While a majority of college students in the U.S. are managing their finances responsibly, many are looking for opportunities to educate themselves about financial matters and credit management, according to a new survey from Sallie Mae.
The survey examined the financial management and spending habits of 800 college students between the ages of 18 and 24. Specifically, the survey asked them questions about the methods they use to pay for purchases, their use and knowledge of credit, and their skills in money management.
Overall, the survey showed that most college students are responsible when it comes to their finances, with 77 percent reporting that they pay their bills on time and 55 percent reporting that they set aside savings every month. Fifty-six percent said they track their spending, 60 percent said they do not spend more money than they have, and 65 percent reported having a paying job.
College students also report using a variety of payment methods, with a debit card as the top payment choice (86 percent) to pay for purchases. However, a significant majority (56 percent) of the students surveyed carry credit cards, which is a more common occurrence among older students between the ages of 21 to 24.
Among those with credit cards, 59 percent said they use the cards as a way to build credit. A majority of students also report managing their credit cards by reviewing their credit report (66 percent), paying their bill themselves (73 percent), paying off their cards each month (63 percent), and keeping their average monthly balance below $500 (69 percent).
In addition to credit cards a majority of survey respondents said they had experience with other kinds of credit, including student loans and auto loans. Fifty-two percent reported having student loans, which was the most common type of debt reported.
While a majority of respondents said they are confident in thier money management skills, fewer than one-third were able to correctly answer three multiple choice questions on credit basics, including how interest is accumulated and how repayment behavior affects the cost of credit. According to the survey, only 31 percent of students correctly answered all three questions, 33 percent answered two questions correctly, 23 percent answered only one question correctly, and 13 percent did not answer any questions correctly.
This knowledge gap among college students may be attributed to a lack of professional resources or formal coursework related the financial management, according to Sallie Mae, which noted that parents are the primary resource college students rely on for money management skills. College courses were cited by only 12 percent of the students surveyed as a resource for money management and 5 percent said they have not used any resources.
A large majority — four out of five students — said they are interested in learning more about specific aspects of financial management, including saving strategies (37 percent), options for paying for college (32 percent), and budgeting (32 percent). Among the students who have some debt, 37 percent said they are more interested in learning about student loan repayment options, while only 14 percent of students without debt said they were interested in that topic.
"[I]t is clear that more financial management education opportunities are warranted for college students," Sallie Mae concluded in its report. "Additional financial management information, tools, and programs designed for this population can only benefit individual students and their wider economic communities."
Publication Date: 3/18/2016