There were plenty of findings from the Higher Ambitions: How America Plans for Post-secondary Education research, but one thing struck me as urgent: families want more tools to help plan for college or other continuing education, and they need those tools now.
Financial Literacy in High School
Half of families reported that high schools are teaching basic financial literacy, like budgeting, using credit, and how interest works. That’s a good start. I think we would all agree, though, that we’d like to see that number higher. In fact, of those who aren’t getting that financial literacy education in high school, 89% said they want it.
When quizzed on basic financial concepts, like whether or not student loans need to be repaid, the majority of families got it right. When things got a little more specific, though, including how interest on those loans is calculated, just 18% of families answered that interest begins to accrue once the loan is disbursed to the school, which is the correct answer in most cases (except in the case of federal direct subsidized loans).
Some cynics might say, “So, what’s the big deal?” Well, it’s clear there are real life decisions being made by high school juniors and seniors. Whether their (near) future investments are based on college, their career, or other life milestones, high schoolers are close to, if not already, making the financial decisions we associate with ‘adulting’.
For example, what about the students who don’t have the tools and are considering ruling out higher education because they assume they can’t afford it? Nearly a third of those who aren’t sure if they’ll continue education after high school say it’s because they aren’t sure who will pay for it. With some more financial literacy support, students may be surprised to learn there are avenues out there to make college more affordable – and they start with (free) steps taken while still in high school.
Building a Future of Financial Independence
While it’s encouraging that high schools are beginning to provide education on finances and the support available to students, it doesn’t have to start and end with high schools. There are a ton of free resources online to help coach students and families through this next chapter of their future:
- For starters, there’s the Free Application for Financial Student Aid, or FAFSA. The gateway to more than $150 billion in federal aid, like scholarships, grants, federal loans, and work-study. The FAFSA opens up on October 1 each year, and its highly encouraged that students and parents file in October or soon after, because some of the aid is awarded first-come, first served. The reality, though? Families may not know the form is available, or why they need to file it right away. As of April, 40% of high school seniors had yet to file – potentially leaving valuable dollars for college on the table.
- Next up? Scholarships. Research shows scholarships are the single most-used resource students use to pay for college, used by two-thirds of families, and they covered nearly a third of college costs in 2018-19. There are a ton of resource available to find them, including Sallie Mae’s free Scholarship Search Tool. Students can also check with their high school or career counselor for additional scholarship resources.
- In addition to scholarships, families may need to calculate how much of their savings, income, and other funding sources like loans, will be needed to cover the cost of post-secondary education. Understanding just how much students or parents might need to put away each month to save for higher education is huge! And knowing if there’s going to be a need for additional funding, like loans, is pretty critical, too. That’s where tools like the College Planning Calculator come in. It’ll help you search for college costs and build a customized plan based on your own situation. You can see the full cost of college, not just tuition, and factor savings, scholarships, grants, and loans into your plan.
- Finally, check out the Paying for College Resource. This hub of information if a one-stop shop to prepare you for talking about, planning for, and paying for college. It features short videos, checklists, and guides to help break down the FAFSA, financial aid offer letters, scholarships and grants, student loans, etc.
Financial literacy doesn’t start and end with high school students looking to pursue higher education. Once out of school, young adults express a desire to know more about financial literacy - in a way that will set them up for success down the road. Whether it’s information on investment strategies, retirement and future financial planning, or budgeting, debt reduction strategies, and credit reports and scores, financial literacy is truly a lifelong learning.
There are really smart resources, including mobile apps and online tools, to help students and families maintain a sense of financial empowerment. And with an early introduction to the topic, I think more families will be prepared to become financial masters.