Financial Literacy Workshop Making the Case for Financial Literacy

1. Financial Literacy WorkshopMaking the Case for Financial Literacy Module 1 of 4 DRAFT

2. Workshop Objectives • Identify benefits of a financial literacy program • Describe features of model programs and identify cost effective ways to replicate • Identify funding and staffing possibilities • Discuss cost effective tools for training staff and volunteers • Analyze and organize available resources for teaching financial literacy

3. WorkshopAgenda • Why Programs Are Needed • Define and Design Your Program • Develop Your Program Content • Implement Your Program

4. Module 1: Why Programs are Needed • Financial literacy – Why does it need our attention? • Benefits of program • Best practices of successful programs

5. Financial Literacy Why does it need our attention?

6. What is Financial Literacy? GENERAL DEFINITION The ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial wellbeing. 2008 Annual Report, President’s Advisory Council on Financial Literacy FOR OUR PURPOSES The ability for postsecondary students to use knowledge and skills to make good decisions related to budgeting, borrowing,and repayment strategies.

7. What is Financial Literacy in College?

8. What do Students Know?

9. Current State of Financial Literacy • Most high school graduates and college students are not prepared to manage their personal finances • Parents are not providing the financial experiences students need and often lack the experience themselves • There is an uneven delivery and availability of personal finance education • Colleges and universities are slow to respond to this growing need

10. Jump$tart Financial Literacy Survey Percentage of questions answered correctly by: Percentage of questions answered correctly by: Jump$tart Coalition 2008

11. Communities Impacted the Most • 15% of Americans are “unbanked” • 30% of African-Americans & Hispanics Hispanic & African-American communities are disproportionately impacted Almost half of Americans reported having trouble keeping up with monthly expenses Low-income populations 75% of young people are likely to lack the skills needed to make beneficial financial decisions Women tend to have lower levels of financial literacy than men.

12. Concerns With Poor Financial Literacy • Paying for college • Little saving, record borrowing • High-interest lending • Home buying • Employee benefits

13. Changing Demographics of Colleges Increased Enrollment • Hispanic 500% • African-American 165% • Asian & Pacific Islanders 336% • American Indians & Alaska Natives 188%

14. MSIs, Retention, and Graduation Retention Rates: • HBCU full-time student retention 61% • TCU full-time student retention 49% • AANAPISI full-time student retention 78% • HSI full-time student retention 67% National Average 66%

15. Financial Literacy and Retention There is a strong correlation between financial literacy and student retention.

16. Why Get Involved? • Benefits students • Benefits families • Benefits communities • Benefits schools

17. Benefits of Program • Title IV compliance • Reduce loan default • Improve retention and graduation rates • Build a base of active and engaged alumni • Build strong community relationships

18. Loan Default and Title IV Compliance • Institutions with high student loan default rates are at risk of losing Title IV status • Loss of Title IV status can cause loss of Pell grant and federal financial aid participation

19. Loan Default and Completion Historically, the majority of borrowers who defaulted, withdrew without completing their academic program. • Borrowers who dropout of school are 4 times more likely to default on their student loans • 16.8%of borrowers who dropout of school default on their loans, compared to only 3.7%of borrowers who graduate

20. Financial Literacy and Loan Default • Student loan default studies show that student success plays a bigger role in predicting who will default than either borrower background or institutional characteristics. • Without a support system, students may perform poorly, drop out, or delay graduation to cope with financial problems.

21. Retention and Graduation Rates Characteristics of non-completers: • Students taking remedial courses • Students working more than 20 hours per week • Students with limited financial resources • Students attending school part-time • Students attending for-profit schools

22. Retention and Graduation Rates (Continued) • Students leave college due to the stressof attending college and working at the same time • The need to work remains top reason students fail to return to college • Financial literacy can demonstrate the relationship between graduating on time, minimizing loans and promoting future financial success

23. Improve Retention and Graduation Rates • Assist students with work & school balance • Reduce number of students who face financial crisis during college • Reaffirm long-term value of postsecondary education • Prepare student for financially stable path post-college

24. Develop Active and Engaged Alumni • Positive correlation between alumni giving and graduation rates • High graduation rates reflect solid academic quality and strong student support • Strong student support contributes to a positive college experience which contributes to more active alumni • Successful students become successful alumni

25. Build Strong Community Relationships • Public colleges and universities often lead the way on critical public issues • Work with local businesses & community-based groups to: • promote financial literacy • encourage financially prudent behavior in community

26. Quotes From the Field “Less than 10% show up to participate in the financial aid workshops so we have to get creative with it, we do postcards, social media and email to get the word out” Baton Rouge Community College “Students and parents are uninformed about how to prepare financially for college and they have unrealistic expectations of what the programs are designed to do.” Norfolk State University “Students get mad because the college is enforcing the bills and students cannot attend without paying. This hurts alumni relations for years to come.” Norfolk State University

27. Best Practices in Financial Literacy • Entrance and exit counseling • Student and parent orientation • Ongoing support beyond freshman year • Student success courses • Programs, seminars and workshops • Just-in-time training and outreach • Money management counseling • Peer financial counseling • Use of technology • Long-term financial planning • Alumni programs

28. Needs Assessment

29. Toolkit Introduction • A collection of financial literacy resources • Contains presentations, website links, calculators and other tools • Resources are organized by • Topic covered • Instructor-led options • Self-study options • Type of use

30. Summary • Financial Literacy is separate from financial aid • Financial Literacy Programs are necessary because they benefit: • Students • Families • Communities • Schools • Establish a program by: • Relying on best practices of successful programs • Capitalizing on your strengths

31. What to Expect Next • Module 2: Define and Design Your Program • Best practices • Strengths of successful programs • Start your action plan • Module 3: Develop Your Program Content • Program elements • Developing materials • Module 4: Implement Your Program • Staffing • Funding • Implementation • Finalize your action plan