College Students and Money: Majoring in Broke?
Students are confident in their financial management skills despite evidence that they're struggling.

6 in 10 students know someone who dropped out or cut class load because of money problems.

MINNEAPOLIS (September 25, 2001) - A strong majority of today's college students feel good about their money management skills, even though many admit to out-of-control spending and excessive debt.

According to a national survey conducted by Yankelovich Partners, 79% of student respondents said they manage their money somewhat well or very well, and 89% feel they have the skills to manage their money effectively after college. But when asked about their own current financial situations, students painted a less rosy picture:

• 72% said they do not have a written budget.
• 37% said their spending sometimes feels out of control.
• 23% have received a letter or call from a collection agency for overdue bills.
• 23% admitted that money problems have affected their grades
• 63% know another student who has dropped out of school or reduced their class load so they could earn money to pay off debt.

"Given the climate of rampant consumerism and 'buy now, pay later' attitudes, it's not surprising that students think they have a handle on their finances, even though the facts show otherwise," said Nathan Dungan, vice president of stewardship and brand development for LB.

Why are students struggling?
With spending power of more than $100 billion per year (College Concepts, 2000), college students today spend more money than their parents, grandparents and even their older siblings did at the same age. Given the consequences of having that much financial power and responsibility, it's important that college students understand the role of money in their lives.

Seventy percent of students surveyed said they learned the most about how to manage money-spending, saving and sharing it-from their parents. Other influences include their own trial and error (7%), relatives other than parents (5%), friends (5%), magazines or books (4%), teachers or school (3%), and the Internet (1%). So what have young people learned about money from their parents and others? Consider these student responses:

• 44% said they remember their parents fighting about money while they were growing up.
• 62% said that someone important to them set a negative example for managing money.
• One in five (20%) said their immediate family is not comfortable talking about money. 44% said neither of their parents regularly gives money to charity.

"Many students have learned that money can be a source of tension, but they haven't learned how to deal with that tension," said Dungan.

"We haven't given young people enough guidance about how to use money in ways that reflect their values."

Marketers feed desire for immediate gratification: "buy now, pay later"
The absence of good examples or guidance about money appears to have created a vacuum filled by the daily barrage of consumer marketing messages. The result? A materialistic outlook that leads to living beyond one's means and the problems that go with it, according to Dungan. Among the survey's other findings:

• 72% said it seems they never have enough money.
• 80% agreed that college students today get too stressed out over having money and things.
• A third (33%) admitted they sometimes buy things they can't afford in order to make themselves feel better.

"With constant messages telling them that they aren't good enough without products X, Y and Z, college students often turn to credit cards to fill in the gaps between what they can afford and what they think they need," said Dungan.

Editor’s Note: Yankelovich Partners conducted this via the Internet among a representative sample of 1,000 full-time college students nationwide. The margin of error for the total sample is +/-3.1 percentage points. Interviews were completed June 26 – July 11, 2001.