Financial Literacy Among College Students And Reductive Millennial Reasoning

How financially illiterate are our nation’s university students?

Financial literacy really is a must for young adults. However, some aspects of finance, such as building and keeping good credit, often aren’t taught young.

In the Council of Economic Education’s 2016 annual report, it was reported that only 17 states require high school students to take a course in personal finance. This lack of early education, of course, shows up later in life, according to a March 2016 survey from LendEDU, a student lending marketplace that also offers tools and tips on personal finance.

For its survey, LendEDU spoke with 668 current undergraduate and graduate students at two-year and four-year public and private schools. According to the survey, the results are startling, disturbing, and showcase the appalling level of financial illiteracy among our country’s brightest minds.

The low-lights:

  • 59.3% of students surveyed could not produce a broad definition of a credit score
  • 19.6% of respondents reported that they would rather have a low credit score
  • 95.5% of respondents did not know the range of possible FICO scores
  • 65.1% of respondents reported that they did not have a credit card in their own name
  • 72.1% of respondents with a credit card reported that they did not know their credit score
  • 45.5% of respondents could not correctly identify at least one factor used in determining a credit score

These are students, sure, and they’re likely more focused on their studies (or other extracurricular activities) than financial realities. But that’s a problem. Especially considering that in 2014 seven in 10 college graduates left school with debt, corresponding to nearly $30,000 per borrower on average.

What happens when a cohort of financially illiterate, indebted individuals enters the workforce? That’s a question without an answer for now.

However, that doesn’t mean there can’t be a solution. More than simply offering affordable student loan products, credit unions can offer on-campus or in-school financial literacy efforts. Many already do.

Credit unions say they want to attract and retain more millennial members and employees. One of the best ways to do that is to meet them where they are, fulfilling a pressing need.

But it’s also wise to know a little more about these college-aged individuals, a group that today encompasses the youngest millennials and oldest Gen Zers.

Visit the CreditUnions.com Blog Roundup for Callahan commentary, industry insights, leadership perspectives, and more.

We write about these generations a lot. And what I’ve learned and I think many others have as well is that in writing about millennials it’s best not to generalize. Sure, it may seem as though enough people saying one thing on the Internet makes it true. But it shouldn’t.

Case in point: Over the weekend, the New York Times ran an article, What Happens When Millennials Run The Workplace? It is essentially a short profile of the website Mic, a website vying to become a leading news source created by and for millennials.

The article asks a question we’ve considered ourselves. Just last week Callahan held a webinar with Rolando Hardy, the 31-year old CEO of Shell Geismar Federal Credit Union: How To Manage A Millennial Staff.

But to answer that question the article too often falls into generalization backed by stereotype. A sample passage:

But he [Chris Altchek, Mic’s28-year-old chief executive] is still working out how to manage many of the traits associated with his fellow millennials: a sense of entitlement, a tendency to overshare on social media, and frankness verging on insubordination.

Mic’s staff of 106 looks a lot like its target demographic: trim 20-somethings, with beards on the men and cute outfits on the women, who end every sentence with an exclamation point and use the word literally’ a lot.

After the story was published, the article started trending and Twitter users responded.

As far as I can tell, reading what was written online and from my own personal opinion on the article, the criticism is born from a sense of fatigue in the idea that millennials are [insert your own adjective], based on a handful of examples instead of real data.

Millennials are different than previous generations, yes, simply based on circumstance. The world was different in the 1990s and 2000s than it was in the 1960s and 1970s. And each generation grows up molded by his or her contemporary climate.

At some point, it became fashionable to analyze and stereotype millennials in general and reductive ways. It’s as if the world is suddenly afraid of change. As if there’s never been a generation like this before.

Look around. How do you think we got here?

March 22, 2016

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