Beginning in 2012, the federal government will use three-year student loan default rates (which are rising quickly) to help decide which higher ed institutions qualify for federal student aid programs. While this will have the largest impact on for-profit colleges (whose students, according to a US Department of Education report, are more likely to default within three years of graduation), it will be important for all types of institutions to take steps to help their students develop financial literacy and make sound financial choices. And this is not only important because of federal requirements; numerous studies have indicated that financial difficulties are the most frequent reason why students “stop out” and do not complete a degree.
At the University of North Texas, one of the institutions on the leading edge of financial literacy programming, Paul Goebel has established a Money Management Center with very few staff, relying on partnerships, staged implementation, and peer counseling. Four years later, the center is showing a remarkable success rate. We interviewed Paul Goebel and the center’s assistant director, Danielle Champagne, for advice on managing (and measuring the effectiveness of) a financial literacy program.
Offer Personalized Advising
First, Goebel emphasizes the importance of focusing not on simply transmitting financial information to students through classes or online tutorials, but on building core money management skills — organization, financial goal-setting, and budgeting — through individualized action plans.
Goebel cites several examples of personalized counseling and skill-building. One student came to his office for advice on financing the purchase of a new vehicle. The student hadn’t thought of searching for used cars, so a money management mentor guided the student through research and cost comparisons. Another student, concerned about managing growing debts, was advised to search her dorm for various paperwork — credit card statements, loan statements — and write all the amounts and interest rates on one page, as an initial step toward taking control of her finances. In each case, the advice — and the action plan — was tailored to the student’s situation and needs, and began with steps that were designed to empower the student.
“We help our students learn to invest their time wisely to research the information they need,” Goebel comments. “Through that information, they can bring control and also empowerment to their financial life, and discover new options.”“Help your students understand that the numbers on their financial plan may change, but that the core financial skills will never change, whether they are 22 or 102.”
Paul Goebel, University of North Texas
Establish the Right Relationships on Campus
If your institution is taking the approach of offering financial literacy advising (rather than relying just on the inclusion of financial literacy material in student orientation or first-year programming), then your program will grow by referral and word of mouth.
It’s important that the various offices that students interact with across campus know about you and are ready and eager to refer students to your program. You will want the various student services offices — and faculty — to be aware of the program and educated about the role it has to play in student success. As these partnerships take time to build, Goebel recommends starting by “playing your strengths.” On any campus, there will be those departments who see the value of a financial literacy program immediately, while others will be more conservative in helping you. Play to your strengths and build collaboration with your natural partners.
- First, focus on partnerships between offices responsible for the key points of financial interaction with students: financial aid, accounting, student housing.
- Second, look to build relationships with those departments where students typically go for advice.
Particularly, Goebel recommends involving academic advisers in your network as early as possible: “make sure they are aware of your services, what you can provide to students, and the role that you have in the success of each student.”“You want to identify staff members on both your team and the other department’s that can serve as liaisons. In that way, when a student is referred, the student goes to a specific staff member, not a desk or a phone number but a staff member with a name.”
Paul Goebel, U of North Texas
Decide on the Right Metrics
Most financial literacy programs are still too new to include significant longitudinal assessment, though the University of North Texas has some significant numbers tracking the impact of the consultative services portion of their program on persistence and retention. As your institution plans for this assessment, it is important to prioritize the metrics that you’ll track. What is the most important measure of success to track, given your division’s priorities?
Goebel and Champagne suggest three primary areas for which you can identify evaluative metrics:
- Development of core financial skills
- Positive behavioral changes
- Positive impact on persistence and academic success
Development of Core Financial Skills
The University of North Texas identified three core financial skills they wanted to cultivate in their students: organization, goal-setting, and budgeting. If you have identified and defined the core skills — and built workshops and services to help develop those skills — then you can test for knowledge and skill-building, whether through quizzes, interactive exercises, or evaluative surveys. Have the students written down specific goals? Have they set specific tasks with self-identified deadlines for mastering their budget? Do they complete those tasks on time? You can also ask targeted questions to determine if students have internalized the information given.
Positive Behavioral Change
This is the hardest area to track. But there are ways to begin tracking:
- A student’s level of confidence with financial planning
- A student’s commitment to financial planning
The first of these you can measure through evaluation surveys or interviews. Champagne recommends checking in with a student at the start and end of a financial literacy workshop or a series of consultations. Having identified the core financial skills you want the students to develop, have them rate their confidence with each. Also, ask how the student intends to apply the information they have gained at the program to their future choices. “Ask about both the short term and the long term,” Champagne advises. “What will they do tomorrow? What will they do next year?”
For hard data, track what percentage of your students schedule follow-up consultations or attend additional seminars, and track percentage of tasks completed. In the case of the University of North Texas’ program, students leave consultative sessions with a financial action plan and specific steps to take and self-identified deadlines for task completion. If 85 percent of your students are following through on those action plans, that is very positive. If your percentage isn’t as high as you would like, seek qualitative feedback (for example, through an anonymous customer service survey) to determine how you can make your program more effective. “We can create a program and think it is the best thing in the world,” Goebel comments, “but if it is not relevant or resonating with our students, then we’re missing the educational moment.”
Persistence and Academic Success
Champagne recommends cross-referencing the data you benchmark on students’ confidence at financial skills with their academic progress. Financial difficulties are the most significant factor in student stop-outs. If your financial literacy programming is effective, you should see higher retention rates among the students involved in the program. Besides persistence, also track GPA.“Consider confidence and the power of knowledge. These are incredibly strong factors that help students alleviate and reduce the stress and anxiety caused by financial issues. They will have more energy to devote to their coursework and their academic learning.”
Paul Goebel, U of North Texas
Finally, Goebel and Champagne note one additional metric that can apply at residential campuses at which housing fees and tuition are not bundled. Since the University of North Texas’ Student Money Management Center has opened its doors, the residence life and housing officials report that the number of students who have defaulted on their housing accounts has dropped. While this measure amounts to a correlation rather than a confirmed causation, it is worth noting.