April is National Financial Capability Month. Decisions about paying for higher education can have lasting impact on individuals and our economy. In keeping with our ongoing efforts to increase financial literacy among college-bound and postsecondary students, the U.S. Department of Education (ED) is working with Treasury’s Financial Literacy and Education Commission (FLEC) to teach students how to save and manage money for their postsecondary education.
The Far-Reaching Impact of Financial Literacy
Financial literacy, which can be defined as an understanding of how to earn, manage, and invest money, has a critical impact on students’ ability to make smart choices about which institute of higher education to attend, what to study, how to pay for college, and how to manage student loan debt after graduation.
Students who are financially literate are better equipped than those who are not to make wise choices regarding school selection, what degrees to pursue, and how to pay for postsecondary education. The choices students make while in school often have a direct impact on their financial futures.
“The most expensive degree remains the one you don’t get,” Secretary John King, Jr., said at a recent FLEC meeting at the Treasury Department.
King pointed out that two of the biggest threats against students’ ability to manage their loan debt are:
- not completing the degree program for which the loan debt was accrued
- earning a degree that is not competitive in the twenty-first century
With this in mind, we emphasize college completion, in addition to college affordability and accessibility.
Getting the Word Out
To help students make wise decisions about higher education, our office of Federal Student Aid (FSA) offers several learning resources, including:
- Responsible Borrowing and Budgeting videos
- An early preparation and saving fact sheet
- A workbook to help middle and junior high school students think through their education goals and how to pay for them
- ED’s College Scorecard
The FLEC webpage offers additional resources that focus on early college preparation, and links to its 2016 report on the state of financial education among postsecondary students titled, “Opportunities to Improve the Financial Capability and Financial Well-being of Postsecondary Students.” This report describes how important it is to build the financial capability of students to promote not only college access and completion, but also lifelong financial health. The report also includes the activities of a number of postsecondary institutions and other entities focused on helping students make critical financial decisions that can lead to economic security.
Elizabeth Coogan is a Senior Advisor in in Federal Student Aid’s Customer Experience Group. She is responsible for postsecondary financial literacy strategies and initiatives.