Originally Posted On: https://www.intuit.com/blog/innovative-thinking/financial-tips/financial-literacy-college-students/
Financial Literacy for College Students
Financial literacy for college students: tips and essential concepts to know
College is a life-changing experience that sets the stage for your entire future. Yet there’s such little focus on helping future and current college students achieve financial literacy.
According to the Education Data Initiative, student loan debt in the US is $1.75 trillion, spread among nearly 43 million borrowers.
Debt can hold back the financial future of students and the country as a whole, as consumer spending is at the heart of a healthy economy.
At Intuit, we believe financial literacy is the first step toward personal and financial independence. Read on for tips on maximizing your financial future.
Why is financial literacy for college students important?
The average cost of college in the US is $38,270. That includes tuition, fees, room and board, and supplies. This is no small sum. Further, pursuing a bachelor’s degree can cost more than $500,000 when you take into account student loan interest and loss of income.
On average, it takes 15 years for bachelor’s degree holders to see a return on their investment. And it takes nearly 20 years to pay off their student loans. Entering adulthood without the tools to manage these expenses can have long-term repercussions. Among them is the risk of falling into a lifelong debt spiral.
States are starting to step up to help students get the personal finance know-how they need. As of 2024, 26 states require high school students to receive at least one semester of financial literacy education before graduating. That number’s more than tripled since 2020.
Many of these courses instruct students on managing student loans and the cost of college. Some might partner with financial institutions or nonprofit organizations to cover borrowing, investing, and savings strategies.
Whatever the approach, preparing high school students for financial success is a big deal. It sets them up for adulthood and contributes to a financially conscious and economically stable society.
Essential financial concepts for college students
The importance of financial literacy for college students can’t be overstated. In this section, we’ll explore basic financial concepts every college student should be familiar with and why they’re so important.
Budgeting
A budget is essentially a summary of how much money you bring in and how much you spend monthly.
It helps you calculate your income (from jobs, loans, family contributions, or scholarships) and expenses. That way, you can set a spending plan and identify ways to keep your spending in check.
Learning how to budget is particularly important for managing expenses like books, housing, food, and tuition.
Saving
Saving is the practice of putting your money away in a safe place where it can grow (usually a savings account). It helps you save money for emergencies or financial goals, like moving to a new city after college.
When saving money for college, your money grows slowly but steadily as you add to it over time. Saving can be tough for students because their resources tend to be somewhat limited. But even setting aside small amounts in a high-yield savings account can add up over time.
Saving during your college years gives you a big head start. It’ll help you prepare for rainy days, cover important purchases, and chase bigger life goals. More importantly, learning to save helps you develop a responsible financial mindset.
Borrowing and credit
Loans and credit cards can be your strongest allies and your worst enemies—often at the same time. On one hand, they can be the lifeline you need to cover expenses. And they can help build a good credit score.
On the other hand, you’ll have to repay every dollar you borrow. And if you carry a balance, don’t underestimate interest, which makes paying off that balance even tougher.
Budget carefully and do your best not to rely too heavily on credit. Constantly having to pay off large debts can quickly eat into your wages, especially when you’re starting out in junior roles. It can harm your credit, too. And that might impact your chances of getting a car loan, mortgage, or renting an apartment in the future.
The bottom line is this: Make responsible choices. Borrow only what you need, understand the terms of your loans, and always make payments on time. Your future self will thank you.
Investing
Investing is an opportunity for students to grow wealth by taking advantage of compound returns. Like saving, investing involves setting aside money and letting it grow over time. Unlike saving in a typical bank account, investing has the potential for higher returns. However, it also involves risk, including the possibility of losing money.
Financial resources for college students
There are tons of resources college students can use to become more confident in managing their money.
Most colleges and universities offer help through their financial aid offices. These campus-based centers walk students through applying for grants, loans, scholarships, and other forms of financial aid. Some campuses also offer assistance, tutorship, or workshops to improve financial literacy for college students.
Many banks, credit unions, and nonprofit organizations also provide financial education resources for students. These include free educational materials on saving and investing, and one-on-one counseling and personalized advice.
You can also check our Intuit for Education Personal Finance curriculum for students. Our flexible lesson plans empower you to make sound and confident financial decisions.
