Financial Literacy Workshop

Making the Case for Financial

Literacy
Module 1 of 4

DRAFT
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

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 Workshop Agenda

1. Why Programs Are Needed

2. Define and Design Your Program
3. Develop Your Program Content
4. Implement Your Program

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Module 1: Why Programs are Needed

• Financial literacy – Why does it need our attention?

• Benefits of program
• Best practices of successful programs

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Financial Literacy

Why does it need our attention?

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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.

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What is Financial Literacy in College?

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What do Students Know?

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 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

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Jump$tart Financial Literacy Survey

Percentage of questions answered correctly by:

High school seniors 48%
College freshmen 59%
College seniors 65%

Percentage of questions answered correctly by:

White HS students 52%
Hispanic HS students 45%
African-American HS students 41%

Jump$tart Coalition 2008

Communities Impacted the Most
15% of Americans are “unbanked”
30% of African-Americans & Hispanics

Almost half of Americans Hispanic & African-American

reported having trouble communities are disproportionately
keeping up with monthly impacted
expenses

Low-income populations

75% of young people are likely

to lack the skills needed to make Women tend to have lower
beneficial financial decisions levels of financial literacy than
men.

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Concerns With Poor Financial Literacy

• Paying for college

• Little saving, record borrowing
• High-interest lending
• Home buying
• Employee benefits

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Changing Demographics of Colleges
Increased Enrollment

•Hispanic 500%
•African-American 165%
•Asian & Pacific
Islanders 336%
•American Indians &
Alaska Natives 188%

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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%

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Financial Literacy and Retention

There is a strong correlation between

financial literacy and student retention.

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

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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

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Loan Default and Title IV Compliance

•Institutionswith 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

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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

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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.

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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

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Retention and Graduation Rates (Continued)
• Students leave college due to the stress of 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

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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

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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

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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

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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

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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

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Needs Assessment

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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

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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

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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

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