In my senior year of high school, as college decisions were released, opening the financial aid award letters was scarier than the decisions themselves: the final number, or net cost, could make or break my ability to attend university. To confuse matters, without an understanding of financial aid terms, award letters can be hard to read; each school’s letter can look different and are full of ambiguous terms and unexplained costs. No matter how well a particular award letter was laid out, I was unsure what exactly I would have to pay. If you are a senior in high school planning to go to college, becoming financially literate is incredibly important.
Every year, incoming and current college students have to file a FAFSA in order to determine their potential and continued eligibility for federal financial aid. Students may also have to file institution-based financial aid applications every year, along with institution-based or outside scholarships. Offer letters are key tools used by colleges and universities to notify students of their eligibility for federal, state, and institutional financial aid. Students and families use these letters to determine what the cost of attending that particular institution will be.
Recent research such as the “Decoding the Cost of College” joint research report by New America and uAspire, and the National Association of Student Financial Aid Administrators Issue Brief on Financial Aid Award Notifications have determined that offer letters are often hard to understand, and can lead students and families to misinterpret financial aid packages. Consequently, students and families end up borrowing more loans than they should, the students decide not to attend a particular institution, or the greatest consequence is that many students do not realize the true cost of attendance, which can lead to negative outcomes like not being able to afford to finish.
Between the high costs of tuition, living expenses, meal plans and textbooks, it is easy to see why college students are increasingly stressed about their finances. A 2015 survey found that around 70% of college students feel stressed about their personal finances in general. As a current student at UCLA, I too have felt the financial strain of an undergraduate education. Luckily, I have found that there are many simple actions college students can take to reduce the cost of postsecondary education. Here are 5 tips from a current college student on how to make college more affordable:
April is National Financial Capability Month and understanding the terms of your financial aid offer and making smart decisions about paying for college can be a good indicator of your financial capability.
When you were in middle or high school, did you learn money basics? Did you take a personal finance class? If so, you were among the less than half of Americans who did. Today, only 17 states require high school students to take a personal finance class before they graduate, and only about six test students on what they’ve learned.
As April was National Financial Capability Month, it was the perfect time for the Department to turn its attention to financial literacy for youth and what it could do to promote best practices and support a network of policymakers and practitioners across the country
The Department, in partnership with the Financial Literacy and Education Commission (FLEC), organized a special convening entitled “Financial Education in America’s Schools.” The goal was to engage the education community, local and state stakeholders, financial institutions and others in building strong, permanent partnerships that immerse youth in financial concepts.
In addition, the Department encouraged states to participate in the Programme for International Student Assessment (PISA), an international survey administered to 15-year-olds that includes a component on financial literacy. PISA results for 2015 showed that students who had a bank account scored higher than their peers who didn’t have one.
In addition to covering my United States Government and Politics curriculum, every year I put my students through a mini “adulting 101” bootcamp. During the first semester of school we focus on basic “adulting” skills like registering to vote, laundry care, vehicle maintenance, building a resume, meal planning, cooking, etc.
During the second semester, I focus on four financial basics that establish a foundation for these students to become financially literate adults.
The basics of banking includes checking accounts, savings accounts, writing checks, money orders, cashier’s checks, fees and setting up automatic payments.
Understanding credit, credit cards, fees and penalties, interest rates, repayment and credit scores.
Borrowing money, interest rates, repayment options and debt.
Budgeting, saving and investing.
Initially when I narrowed the focus of the financial literacy portion of my “adulting 101” curriculum, I reached out to my local bank for information and resources. They not only provided me with free resources, they also offered to present to my students. This was an awesome opportunity for a financial professional and community partner to answer questions and provide insight to these young adults getting ready to start the next, but for most, the first financial chapter of their lives.
April is Financial Capability Month. To help mark this occasion, two students offer their perspectives on their very different experiences in obtaining financial education.
Growing up, I’ve been fortunate enough to have a father who has educated me on fundamental financial principles. In my house, terms like P/E ratios, EBITDA, ROI and diversification are a part of our regular vocabulary.
From selling lemonade as a young child to buying my first stocks at age twelve, business, entrepreneurship and finance have always been a part of my life. Seeking to expand my love of investing to others, I co-founded an investment club at my school called “The Blake Asset Management Group” in an attempt to give my peers and me a chance to test our investment acumen in a real-world setting.
While I expected our club’s first meeting to revolve around potential investment ideas, I was surprised to see that most of those in attendance actually knew little about stocks, and even fewer knew how to analyze a stock at the most rudimentary level. Most surprising was the number of students who lacked an understanding of broader and more important general financial literacy concepts like interest, diversification, and the importance of saving.
Recognizing that it would be difficult to run a club where few members possessed the necessary knowledge to invest, the leadership team and I restructured our club’s focus. We decided to measure our success not by the investment profits we generated but rather by the number of students we educated. Consequently, I designed and created a financial literacy course and made it available to all students at my high school.
The initiative, which was taught through the club, was a major success. Due to strong demand, what was initially intended to be a 5-week course turned into a 12-week class with interactive lesson plans and guest speakers. Students gained a thorough knowledge of basic financial concepts.
Working as a Financial Aid Counselor, families often ask me how they can pay for college. More often than not this conversation takes place during the student’s senior year in high school. As a first-generation college student, there are things I wish my family and I had known to help us save on our college bill. These are a few things that families can do to help cut the cost of college:
1. Community colleges can be great options
Community college offers the most affordable education out there. At community college you can complete the general education classes that every school requires, and then transfer to a 4-year school where you can take classes specific to your major. Also, community college is a great place to gain technical skills and earn a short-term certificate to get you started in the workforce.
2. Buy used textbooks or rent them
Buy used books or check to see if you can rent textbooks at your school or online. After the class is over, sell your books back online, to the bookstore, or to someone else.
Note: April is National Financial Capability Month.
On August 28, 2017, I accepted an offer to work with the U.S. Department of Education’s Office of Federal Student Aid (FSA) through the State Department’s Virtual Student Federal Service (VSFS) internship program. I imagined that I’d be doing typical intern duties, but didn’t foresee how much I’d learn about financial literacy, or the level of understanding I would gain on how to earn, manage and invest money.
Financial literacy, or financial capability, is a very important area of study. Included in the Secretary’s Final Supplemental Priorities for Discretionary Grant Programs from the U.S. Department of Education is a priority area for “[s]upporting instruction in personal financial literacy, knowledge of markets and economics, knowledge of higher education financing and repayment (e.g., college savings and student loans), or other skills aimed at building personal financial understanding and responsibility.”