Smith Study Sheds Light
on College Student Finances
By Kristen Cole
Institutions of higher education need to pay attention
to the critical area of teaching financial education, according to Smith College
Professor of Economics Mahnaz Mahdavi, whose recent research provided evidence to
back that up.
Mahdavi designed a study about student credit card
habits last year, in part to determine what else Smith’s Women and Financial
Independence (WFI) program should be teaching students to prepare them for making
financial decisions now and in the future.
In the national survey of 700 undergraduate, graduate
and professional school students, Mahdavi and fellow researchers Jessamyn Lewis,
assistant director of WFI, and Howard Gold, associate professor of government, found
a surprising trend. Nationwide, about 23 percent of college students—men and
women—use credit cards to pay for tuition and fees, and 52 percent charge textbooks
and school supplies, which is a greater percentage than use credit cards for dining
out.
The findings spurred a Washington Post columnist to
challenge other colleges and universities to begin financial education programs like
Smith’s. In the August 25 edition of the Washington Post, Michelle Singletary
wrote: “The Smith program should be emulated all over the country. And those
colleges that don’t have a similar financial literacy program aren’t
giving students their money’s worth.”
In fact, more students in the survey had credit card
debt than had student loans—65 percent compared to 48 percent. “Students
are not just paying for late-night pizza with their credit cards, they are paying
for college,” says Mahdavi, whose survey was funded by OppenheimerFunds, Inc.,
and administered randomly and electronically by InsightExpress. “That can be
an expensive way to get an education.”
Mahdavi’s reason for conducting the survey was
substantiated by yet another finding: a lack of knowledge about financial matters
played a significant role in students’ credit card management.
Fifty-five percent of students said they had never
taken a course in personal finance or economics. When they needed information about
finances and loans, students turned first to friends and relatives, not to financial
professionals or financial aid offices.
Although Smith students cannot amass credit card debt
from tuition payments because the college doesn’t accept credit cards, they
may still take advantage of the courses WFI offers on credit, debt and budgeting
in college and beyond. |
