you have a 401(k) at work or your own IRA, putting any amount of money into the accounts will count as investing.
How Many Americans Are Living Paycheck to Paycheck? A 2023 survey conducted by Payroll.org highlighted that 78% of Americans live paycheck to paycheck, a 6% increase from the previous year. In other words, more than three-quarters of Americans struggle to save or invest after paying for their monthly expenses.
Are rich people more financially literate?
Rich adults have better financial skills than the poor (Figure 7). Of adults living in the richest 60 percent of households in the major emerging economies, 31 percent are financially literate, against 23 percent of adults who live in the poorest 40 percent of households.
Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing. The meaning of financial literacy is the foundation of your relationship with money, and it is a lifelong journey of learning.
Among Fortune 500 CEOs, 41.0 percent went to an elite school, 53.0 percent had a college education, and only 5.8 percent had no college education or no data. Looking at the other side of the equation, college dropouts are unlikely to have a bright future.
American Indian/Alaska Natives have a 1.1% dropout rate, which is the second lowest among ethnic demographics. Black students have a dropout rate of 14.4%. White students are the most likely to drop out, at 33.4% compared to all other college dropouts.
A survey from Morning Consult found that 77 percent of people say that college is difficult to afford, while 52 percent say that even in-state, public universities—which are typically intended to be more affordable options—are not affordable [6].
