Financial Literacy Education: Discovering what WE can do as a Campus Community

1. Financial Literacy Education: Discovering what WE can do as a Campus Community University of Kansas Office of Student Financial Aid Justin Chase Brown Jeremy Early

2. Preview • Financial Literacy Definitions • National and Institutional Facts • Panel of Experts • KU’s Current Financial Literacy Programs • Peer Institutions’ Financial Literacy Programs • What more can we do?

3. What is Financial Literacy? • The U.S. Financial Literacy and Education Commission defines financial literacy as “the ability to make informed judgments and to take effective actions regarding the current and future use and management of money.”

4. What is Financial Literacy Education? • Financial literacy education should include the ability to understand financial choices, plan for the future, spend wisely and manage, and be ready for life events such as job loss or saving for retirement. At the heart of the definition of financial literacy, is the term “informed,” as emphasized previously. It is the effective use of information in the decision making process that separates the more literate from the less literate decision.

5. Why is Financial Literacy Important for our Students? • Increased awareness when managing money can put students in a better position upon graduation • Only borrowing loans that are necessary can keep debt from getting too high • Lower debt can increase career options

6. Why is Financial Literacy Important for the University? • It has been cited that the “number one reason students leave [college] is for financial reasons (Adams, 2005).” What if financial literacy can keep these students? • What’s the cost of attrition at KU? • 12 credits x $213 = $2,556 per student per semester • 4,034 full-time freshman (Fall 2007) in 1 semester brings in $10.31 million • KU attrition rate = ~20% loss = 800 students • Let’s say 50% leave for financial reasons, so 400 students leave x $2,556 loss per semester x 6 semesters = gross loss of $6.13 million (over the next three years) • If we implemented a financial literacy program and kept just 1% of those students, we save KU $61,300

7. College Students & Financial Literacy Across the Nation • 76% of college students wish they had more help preparing for their financial future [2007, The Hartford Financial Services Group, Inc.] • 32% of college students, when thinking about their freshman year, admit they were “not at all” or “not very well prepared” for managing their money on campus [2006, KeyBank and Harris Interactive]

8. College Student Spending Habits Across the Nation • Common ways of supporting students’ spending habits and living expenses in college included getting a part-time job (58%) or a full-time job (24%)[2006, KeyBank and Harris Interactive] • 78% of students work in the summer, 55% during the school year [2006,Student Monitor Lifestyle and Media] • 75% of students admit to having made mistakes with their money when they first arrived on campus[2006, KeyBank and Harris Interactive]

9. College Student Debt Across the Nation • 40% of college students have a credit card in their name [2006,Student Monitor Lifestyle and Media] • Students with credit cards from on-campus solicitation have a higher debt-to-income ratio than those with credit cards from other sources [2003, Norvilitis, Szablicki, et.al] • More than half of college students have accumulated more than $5,000 in credit card debt while in school (33% piled on more than $10,000 in credit card debt)[Jan. 2007, Sallie Mae] • Parental/guardian involvement in the form of simply acting as a co-obligor tends to lead to lower credit card balances[2001, Palmer, Pinto, et.al]

10. College Student Debt Across the Nation • 62% expect to have a student loan debt averaging $27,236 and requiring 7.9 years to pay off[2006,Student Monitor Lifestyle and Media] • Average cumulative federal loan debt for undergraduates in a four-year public school = $15,982 [2007, NASFAA]

11. In 2006-2007, 62% of students received some form of financial aid. The average cumulative debt for December 2006 and May 2007 graduating seniors with federal loans was $20,325.00. (omits parent loans but includes private/alternative loans) (Information gathered from the 07AY Student Success FA Summary for SS Profile) The current default rate for our students on the Lawrence, Edwards, and the KU Medical Center campus is 1.8%. (as of June 2007) Our own KU students

12. Cost of Attendance(2007-2008) • OSFA Budgets (with cohort) • Undergraduate resident: $17,898 • Undergraduate non-resident: $28,308 • Graduate resident: $20,820 • Graduate non-resident: $28,846 • Budgets include • Tuition, fees, room, board, books/supplies, transportation, and miscellaneous expenses • In 2006-07, KU students received over $165.2 million in financial resources (including aid such as scholarships, grants, work study and loans).

13. Discussion with Panelists • Brenda Maigaard • Director of the Office of Student Financial Aid at KU • Robert Baker • Education Coordinator from the Consumer Credit Counseling Service in Topeka

14. KU’s Current Financial Literacy Programs • 3-week moratorium on campus credit card solicitations at the beginning of the academic year • Various decentralized programming on campus • Personal Finance Course through School of Business • Various presentations to first-semester freshmen enrolled in PRE 101 • Debt management website through OSFA (in production) will include tips on money management, budgeting, etc.

15. Financial Literacy Programs at Other Schools • Financial Path to Graduation – BYU • Student Advocates for Financial Education (SAFE) – Montana State University • Virginia Tech Financial Literacy Program

16. So what can WE do as a KU community???

17. Let’s Share OUR Ideas!!! Thoughts/Questions? We hope you consider serving on a University committee developing some of these great ideas.