Do you remember your first night at college? For those of us who dove headfirst into sampling fraternity life things might be a bit of a blur, but no matter how seamlessly any us think we can adapt to new situations, leaving home for the first time inevitably brings its own unique set of challenges and anxiety.
Not only do we start to appreciate all the little things our parents did for us on a day-to-day basis, but the big things come into focus too. It gradually hits us that we’re going to have to earn a living, manage our own finances, pay taxes, and do all those other real-world tasks that, while perhaps mundane, seem are nonetheless extremely important if for no other reason than the fact that doing them well can save us a lot of money, and vice versa.
The trouble is too many people out there don’t come to that realization until college is over and they’re smack dab in the middle of the dreaded “real world.” It’s hard to play catch up while you’re looking for a job and maybe even a place to live in a brand new city, especially since an established credit score is a valuable ally that you’ll probably be missing. Trial by fire is therefore an all too common and ineffective learning process, as the state of financial literacy in the United States, not to mention the economy, clearly indicates.
- 42% of people grade their financial know-how at a “C” level or below.
- 75% of parents in the U.S. say their kids don’t know the basics of money management – the most pessimistic outlook of any country polled for Visa’s 2012 Global Financial Literacy Barometer.
- We added $36.2 billion in new credit card debt during 2012, while the economy is still trying to recover from a recession caused in no small part by chronic overleveraging.
- Outstanding student loan balances now total more than $1 trillion.
It is necessary to offer that context in order to properly explain Louisiana State University’s efforts to only educate students, but also give them the tools they need to translate that education into a career and, ultimately, financial security. After all, money and work are the two leading causes of stress, according to the American Psychological Association, and aren’t we all just pursuing happiness at the end of the day?
In Depth: Financial Literacy at LSU
In addition to an eight-part certification program for financial planners, the Louisiana State University has long covered a variety of personal finance topics – ranging from real estate and investments to risk management and insurance – in classes offered through its E.J Ourso College of Business. But aside from an introductory financial literacy class that’s open to all students yet targeted to Personal Investing minors and residents of the business dorms, there hadn’t been much offered to the general student population until recent years.
While the country’s economy was still in free fall, LSU started taking steps to prevent history from repeating itself. The school in 2009 launched a Student Financial Management Center with the stated purpose of “helping students create and maintain financially responsible behaviors by providing resources and educational opportunities.”
Since that time the organization has grown rapidly. Not only does it now provide a collection of useful resources through a website that gets more than 38,000 visitors per year, but armed with meager funding – half a staff member’s salary and a limited operational budget – the Center has also progressed to conducting outreach with student groups and offering one-on-one counseling services.
Even more exciting are the early-intervention initiatives the Center has launched over the past couple of years. These include an initial taste of financial literacy education for first-year students during orientation, a smaller-scale five-part workshop series called First-Year Finances, and the crown jewel – Buttonwood: The LSU Financial Literacy Challenge.
The Buttonwood Challenge is a mandatory online course for first-year students that LSU bills as, “a turnkey platform to empower students with the skills to successfully manage their finances while in school and beyond, and minimize dropout and student loan defaults through education.” The Challenge has only been around for a year so it’s too early to judge its effectiveness, but “there are built in assessment measures that will allow us to benchmark over time and collectively,” according to Emily Harris, the staff coordinator for Student Financial Management Center.
Hester also has a solid feel for the things students need to work on most. “I believe that financial literacy is one the key areas that students have not traditionally been educated about in the college setting. With our new efforts this has improved, but students are still not as proficient as we would like,” she recently told CardHub. “Students generally understand financial goals setting, but still struggle with understanding and reducing spending when it comes to wants vs. needs. The average student is ready for a basic level of financial independence but is still not ready to excel in managing his/her own money. However, this still leaves a large majority not ready to manage their own money, especially when it comes to paying back student loans.”
The good news is students will naturally grow less impetuous and more skilled at ignoring the impulse to spend money on luxuries. Maturity is not a cure-all though, as the general consumer population’s addition to debt clearly indicates. The loan issue is also complicated somewhat by the fact that many students will have already made their borrowing decisions by the time they learn their P’s at Q’s in Baton Rouge. Instruction will nevertheless help them better understand the implications of their repayment habits and will pay dividends when it comes to post-graduation borrowing.
Before long, the vast majority of LSU graduates will have gone through these various programs and will therefore have a considerably deeper base of financial knowledge than the average college grad, as you’ll see from the following numbers.
LSU Financial Literacy By The Numbers:
- 95% of LSU’s 5,500 first-year students received preliminary financial literacy education and were instructed to keep a budget during orientation.
- 120 students participated in a five-party workshop called First-Year Finances, which was introduced last year in order to educate students further about earning, spending, saving, and repaying money.
- The SFMC does about 30 presentations to student organizations each semester, reaching 500-1000 students.
- The SFMC conducts one-on-one financial counseling sessions with about 50 students each year.
- Last year, more than 3,800 students completed the Buttonwood Challenge.
LSU certainly seems to be on the right track in terms of giving students the tools they need to build a solid financial future, but only time will tell how effective the programs already in place actually are.
There are clearly opportunities for improvement in the school’s initiatives too. The Student Financial Management Center is making the most with what it has, but its funding doesn’t match the importance of the subject matter being taught. The Center must also do a better job of advertising services like one-on-one counseling to the general student population. The fact that only 100 of the 29,549 students currently enrolled at LSU take advantage of such a valuable (not to mention free) service each year is a clear sign that a lot of people simply don’t know about it.
Still, the future is bright for a state whose citizens rank 51st nationally in terms of financial capability and 46th in financial behavior, according to FINRA, if for no other reason than what the centerpiece of its higher education system is teaching its future workforce about fiscal responsibility.