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Teaching Financial Literacy Is a Challenge, Both on Campus and Beyond

Washington — Worries about debt are widespread among college students, but that doesn’t stop some of them from engaging in risky financial behaviors, according to a survey of 40,000 students released on Wednesday. Financial-literacy training can help, says a report on the survey’s findings, but to be effective it must be mandatory and occur at multiple stages in people’s lives.

A panel discussion tied to the report’s release used its findings as a jumping-off point to address students’ relationships with money and what role colleges should play in shaping them.

The notion that college students aren’t always financially literate did not surprise Steven C. Bahls, president of Augustana College, in Illinois, and one of the panelists. Mr. Bahls said that his own children lacked a great grasp of money issues during college. One son, an English major, “mastered the intricacies of Shakespeare but could not master the intricacies of a basic lease,” he said.

Mr. Bahls’s levity aside, the panelists agreed that students’ financial literacy is a real concern, something that plays a role in whether they graduate and how much debt they incur.

Financial illiteracy is not confined to students, several panelists said, asserting that if adults were given a survey of their financial attitudes and behaviors, the results would probably be similar to the survey of students.

Colleges have a responsibility to help students understand what they’re getting into when they take out education loans, said Terry Hartle, senior vice president for government and public affairs at the American Council on Education.

But doing so may not be easy. Students’ financial attitudes are shaped long before they arrive on a campus, said Sara Goldrick-Rab, an associate professor of education-policy studies and sociology at the University of Wisconsin at Madison. Advisers may counsel students to forgo luxuries during college, she said, but many of them come to college precisely because they want access to luxuries. “They are merely trying to keep up with the Joneses,” she said, “much as we all are.”

The situation is not helped, Ms. Goldrick-Rab said, when colleges treat students as consumers.

Mr. Hartle disagreed that treating students as consumers was part of the problem. But information overload is, he said. Colleges are required to give students lots of disclosures about loans as well as campus safety, Mr. Hartle said. But there is little evidence that simply providing more and more information changes students’ behavior.

There is also little evidence that a student who enrolls in college right out of high school is making rational choices, Mr. Hartle added. “Do you know any 18-year-olds?”

There may be no easy way to tackle financial literacy before college, but parents, elementary and secondary education, and online tools were mentioned as parts of the solution. Panelists also said more research was needed to understand what kinds of financial-literacy training work best.

The report, “Money Matters on Campus,” was produced by EverFi, an educational-technology company, and sponsored by Higher One Holdings Inc., a higher-education financial-services company. A related article on the report’s findings can be found here.

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