Many students drop out of their studies due to financial pressure. As a result, some universities are investing in financial education. And this is already paying off for the students.
A college education can cost a lot of money depending on the country. In particular, in the USA, high student loans are often taken out to finance education.
However, these very financial reasons exert such strong psychological pressure on students that they abandon their studies. Experts are now calling for universities to offer support to students to help them manage their financial problems. This was reported by the English magazine Fortune.com.
Universities invest millions in the financial education of their students
What is the problem? 8 out of 10 students report that financial issues affect their mental health, and finances are the main reason why around 42 million students have left universities (via upcea.edu). On average, students in the USA take on debts of about 32,000 US dollars to be able to study.
What are universities doing about it? To tackle the high dropout rates, several universities are currently investing millions of US dollars in the financial education of their students. And initial results show that these projects are very successful.
What are the results? The Indiana University (IU) is used as an example. Since 2012, they have focused on prioritizing financial education: They aim to teach students how to handle financial resources.
The result: Student borrowing has decreased by 13% over the past ten years. This corresponds to savings of nearly 73 million dollars, even though tuition fees for domestic students have risen by almost the same percentage. Furthermore, while 44% of graduates still have student loan debt after graduation, the total amount they borrow has decreased by 5.2%.
Other universities are also considering similar steps. In recent years, institutions such as the University of Maryland, the University of North Carolina, and Washington University in St. Louis have also announced multimillion-dollar investments in financial education.
The topic of finance is a major taboo among young people
What is the fundamental problem? Experts criticize that children are not taught how to manage money in school. For example, Adam Nash, the former CEO of Wealthfront, explains to the English-language magazine Fortune that the topic of finance rarely occurs in schools, but should probably be taught to everyone in middle or high school:
I think it is wrong to send children into the world without understanding the basics of personal finance.
Additionally, especially young people of Generation Z are very reluctant to talk about financial problems. A recent study by Intuit found that Generation Z would rather talk about politics, sex, or infertility than financial topics such as debt, salaries, or bad investments. Money remains a taboo subject for many in Generation Z.
Essentially, saving is not a big topic for Gen Z, as they consider saving pointless and do not set aside emergency reserves. Among Generation Z, “doomed spending” is particularly trendy.
During the corona pandemic, many young people were confined and bought their quality of life with loans. This is now negatively impacting their situation, according to experts reporting on the current problems: Experts believe that Generation Z is struggling because they spent a lot of money at the wrong moment
