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September 09, 2021

Freshman entering college lack basic money skills: report

Most parents wish their kids could avoid making the same stupid money mistakes that they did as they head off to college.

The best way to go about that? Get them on the way in, suggests a new study from EverFi, a Washington D.C.-based education technology company.

Researchers surveyed 40,000 college students, most of them freshmen, from across the U.S. about their money habits. They found that nearly 80 per cent of students said that they “frequently” worry about debt and are experiencing debt-related stress in their daily lives.

And, despite the fact that school costs considerably less on this side of the border, Canadian students aren't doing any better.

“A freshman in college may benefit most from education around school loans, budgeting while in school, and credit card behavior, whereas seniors in college may benefit more from education around budgeting for life on their own, retirement planning, and mortgages,” the study says.

In addition, it found that:
  • 28% have a credit card, and nearly 25 per cent have more than one.
  • 24% of students with credit cards had more than $1,000 in credit card debt
  • 35% reported typically making only minimum payments
  • 8% have been late on payments at least once in the past year.

To make more informed choices about credit cards, here's a useful selector tools for students from the Financial Consumer Agency of Canada. But that's just one area worth exploring.

Students usually enter college with risky debt behavior, the study says, and it’s everybody’s job at the school to fix it: "Addressing student financial problems should be the responsibility of the entire institution — students, faculty, student affairs, and financial aid."

Equally important is the role parents can and should play in setting good examples, of course. Providing opportunities for teens to learn the value of money (particularly when it's not really theirs) and highlighting the difference between needs and wants would seem to a be a good first step.

Did you struggle with debt issues when you were in school? Are things any better for your college-age kids?

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...