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KEY CHALLENGES(and how to overcome)

Better Money Management

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Introduction

We’ve all known for some time that money is an issue for students.

Tuition fees are driving up debts and students and parents are increasingly focused on value for money. But there is a clear mismatch between that and how students are managing their money on a daily basis.

We’ve done some research which shows that this mismanagement could see you losing up to one in 10 students a year which is significant number and could have a significant impact on your institution’s finances.

Clearly it will come as no surprise to you to hear us say that we think upskilling students and getting them more financially savvy is key but this shows just how important it really is.

We hope you find it useful and look forward to your thoughts and feedback.

Read on to hear more.

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Challenge #1:

Retention

‘The cost of acquiring new students is considerable while retaining them represents a far lesser investment ’.

Results from our survey show that 25% of students are worried about how they will be able to afford to continue with studies and 9% are likely to drop out of university because they cannot afford to continue with their studies.

That means almost half a million students worrying about how they will afford to continue their studies.

The focus on NSS results and the increasing expectations of students makes retention a key matrix. As such reducing the rate of withdrawal and enhancing the student experience is a key ambition.

Since the cost of acquiring new students is considerable while retaining them represents a far lesser investment. The average university non-completion rate (2011) was 7.4% and we are concerned that students feel they have to resort to dropping out of university as a financial solution.

Apart from demonstrating commitment and long-term pastoral care to students’ wellbeing; enhancing the value students get out of their university experience means they can transition into the careers they desire or the environment they seek.

Students shouldn’t live in fear of their

financial future, but instead be better

educated about financial management.

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Challenge #2:

Ambivalence

Despite a broad awareness that current spending habits impacts their future finances (59%), almost a third (30%) of students say they’ll ‘worry about it later’ and 29% say that they don’t think about the future as they live for the now.

While students are clearly worried about money, and debt – the recent protests demonstrate that pretty clearly – our results indicate that there is a disconnect between awareness and action.

With forecasted average debt upon graduation of £44,015 it is critical that students keep an eye on the horizon and be aware that financial decisions made on campus can have repercussions long after they have left.

The challenge is therefore to engage them with their finances and encourage them to consider learning this lifelong skill while at university. This way they have access to advice and financial assistance should they need it.

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Challenge #3:

Making money last

Our survey found that 27% of students felt the need to borrow (or ask for) money from others.

And with over a month to go until the next instalment hits students’ accounts, one in ten have already spent their entire loan. Those in their second year demonstrate the most worrying financial behaviour. Almost a quarter having spent their entire instalment and, of the 40% who have borrowed money, almost 23% have already borrowed over £1,000.

46% of all students consider themselves to be confident at money management – 34% have no idea how much living costs really are, 35% find it hard to rein in their spending when funds are low and 34% find it difficult to cope without being given money from friends / family.

It is clear that many are overestimating their knowledge and understanding. This is a global phenomena.

Students who are consistently out of money before their loan arrive are more prone to dropping out and are more likely to turn to dangerous lending practices to fund the shortfall.

When students are financially savvy and in control everyone wins. There is more protection for potential budget carryover, potentially a reduction in the need for emergency funding and therefore more funds available for other initiatives eg WP.

We firmly believe that technology has a significant role to play in complementing existing services. By equipping students with the skills necessary to manage their money and take control of their financial future in their own time financial behaviour becomes a shared responsibility.

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Challenge #4:

Dangerous practices

The more students declare their inability to get from one loan instalment to the next without running short of funds the more concerned we are about the impact gambling and payday lending are having on students.

Troublingly while students are increasingly turning to gambling and payday lending (24% each) to ease financial worries - less than 2% of students would turn to the university.

Some payday lenders are specifically targeting students, and many student-centric websites are helping students “beat the system” through matched betting.

The NUS has long called on universities and colleges to ban adverts for payday loans on campus but the ubiquitous nature of payday advertising poses a multitude of challenges for student advisers. So too do gambling sites and apps.

Could greater signposting to the availability of hardship funds and other financial resources on campus be helpful? Could immersive activities drive the message home in more practical ways? Debt is deeply personal and intimate – might students be more comfortable interacting online rather than face to face? Could access to non-judgemental online resources provide another knowledge pipeline.

It is important that university campuses are safe spaces for students and we must arm them with the knowledge, confidence and skills to make informed decisions, particularly when at their most vulnerable.

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Solution

Financial insecurity is a key challenge to student services and universities.

But the solution isn’t, and can’t, always be about finding more money – encouraging and educating students to better spend available funds can prove to provide better short (and long!) term value both to the institution and the student.

We are calling on students to act now and take control of their finances and avoid spiralling debt. By taking control of their finances, students can apply themselves to their studies rather than stressing about money. Those who are better informed are better equipped to succeed.

By understanding the sources of satisfaction (and dissatisfaction) of students, and matching 21st century solutions with traditional face to face advisory institutions can set their students on the path to success.

The innovative can truly thrive in periods of challenge and that means a greater focus on ensuring students are aware of the financial reality on campus before they arrive and then ensuring sufficient resource, available when they want it for just in time learning.

Better Money

Management

With NSS statistics, and the like, increasingly influential, enhancing the student experience,

raising satisfaction and providing further skills and resources is all the more important.

Together we can empower, and upskill, young people for the 21st century!

Phone: 0800 808 9533Email: enquiries@blackbullion.co.uk

www.blackbullion.co.uk