Welcome to The CITE -- a blog on Course materials, Innovation, and Technology in Education, created by Mark Nelson and now part of the Publications Department of the National Association of College Stores. CITE is a pun with multiple meanings - referring to cite as in citation, something people reference; site as in location, website, or place people go to; and sight as in foresight or looking ahead to what is coming. Comments, discussion, feedback and ideas are welcome.

Friday, August 19, 2016

Students Have Limited Grasp of Financial Info

Some college students are unfamiliar with basic financial concepts, which could pose a problem for those expecting to borrow substantial loans to pay for their education.

In a survey with 18,795 student respondents at 51 public and private universities and colleges, the Study on Collegiate Financial Wellness asked five questions about interest calculations, inflation, college loan repayment, take-home pay, and credit score components to determine what students knew about consumer finance.

Only 11% were able to answer all five correctly. About 29% got four questions right and another 29% got three, but 7% couldn’t provide a single accurate answer. Some questions apparently stumped students more than others, according to a report in The Conversation. Almost 21% picked the wrong answer on the interest question, but 41% didn’t get the one on inflation.

“Students who answered the interest rate question incorrectly don’t understand that interest is earned not only on money deposited in a savings account, but also on previously earned interest—a feature known as compounding—while students who answered the inflation question incorrectly don’t understand that rising inflation reduces the buying power of money,” wrote researchers Catherine Montalto and Anne McDaniel.

Not surprisingly, older students and students who had taken some type of financial coursework performed better on the five questions. Students attending four-year private schools fared worse on the quiz than those at two-year or four-year public institutions.

1 comment:

Anonymous said...

The final point is interesting, indicating that students who are better off financially actually know less about the subject. I wonder if they're more insulated from monetary concerns by their parents.