Participation in an elective financial education skills course has little measurable influence on college students' financial well-being, according to a new analysis set to be published in the Certified Financial Planner Board of Standards' Financial Planning Review.
The paper, "Undergraduate financial knowledge, attitudes, and behaviors: The impact of financial life skills course on college students," was authored by Cliff Robb, a professor at the School of Human Ecology at the University of Wisconsin-Madison. Robb's work was supported by Somalis Chy, a graduate student at UW.
It is increasingly common for universities to offer financial education or life skills courses as electives, the authors note. However, less is known about the potential effect of these courses on factors beyond basic financial literacy — from the levels of financial stress experienced by course-takers to their actual financial well-being during their working lives and retirements.
Ultimately, evidence from the study finds that a single-credit financial life skills course has little sway on financial well-being or financial stress. However, there were notable changes associated with financial socialization and financial self-efficacy that reinforce some earlier explorations of financial well-being.
The authors say their analysis backs up what probably feels like common wisdom to many practicing financial advisors: There is no easy fix to the financial literacy gap. Instead, it requires sustained, ongoing education and advisory support to truly help individuals and families get on the right financial footing, both during their working lives and in retirement.
Running the Analysis
According to the new paper, financial literacy is now widely acknowledged as being important for consumers, but the provision of support and resources for consumers has not been consistent in the United States.
"Currently, 33 states require basic financial education in high school, though specific content, depth and structure varies both within and across states," the authors write. "Evaluations of state-mandated financial literacy courses at the secondary level have shown positive outcomes, as evidence increasingly points to the effectiveness of these programs."
Robb and Chy suggest these studies have shown that financial education influences consumers' financial well-being through augmented financial knowledge and improved financial behaviors. However, whereas prior studies provide evidence for the value of sustained education at the secondary level, little is known about the value of college-level financial literacy courses, especially those taken as electives.
"At the college level, courses are often elective, and content varies significantly from one college or university to another, making it inherently difficult to gauge program success more broadly," the authors suggest.
With these challenges in mind, the authors conducted a broad survey of 370 undergraduates at a major U.S. university. Half had opted to take a financial life skills course as freshmen or sophomores and the other half did not.
The initial parts of the analysis explore predictors of course enrollment. For the latter analyses, the authors were primarily interested in how students who choose to enroll in the course might differ from those who do not take the course. The paper also explores potential course affect on financial well-being, stress, attitudes and student loan debt awareness.
