My good friends just sent their eldest child to college. It has been interesting to hear about their related financial exploits.
Tuition is a big consideration, and the school’s distant location requires travel dollars.
Outfitting the dorm room was expensive, meal plans are pricey, and Dad was shocked to learn two textbooks cost nearly $500!
Dad confided he would suggest their son find a part-time job.
Mom, too, has concerns about their son’s available financial resources. She called the lad: Was everything OK?
His response: “Send gum, Mom!”
Gum? She’d packed the kid off with ten packs of it! Did they not have gum in his vicinity?
How would he handle finances if he could not plan for gum expenditures?
Research this week reveals spending habits of college students—aside from tuition bills—and indicates these young adults may need help selecting financial products and planning for and determining responsible expenditures.
Further, students say their parents often are unaware of money spent at college. Mom and dad may not approve as they help foot the bills.
‘I had a stick of CareFree gum, but it didn’t work’—Mitch Hedberg, comedian
“In Face of Growing Student Debt, College Researchers Call for Financial Education for University Students,” says Kansas State University. Researchers say it is likely “Financial issues are one of the top reasons… students drop out of college.”
Most young adults entering college have not had benefit of financial literacy courses and do not know basic money management skills, such as making timely payments and avoiding the rapid accumulation of credit card debt.
“There’s a lot of need but not a lot of resources for college students currently,” the authors note.
Debt adds up. In addition, “30% of students who have student loans drop out of college, which is a pretty alarming percentage.”
“Financial habits are really developed in college,” observes a financial adviser in a recent Forbes article that identifies “The 9 Habits You Develop In College That Will Haunt Your Wallet.” Among them:
College students account for one of every five identity theft complaints, suggesting this group lacks awareness of financial fraud prevention.
‘We patched it up with chewing gum and scotch tape.’—Norm Hewitt, New Zealand rugby player
Let’s chew on a few facts about where and how college students spend, as financial bubbles could burst without attention to this detail.
College students boast “immense buying power” and wield “a vast arsenal of gadgets,” as reported in a Crux Research survey offering various insights on purchase behavior of students.
A few highlights of note regarding collegiate spenders:
This is all important, as “The college years remain a pivotal point in a consumer’s life… A lot of lifelong consumer behavior and purchase patterns are being initiated and ingrained.”
Another interesting survey unearths additional earning and spending patterns. See “College Students’ Spending Habits” as reported by studybreakscollegemedia.com.
Noted, students’ sources of income are parents (45%), a job (40%), and loans (15%).
Seventy-three percent of students spend $6,000 or more annually on basic living expenses, and $1,200 is the amount spent annually on entertainment.
Some sticky statistics on percentages of students who spend in various places:
Also, “16% of college students… admit to spending money on marijuana every month. And, more specifically, 10% of surveyed students claim to spend $300 or more per year on this habit, and 1% admit to spending at least $6,000 per year.”
Do you know “What Your College Kid Isn’t Telling You About Money?” asks philly.com. “More than half of college students (55%) admit they hide information from mom and dad about all that money they are spending… but only 33% of parents realize that’s the case.”
Another way students “double the pleasure” for their parents: “While 90% of parents claim to be on top of how much debt their children owe, just 78% of students agree their parents are up-to-speed on their finances.”
Some students may be in the know about their bad habits: “26% of college students admit they may be doing damage to their credit rating. Only 17% of parents think their little angels could possibly be doing such a thing.”
‘Presidential candidates don’t chew gum.’—Theodore C. Sorensen, presidential adviser
Meanwhile, “Most Parents Worry That College Costs Will Hurt Retirement Savings” as reported in the Chicago Tribune.
Here, a Citizens Financial Group study shows “70% of parents with children age 18 to 24 are concerned that an investment in college won’t pay off,” and “nearly two-thirds of parents with children ages 15 to 17 worry that college costs will jeopardize their ability to save for retirement.”
How can parents help a college student from going broke? The Washington Post has a few suggestions. First, discussion about money, debit and credit cards, and bank accounts is a good idea.
Beyond that, students can budget for food, find a good financial institution, talk with their parents about managing budgets and accounts, and find ways to economize—perhaps in finding deals on textbooks, for instance.
Many parents tell their kids who chomp away at Hubba-Bubba, “I don’t want to see it, and I don’t want to hear it.”
Possibly, in the case of the annoying gum chewer, ignorance is bliss.
But in the realm of personal financial management, ignorance is bliss for neither student nor parent.
Do your members know what’s happening on campus?
LORA BRAY is an information research analyst for CUNA’s economics and statistics department. Follow her on Twitter via @Bray_Lora, and visit the CUNA blog, “The Research Roundup: Economic Perspectives.”