How is the pandemic altering the perceptions of young Americans about their financial future?New market research from the consumer finance site wallethub.com taps into changing attitudes about today’s financial literacy
Two-thirds of college students (13.3 million) say the coronavirus has changed how they feel about their financial future, according to the personal-finance website WalletHub’s 2020 College Student Financial Survey, released today. The survey also revealed that students feel the pandemic is the biggest thing holding them back financially right now, ahead of a lack of money and a lack of financial literacy.
Additional survey results can be found below, along with our editors’ picks for 2020’s Best Student Checking Accounts and Best Student Credit Cards, selected from hundreds of offers. College won’t be the same this year, but students still need to prepare for their financial future, and these types of accounts are essential building blocks.
- More than 6.4 million college students get help from their parents with their credit card bills
- 2X more students from medium-income households say a lack of financial literacy holds them back the most, compared to students from high-income households
- 15% more students would grade their knowledge of personal finance with an A in 2020 vs 2019
- 14% more students consider themselves savers in 2020 vs. 2019
- Best Credit Card for Students: Bank of America Cash Rewards for Students – $200 initial bonus. 1% – 3% cash back on purchases. No annual fee
- Best Checking Account for Students: Capital One Money Teen Checking Account – No monthly fee, overdraft fee or ATM transaction fee. 0.1% APY on all balances
A Q&A with WalletHub analyst Jill Gonzalez on the state of today’s financial literacy
How has the coronavirus pandemic affected financial literacy among college students?
“The coronavirus has increased financial literacy among college students overall, with 6 in 10 students reporting an improvement in financial aptitude as a result of the pandemic. This is actually one sliver of a silver lining that we can take from COVID-19. Young people are watching what’s going on and learning just how important financial security really is when the unexpected can happen at any time.”
Should students rethink their future schooling and career prospects as a result of the pandemic?
“Students should always be thinking about their future schooling and career prospects in order to make sure they’re putting themselves in the best possible position to succeed, and when new variables are added to the equation, that may change the final conclusion. Students should not make any rash decisions in the heat of the moment, however, because the coronavirus pandemic is not done shaping young people’s futures.”
What do you think is the biggest thing holding students back financially right now?
“Four in 10 students will tell you the biggest thing holding them back financially right now is the coronavirus. Students aren’t getting the same bang for their (or their parents’) buck on tuition right now, and nearly 7 in 10 students believe the pandemic will make it harder for them to get a job. However, blaming everything on the pandemic is a bit shortsighted. We owed more than $1 trillion in student loan debt well before the coronavirus was a twinkle in that Wuhan bat’s little eye, and opportunities for advancement have decreased with the shift to online learning.”
Excerpts from the 2020 College Student Financial Survey
Identifying the best student credit card is only half the battle. You also need to use it responsibly, avoid common money-management mistakes, and build financial literacy for success after graduation.
Consider Credit Building Your Top Priority – A good credit score will save you thousands of dollars per year on loans, lines of credit and insurance premiums. It may even help you land your dream job or lease a new car. And two of the keys to building a good credit score are making on-time payments and establishing a long track record of responsible borrowing.
Don’t Make Purchases If You Don’t Trust Yourself – Credit cards report information to the major credit bureaus every month even when you don’t make any purchases. And while you may build credit faster by making purchases and paying them off by the end of the month, overspending and missing payments is counterproductive.
So if you don’t trust yourself to spend responsibly with plastic, give your card to your parents for safekeeping. You could even cut it up. Just make sure to save your account number in case you need to call customer service.
Make a Budget – If you combine credit card use with a well-defined budget while in college, you’ll be well ahead of the curve. Only two in five consumers have a budget, according to the National Foundation for Credit Counseling, and that’s one of the main reasons why credit card debt levels are so high.
Take Advantage of Campus Resources – Most colleges and universities offer financial literacy resources of some sort. For example, there might be a personal finance class you can take, a money-management help center you can visit or online educational materials to peruse. Find out and soak up as much information as you can, especially if it will fulfill a curriculum requirement. Because unlike much of what you’ll learn in college, financial skills translate directly to everyday life.
Approach Student Loans with Caution – Taking out a bunch of student loans might not seem like a big deal now, considering how long you’ll have to pay them off. But too few students truly consider how big of a burden they can wind up being. Student debt increases the pressure to find a job and can delay major life events such as buying a home, getting married or starting a family. No one wants to be paying off education debt into their 40s, which is all too common these days. So try to supplement your tuition money with scholarships, grants and work experience. This will also give your resume a boost.
Improve Your Financial Literacy – Understanding how to manage money is an invaluable life skill. And you probably won’t learn much about in school. So you’ll have to take things into your own hands. To get a sense of your current knowledge level and the areas where you can improve the most, get your WalletLiteracy Score.