Why More Colleges Are Teaching Financial Wellness

Jessie Zinderman is a first-year student at Dickinson College who plans to be a lawyer representing people with intellectual and developmental disabilities. She was inspired by an uncle on her mother’s side who was born with severe cognitive impairment and cerebral palsy. Zinderman has volunteered with Special Olympics and Best Buddies and plans to double-major in law and education.

But dreams are built on healthy balance sheets, so Zinderman confers with her future self: a young law associate in the firm Jacoby & Meyers living in Los Angeles in the year 2026. Future Jessie has to budget for rent and utilities to split with a roommate. She also allocates for food; cellphone fees; work wardrobe and hair styling; a gym membership; and repayment of $30,000 in student loans, at 6-percent interest. She’ll put some money aside for uncovered medical costs too, but still plans to put 7.5 percent of her income toward savings and $200 into an emergency fund.

Do Gen Z students typically plan ahead like this?

They do if they’re in Joy Middaugh’s first-year seminar, “Paying the Game of Life.” Middaugh, a lecturer in international business and management, asks her Dickinson students to imagine and detail their financial futures through a series of four essays that carry them from entry-level jobs into marriage and parenthood. Beyond rent and utilities, the students determine how they’re going to pay off student or car loans, save for their retirement and their kids’ college tuition, and set up insurance policies and protections against identity theft.

“It’s been fun watching the maturity develop,” Middaugh says.

Colleges have been teaching financial skills for years, but they are committing to doing it more — and better. They are working it into orientations, first-year classes like Middaugh’s, requirements for internship or study-abroad stipends, and even making such training part of late-fee-waiver agreements.

January will mark the formation of the Higher Education Financial Wellness Alliance, which grew from an annual summit that has doubled in size over six years; this year it attracted 340 participants from almost 200 institutions. Phil Schuman, senior director of financial literacy at Indiana University, is executive director of the alliance, which will offer webinars, coaching, and other services to help colleges create or enhance financial-wellness programming.

Student-affairs officers cite Ohio State University’s financial-education program as a pioneer and model. Ben Raines, OSU’s wellness coordinator for financial education, says he speaks to a couple colleges every month that are interested in starting or beefing up financial-wellness programs, and his presentations at meetings of Naspa, the national association of student-affairs administrators in higher ed, generate keen interest.

A Major Stressor

Why has “financial literacy” morphed into “financial wellness”? And why this surge of attention to it? Because, experts say, the numbers make clear that finances are a major stressor for students and often an obstacle to their health, happiness, and college completion and success.

Managed poorly, college finances can be not just a short-term headache but a long-term ball and chain. A 2018 study by the Brookings Institution showed that people without a degree and no longer enrolled had a student-loan default rate more than four times greater than that of graduates with bachelor’s degrees. And a 2019 report by the U.S. Financial Literacy and Education Commission says 43 million people owe $1.5 trillion in college debt, an average of more than $33,000 per borrower.

During college, money worries can be distracting at best, debilitating at worst. In a 2018 survey, Trellis, a nonprofit focused on student finances, found that of 17,531 student respondents from 58 colleges in 12 states, 65 percent were worried or strongly worried about how they would pay for college. Twenty-three percent had no plan to pay for their next semester. Thirty-four percent ran out of money five or more times during the previous year. Half had trouble paying rent and utilities in the previous year, and 16 percent had been homeless during that period.

In a Healthy Minds Network’s 2018-19 survey, of 62,171 student respondents at 79 colleges, 35 percent said their financial situation was “stressful,” 24 percent “often stressful,” and 14 percent “always stressful.”

Not only are financial stakes increasing, says David Hood, associate provost for undergraduate education at Montclair State University, but student demographics are shifting in ways that make financial education all the more important. Colleges can’t assume students are receiving a grounding in these matters at home before they enroll, he says. More students from disadvantaged backgrounds are coming to college with more unmet needs. More of them too have declared legal independence from their parents, and “they don’t necessarily know how to navigate” financial-aid documents, loan decisions, and financial planning.

“As institutions open their doors to a broader demographic of students,” Hood says, “it will be increasingly important that we really zero in on this component of the student experience.” Of a new $2.2-million grant to Montclair State from the Department of Education, he says, $160,000 will support financial-wellness training for students.

Skills and ‘Habitudes’

Carol Cain, an assistant professor of accounting at Winston-Salem State University, knows what financial insecurity feels like and the power financial savvy can offer. She grew up in an unstable home of meager means. She was one of three adopted children and one biological child of parents who divorced after many separations. Neither parent had financial acumen.

At 10, Cain was balancing her mom’s checkbook. At 11, she was buying the family’s groceries. She baby-sat, pet-sat, shoveled snow, delivered newspapers, and cut out coupons. During college, she worked at a bank that reimbursed her for courses, and by the time she graduated she was the assistant comptroller for a company in the institutional food-service industry.

“Financial literacy has been a lifelong passion,” she says, so she started a course and has developed programs at Winston-Salem State with a special focus on African American and female students. She was recently appointed to the board of the Center for Smart Financial Choices, a nonprofit that presents workshops for area colleges, schools, and other groups on budgeting, establishing good credit, and Money Habitudes — a “gamelike tool” developed by the financial-literacy educator Syble Solomon that helps people understand their habits and attitudes about money.

Students examine their character traits and their perspectives on money. Do they see money as a source of security? As a status symbol? Every perspective has pluses and minuses, Cain emphasizes. Extravagance can be a problem, but so can fearful hoarding. “You’ve got to have some downtime and plan to have some fun,” she says.

In her three years at Winston-Salem, Cain has recruited some 60 students through the university’s chapter of the National Association of Black Accountants to volunteer to teach financial skills on campus and in neighboring schools. It’s educational for the volunteers and good community diplomacy for the university, she says.

Women tend to graduate with higher loan burdens and don’t negotiate as well as men for salaries, Cain says. So she has organized workshops with guest speakers to get female students to think about their financial concerns, personal and professional value, and career fulfillment.

At Scripps, a women’s college, practical financial lessons are brought home by recent alumnae who return for a series of four Friday-afternoon sessions throughout the year. Some of these alumnae work in finance, but some are art historians, psychologists, or other kinds of professionals, says Vicki P. Klopsch, executive director of the college’s leadership center, which organizes the sessions. Topics include basic budgeting, paychecks and taxes, banking, credit, loans, investing, salary negotiations, and opportunities for philanthropy.

“Most of the facilitators are willing to be vulnerable in their story-telling,” says Klopsch. They talk about their real salaries, living with two other people, forgoing a car to save money. “You hear other women talking numbers, not just the big picture — the theoretical concepts — but the down and dirty of it.”

That gritty detail is important, and all too rare, says Pamela Peterson Drake, a professor of finance at James Madison University. She has taught for 40 years and says she saw a worrisome shift about a decade ago. Parents started managing their kids’ lives to the point that students came to college with little understanding of basic finances.

“Parents are not doing the training they used to in financial responsibility,” Drake says. They used to ask their kids to get part-time jobs, then follow a simple formula like “save half, spend half.” Students now “aren’t coming in with that.” All they know how to do is swipe a debit card, and taxes and 401(k) plans seem “too far into the future to worry them now.”

That’s why the essays in the Dickinson freshman seminar carry students into that future. In his second of four essays for the course, Robert Samuel Campbell, who plans to study business, projected himself into an entry-level analyst associate position at Morgan Stanley, in New York. Future Sam earns $49,500, found a studio in midtown east for $2,500 a month, will pay $102.75 for utilities, and can get a monthly metro pass for $127. From there he prioritizes his emergency fund, debts, living expenses, and retirement contributions.

When Campbell marries, in Essay Three, his new spouse makes $64,350. He adds 2 percent to the entertainment fund, “making it $400 for fun nights on the town or to a Broadway show with my wife.” Then, baby makes three. There goes another $700 a month. “Babies aren’t cheap,” he writes.

Peer Counseling

Michael Hinderman, senior money coach at the University of Oklahoma, says he and his eight fellow coaches try to discuss individual financial plans with every freshman, in person or by phone and preferably before classes even begin. Oklahoma also works with MidFirst Bank to hold six workshops on financial basics throughout the year. Those are attended by about 85 students each.

Indiana’s Schuman says his office offers 21 online financial-education courses through its MoneySmarts U platform. Each course lasts about 30 minutes, and they are geared to students in different phases and demographics: first-year, international, athletes, graduate students, veterans, medical students, and so on. Indiana also has a team of 10 student-peer financial educators who speak to classmates individually, in groups, or during presentations to campus organizations.

Over close to two decades, Ohio State’s program has evolved into a financial-education unit within the student-wellness center. There, up to 60 trained students meet with close to 3,000 peers in one-on-one appointments annually, says Ben Raines, who oversees the program. Students who want stipends for study abroad or for internships, or who seek waivers on late fees (the university waived $44,000 in those fees last year) are required to attend a session.

The student counselors receive three credit hours for their training. They don’t have to be accounting majors, but they do need to learn core financial principles, be able to articulate concepts, build relationships, and empathize. They have to understand and work toward the students’ goals, not their own, informing but not judging.

One of those student counselors was Vattsa Mehta, a finance and economics major who graduated in the spring. She estimates she counseled close to 200 peers over three years.

Many of them were afraid of credit cards, and she told them that not all debt is bad debt, and that building a good credit score will help them later when they apply for a job, rent an apartment, or buy a car. Many classmates also got refund checks from student loans if they overborrowed, and then spent that money on nonacademic expenses. “That’s money you technically don’t have even though it’s in your bank account,” she would explain to them.

The soft skills she developed as a counselor, she says, will help her in a career as a consultant. And her credit score, she says, impressed not just a car-finance company but her dad. She had her own credit history and didn’t need his, she told him.

He asked: “When did you become so smart?”