Recipient Organization
SOUTHERN UNIV
(N/A)
BATON ROUGE,LA 70813
Performing Department
Agricultural Economics
Non Technical Summary
For several decades, college costs have outpaced income growth, forcing a majority of students and their families to use student loans to finance college. The 2008 Financial Crisis and recession made the situation worse because many state governments were forced to make deep cuts in higher education funding so as to balance their budgets. Thus, a large percentage of public colleges and universities shifted more of their operating costs to students and their families by raising tuition and fees. During the recession, sizeable numbers of displaced workers enrolled in college to improve their skill sets and career prospects, and this also led to additional increases in tuition and fees. Today, educational loans have become the primary way to pay for college; an estimated 45 million Americans have student loan debt; and long-term delinquency rate on that debt exceeds 10 percent (Federal Reserve Bank of New York, 2019). The delinquency rate implies that some borrowers are having difficulties repaying their student loan debt. In fact, numerous borrowers are reporting that they are experiencing tremendous financial stress from not being able to repay their student loans. Financial stress can affect health and well-being.Britt et al. (2017) examined the dynamics among student loans, financial stress, and college student retention and found that student loan debt and financial stress increased the likelihood of students discontinuing college. Financial stress also adversely affects health and well-being; increases incidences of headaches, backaches, and ulcers; and elevates blood pressure and anxiety, among others. Chronic financial stress can also cause workplace absenteeism, affect workplace performance, or lead to depression, and that debt stress affects children and young adults, especially those from low-income families, who can become trapped in a perpetual cycle of poor health Choi (2009). Results from a 2017 survey of student loan borrowers indicated that more than 61% of these borrowers had some repayment concerns and more than 70% reported that they were suffering from headaches, insomnia, anxiety, and social isolation due to the stress associated with the repayment of their student loan debt (Insler, 2017).Coupled with financial stress is the high level of financial illiteracy prevalent among college students. Personal financial management courses are often not taught in high schools or in colleges. Therefore, many college students lack the financial acumen to navigate the increasingly complex world of finance. For example, many do not understand how to budget, save, invest, or the importance of credit, among others. Because of the high level of financial illiteracy, concepts such as the time value of money are often not well understood, and as a result of which, many students often borrow more money than they will be able to comfortably repay from future earnings. Financial illiteracy and poor financial decisions can lead to future financial stress and health issues. Chan, Chau, and Chan (2012) suggest that high debt loads and poor budgeting practices by college students have serious personal and financial consequences such as damaging credit scores, bringing on stress-related health problems, and impacting academic performance and graduation rates. Therefore, researchers must study relationships among college students' money-related aptitudes, financial management practices, and financial well-being.A financially literate individual has "the ability to make informed judgments and to take effective actions regarding the current and future use and management of money" (The Government Accounting Office). Such an individual knows how money works, how to create a budget, track spending, and pay off debts, and how to make sound decisions on personal financial matters such as investing, insurance, real estate, paying for college, retirement, and tax planning, among others (Investopedia, 2019). Although college students are not expected to possess all the previously mentioned skills, many lack basic financial management skills and are making costly money mistakes. Therefore, as with our previous study, once we collect the baseline data, we will focus our educational efforts on debt, interest rates, and repayment schedules for student loans, credit card, car loans, and mortgage, among others, and their impact on credit scores, employment opportunities, and future financial security. Specifically, our focus will be on financial and loan literacy and financial stress. We will define financial stress as a condition resulting from financial and or economic events and creating anxiety, worry, or a sense of scarcity, and accompanied by a physiological stress response (The Financial Health Institute, 2019). Given the societal importance of having a financial literate population and the fact that current college students will be the leaders and workers of tomorrow, we must equip them with the financial tools to succeed in the global marketplace. Thus, we must continue our efforts to provide them with the tools to become more financially literate and to the extent possible help to reduce their financial stress levels.
Animal Health Component
100%
Research Effort Categories
Basic
(N/A)
Applied
100%
Developmental
(N/A)
Goals / Objectives
The study's overall objective is to broaden students' financial and loan literacy levels. The specific objectives are as follows:1. To evaluate students' financial literacy, student loan literacy, and financial stress levels;2. To develop instructional and other educational resources aimed at expandingknowledge and changing behavior;3. To examine the role of socioeconomic and other factors on literacy, attitudes, and behavior.
Project Methods
PROCEDURES FOR ACCOMPLISHING EACH OBJECTIVEIn the data collecting, the project director will use a multistage random sampling technique to identify sample participants. The approach involves the following steps. 1. Southern University and A&M College-Baton Rouge (the population) will be divided into six colleges and schools (clusters) or primary sampling units (PSUs).2. One PSU will be selected at random, along with the College of Agricultural, Family and Consumer Sciences.3. The selected PSU will be divided into departments and courses and a random sample will be drawn from courses within the selected departments.4. Students within the randomly-selected courses will be asked to participate in the study, but will be screened to ensure that they participate only once.If a 5% margin of error at the 95% level of confidence is assumed, then the sample size must contain 367 students. The survey instrument will contain questions from the National Financial Capability Survey and questions designed to measure financial stress. The instrument will be validated, pre-tested, and revised prior to full-scale execution. The data will be analyzed using descriptive and inferential statistical techniques. Objective 1Data on financial literacy will be generated by asking students the five questions from the National Financial Capability Survey which deal with interest, inflation, risk, and loan repayment. For loan literacy, participants will be asked a subset of questions on student loan from the NPAS 2016 survey. The sample questions below are adopted from Anderson, Conzelmann, and Lacy and are based on the NPAS 2016 study.If a borrower is unable to repay his or her federal student loan, what steps can the government take to collect the debt? If you are unsure of the answer, please provide your best guess. (Please check all that apply.)Report that the student debt is past due to the credit bureausHave the student's employer withhold money from his or her pay (garnish wages) until the debt, plus any interest and fees, is repaidRetain tax refunds and Social Security payments until the debt, plus any interest and fees, is repaidThe following statements will be used to assess financial stress: (1) I feel stressed about my personal finances; (2) I worry about having enough money to pay for school; (3) I worry that I will not be able to repay my student loan debt. The response-categories will be based on a five-point Likert Scale ranging from strongly disagree through strongly agree (Lim, et al., 2014).Objective 2Based on our previous study and those at the national and state levels, it is unlikely that scores will be high on the financial literacy questions but financial stress may be high. Therefore, we will develop and distribute flyers containing information on budgeting, interest rate computation, loan literacy, and repayment schedule, among others. With instructors' permission, we will give students a quick rundown of some basic personal financial management techniques. The project director will also teach these financial concepts in her Applied Economic Principles (AGEC 212) course and to students enrolled in the Orientation to Agricultural Sciences courses and track their learning and utilization of the concepts throughout the semester. We will also ask students to rank the usefulness of the instruction and handouts in addressing their financial literacy and stress levels.Objective 3Research suggests that financial literacy and financial stress are influenced by cultural, psychological, demographic, socioeconomic, and geographic factors. Therefore, data also will be collected on students' socioeconomic and demographic (SD) characteristics including age, academic classifications, gender, household size, residence, and job and academic status, among others. With these data, we will be able to ascertain the importance of SD characteristics on financial literacy and financial stress levels. ModelsChi-square contingency and t tests will be used to examine the relationships among and between variables. These tests allow us to determine the degree of association between selected SD characteristics and the response categories. Additionally, logistic regression will be used to assess the binary outcomes such as correct or incorrect responses to the financial literacy questions. EVALUATION PLANThe project team will use already developed and tested survey instruments to administer pre and posttest evaluation. These instruments are culturally appropriate for use given the demographics of the intended participants. A focus group panel of participants also will be used to ensure that qualitative data are obtained and incorporated in the study. The evaluation will be based on how well the project achieved its stated objectives, and the activities, outputs, and outcomes in its logic model.