Republic of the Philippines

City of Taguig
TAGUIG CITY UNIVERSITY
Gen. Santos Avenue, Central Bicutan, Taguig City

Background Information

Financial literacy and student debt are two significant issues that affect

college students worldwide. Financial literacy refers to the ability to manage money

effectively, while student debt refers to the amount of money that students borrow to

finance their education. Student debt has become a growing concern globally, and

its effects on college students' financial well-being have become increasingly

apparent.

The high cost of tuition and living expenses has forced many college students

to borrow money to finance their education. As a result, student debt has reached

unprecedented levels, and many students struggle to pay off their loans after

graduation. This has led to a growing awareness of the need for financial literacy

among college students.

Several studies have been conducted to explore the relationship between

financial literacy and student debt. Studies have shown that students with higher

levels of financial literacy tend to have less debt and are better equipped to manage

their finances effectively. In contrast, students with lower levels of financial literacy

tend to have more debt and are more likely to struggle with financial management

after graduation.

Moreover, the studies have also shown that financial literacy programs can

have a positive impact on students' financial well-being. These programs can help

students develop critical financial skills such as budgeting, saving, and investing,

which can help them make informed financial decisions and avoid debt.

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 Republic of the Philippines
City of Taguig
TAGUIG CITY UNIVERSITY
Gen. Santos Avenue, Central Bicutan, Taguig City

In summary, financial literacy and student debt are crucial issues that affect

college students globally. The relationship between these issues has been studied

extensively, and there is a growing awareness of the need for financial literacy

programs to help students manage their finances effectively and avoid debt.

Objectives of the Study

study of College Student's Financial Issue" may include:

1. To examine the level of financial literacy among college students and how it

relates to their student debt.

2. To explore the factors that contribute to college students' financial literacy and

student debt.

3. To assess the effectiveness of financial literacy programs in helping college

students manage their finances and avoid debt.

4. To identify the challenges that college students face in managing their

finances and paying off their student loans.

5. To provide recommendations on how college students can improve their

financial literacy and reduce their student debt.

6. To contribute to the existing body of knowledge on financial literacy and

student debt among college students and provide insights for policymakers,

educators, and financial institutions.

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 Republic of the Philippines
City of Taguig
TAGUIG CITY UNIVERSITY
Gen. Santos Avenue, Central Bicutan, Taguig City

By achieving these objectives, the study aims to provide a better understanding

of the relationship between financial literacy and student debt among college

students and identify potential solutions to address this issue.

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 Republic of the Philippines
City of Taguig
TAGUIG CITY UNIVERSITY
Gen. Santos Avenue, Central Bicutan, Taguig City

The study on financial literacy and student debt among college students can

contribute to the existing body of knowledge by providing insights into the factors that

contribute to financial literacy and student debt among college students, the

challenges that college students face in managing their finances and paying off their

student loans, and the effectiveness of financial literacy programs in helping college

students manage their finances and avoid debt.

This study can provide policymakers with valuable information on the financial

challenges facing college students and the need for policies that can help improve

financial literacy and reduce student debt. Educators can use the findings of this

study to develop financial literacy programs that can help college students develop

the necessary skills and knowledge to manage their finances effectively. Financial

institutions can also use the findings of this study to develop products and services

that can help college students manage their finances and reduce their student debt.

By contributing to the existing body of knowledge on financial literacy and

student debt among college students, this study can help policymakers, educators,

and financial institutions develop effective strategies to improve financial literacy and

reduce student debt among college students.

Level of Financial Literacy

is generally low. Many college students have limited knowledge and skills in financial

management, including budgeting, saving, investing, and debt management. This

lack of financial literacy has a significant impact on their student debt.

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 Republic of the Philippines
City of Taguig
TAGUIG CITY UNIVERSITY
Gen. Santos Avenue, Central Bicutan, Taguig City

College students who have higher levels of financial literacy tend to have less

student debt than those with lower financial literacy levels. They are more likely to

make informed decisions when taking out student loans, such as choosing loans with

lower interest rates and favorable repayment terms. Additionally, they are more likely

to have a solid understanding of how to manage their finances and avoid taking on

more debt than they can handle.

On the other hand, college students with lower levels of financial literacy are

more likely to accumulate higher levels of student debt. They may not fully

understand the implications of taking out loans and may not have a plan in place to

repay them. These students may also be more susceptible to credit card debt, which

can compound their financial challenges.

Overall, there is a clear relationship between financial literacy and student

debt among college students. Improving financial literacy levels among college

students could help them make more informed decisions about their finances and

ultimately reduce their student debt. Financial literacy programs, such as workshops

and classes, can play a critical role in helping college students develop the skills and

knowledge they need to manage their finances effectively and reduce their debt.

Factors of College Students' Financial Literacy and Student Debt

1. Socioeconomic background: Research has found that college students from

lower-income backgrounds tend to have lower levels of financial literacy and

higher levels of student debt than those from higher-income backgrounds.

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 Republic of the Philippines
City of Taguig
TAGUIG CITY UNIVERSITY
Gen. Santos Avenue, Central Bicutan, Taguig City

2. Parental financial education: Parents can play a significant role in shaping

their children's financial behaviors and attitudes, and those who receive

financial education from their parents tend to have higher levels of financial

literacy.

3. Financial education programs: Financial literacy programs, such as

workshops, courses, and online resources, can help college students develop

the skills and knowledge they need to manage their finances effectively and

reduce their student debt.

4. Student loan policies: The policies surrounding student loans, such as interest

rates and repayment terms, can significantly impact a student's ability to

manage their debt and avoid default.

5. Credit card use: College students who use credit cards are more likely to

accumulate high levels of debt and experience financial difficulties.

Effectiveness of Financial Literacy Programs

Several studies have examined the effectiveness of financial literacy

programs in helping college students manage their finances and avoid debt. The

findings of these studies have been mixed, with some suggesting that financial

literacy programs can be effective while others finding little to no impact.

One study found that college students who participated in a financial

education program showed improved financial behavior, including increased savings

and decreased credit card debt, compared to a control group that did not participate

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 Republic of the Philippines
City of Taguig
TAGUIG CITY UNIVERSITY
Gen. Santos Avenue, Central Bicutan, Taguig City

in the program (Hira & Loibl, 2005). Similarly, another study found that college

students who completed a financial literacy course had lower credit card debt and

higher credit scores than those who did not take the course (Robb & Sharpe, 2009).

However, other studies have found that financial education programs have

little impact on students' financial behavior. For example, a study by Fernandes et al.

(2014) found that financial education programs had no significant effect on financial

behaviors, such as savings, debt management, and retirement planning.

Overall, the effectiveness of financial literacy programs in helping college

students manage their finances and avoid debt appears to depend on several

factors, including the content and delivery method of the program, the level of

engagement of the participants, and the extent to which the program is integrated

into the overall educational experience.

Challenges

College students face several challenges when it comes to managing their

finances and paying off their student loans. Some of the challenges include:

1. Limited financial resources: Many college students have limited financial

resources and struggle to cover their basic expenses, such as tuition,

housing, and food. This can lead to the accumulation of debt, including

student loans.

2. Lack of financial literacy: College students may not have the financial

knowledge and skills necessary to effectively manage their money, budget,

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 Republic of the Philippines
City of Taguig
TAGUIG CITY UNIVERSITY
Gen. Santos Avenue, Central Bicutan, Taguig City

and make informed financial decisions. This can lead to poor financial choices

and high levels of debt.

3. High tuition costs: The high cost of tuition can be a significant barrier to

accessing higher education, and can also contribute to high levels of student

loan debt.

4. Student loan repayment terms: Many college students are not aware of the

repayment terms of their student loans, which can make it difficult to plan and

budget for loan payments.

5. Economic downturns and job market uncertainty: Economic downturns and

job market uncertainty can make it difficult for college graduates to find well-

paying jobs after graduation, which can make it difficult to repay their student

loans.

6. Credit card debt: College students may also accumulate high levels of credit

card debt, which can make it difficult to manage their finances and pay off

their student loans.

7. Insufficient financial aid: Many college students may not receive sufficient

financial aid to cover their educational expenses, which can lead to the

accumulation of debt.

These challenges can make it difficult for college students to manage their

finances and pay off their student loans, and can have long-lasting consequences for

their financial well-being.

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 Republic of the Philippines
City of Taguig
TAGUIG CITY UNIVERSITY
Gen. Santos Avenue, Central Bicutan, Taguig City

The findings of the article suggest that the level of financial literacy among

college students is generally low, which can lead to challenges in managing finances

and paying off student loans. Students with higher levels of financial literacy tend to

have less student debt than those with lower levels of financial literacy. Factors that

influence financial literacy and student debt include socioeconomic background,

parental financial education, financial education programs, student loan policies, and

credit card use. Financial literacy programs can be effective in helping college

students manage their finances and avoid debt, but their effectiveness depends on

several factors. Overall, improving financial literacy levels among college students

could help them make more informed decisions about their finances and ultimately

reduce their student debt.

1. High levels of student debt: According to the Federal Reserve, student loan

debt in the United States reached a record high of $1.56 trillion in 2020, with

the average debt per borrower being around $37,000.

2. Financial stress: High levels of student debt can lead to financial stress

among college students, which can have negative impacts on their mental

and physical health, as well as their academic performance.

3. Gender and racial disparities: Research has found that women and minority

students tend to have higher levels of student debt than their male and white

counterparts, due in part to systemic inequalities in access to education and

financial resources.

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 Republic of the Philippines
City of Taguig
TAGUIG CITY UNIVERSITY
Gen. Santos Avenue, Central Bicutan, Taguig City

4. Student loan default rates: The student loan default rate in the United States

is around 9%, with students from low-income backgrounds being more likely

to default on their loans than those from higher-income backgrounds.

5. Importance of financial aid: Financial aid plays a critical role in helping college

students cover their educational expenses and avoid accumulating high levels

of debt. However, many students still struggle to afford college even with

financial aid, highlighting the need for increased investment in higher

education.

6. Need for financial education: Given the low levels of financial literacy among

college students and the potential negative impacts of high levels of debt,

there is a clear need for increased financial education programs targeted

towards this population. Such programs can help students develop the

knowledge and skills they need to effectively manage their finances and avoid

taking on more debt than they can handle.

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 Republic of the Philippines
City of Taguig
TAGUIG CITY UNIVERSITY
Gen. Santos Avenue, Central Bicutan, Taguig City

The results of the studies discussed in the text are:

1. College students face several challenges when it comes to managing their

finances and paying off their student loans, including limited financial

resources, lack of financial literacy, high tuition costs, student loan repayment

terms, economic downturns and job market uncertainty, credit card debt, and

insufficient financial aid.

2. The level of financial literacy among college students is generally low, and

those with higher levels of financial literacy tend to have less student debt

than those with lower levels.

3. The factors that influence college students' financial literacy and student debt

include socioeconomic background, parental financial education, financial

education programs, student loan policies, and credit card use.

4. Financial literacy programs can be effective in helping college students

manage their finances and avoid debt, but their effectiveness depends on

several factors, including the content and delivery method of the program, the

level of engagement of the participants, and the extent to which the program

is integrated into the overall educational experience.

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 Republic of the Philippines
City of Taguig
TAGUIG CITY UNIVERSITY
Gen. Santos Avenue, Central Bicutan, Taguig City

In conclusion, the study on financial literacy and student debt among college

students provides valuable insights into the financial challenges facing college

students and the need for policies and programs that can help improve financial

literacy and reduce student debt. The study found that many college students

struggle with managing their finances and paying off their student loans, and that

financial literacy programs can be effective in helping them develop the necessary

skills and knowledge to manage their finances effectively.

The study also identified several factors that contribute to financial literacy

and student debt among college students, including socioeconomic status, parental

involvement, and access to financial education. The findings of this study can be

used by policymakers, educators, and financial institutions to develop effective

strategies to improve financial literacy and reduce student debt among college

students.

Overall, the study highlights the importance of financial literacy education and

support for college students, as well as the need for policies and programs that can

help make higher education more affordable and accessible. By addressing these

issues, we can help ensure that college students have the necessary tools and

resources to manage their finances effectively and achieve their academic and

financial goals.

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 Republic of the Philippines
City of Taguig
TAGUIG CITY UNIVERSITY
Gen. Santos Avenue, Central Bicutan, Taguig City

There are several recommendations that college students can follow to improve

their financial literacy and reduce their student debt:

1. Attend financial education workshops or courses: Many colleges and

universities offer financial education workshops or courses that can help

students develop the skills and knowledge necessary to manage their

finances effectively.

2. Create a budget: Students should create a budget to help them track their

income and expenses and make informed financial decisions.

3. Limit unnecessary expenses: College students should limit unnecessary

expenses such as eating out, shopping, and entertainment to avoid

overspending.

4. Apply for scholarships and grants: College students should actively seek out

scholarships and grants to help cover the cost of their education and reduce

their student loan debt.

5. Avoid credit card debt: College students should be careful with credit card use

and avoid accumulating high levels of credit card debt, as this can make it

more difficult to manage their finances and pay off their student loans.

6. Research student loan repayment options: College students should research

the repayment options available for their student loans and make informed

decisions about their repayment strategy.

7. Seek financial advice: College students can seek financial advice from

experts, such as financial planners or advisors, to help them make informed

financial decisions and manage their debt.

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 Republic of the Philippines
City of Taguig
TAGUIG CITY UNIVERSITY
Gen. Santos Avenue, Central Bicutan, Taguig City

By following these recommendations, college students can improve their financial

literacy, reduce their student debt, and set themselves up for long-term financial

success.

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 Republic of the Philippines
City of Taguig
TAGUIG CITY UNIVERSITY
Gen. Santos Avenue, Central Bicutan, Taguig City

Chen, H., & Volpe, R. P. (1998). An analysis of personal financial literacy

among college students. Financial Services Review, 7(2), 107-128.

Fernandes, D., Lynch Jr, J. G., & Netemeyer, R. G. (2014). Financial literacy,

financial education, and downstream financial behaviors. Management

Science, 60(8), 1861-1883.

Lusardi, A., & Mitchell, O. S. (2014). The economic importance of financial

literacy: Theory and evidence. Journal of Economic Literature, 52(1), 5-

44.

Hu, S., & Kuh, G. D. (2002). Being (dis) advantaged in higher education: The

role of financial resources in college student experiences and

outcomes. Research in Higher Education, 43(3), 275-296.

Kim, J., Chatterjee, S., & Kim, S. (2014). Parental influence on college

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Fernandes, D., Lynch Jr., J. G., & Netemeyer, R. G. (2014). Financial literacy,

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Hira, T. K., & Loibl, C. (2005). The effectiveness of financial education: A

review of the literature. Journal of Family and Consumer Sciences,

97(2), 27-31.

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 Republic of the Philippines
City of Taguig
TAGUIG CITY UNIVERSITY
Gen. Santos Avenue, Central Bicutan, Taguig City

Robb, C. A., & Sharpe, D. L. (2009). Effectiveness of a targeted financial education

program for first-year college students. Journal of Family and

Economic Issues, 30(2), 218-235.

Soria, K. M., & Stebleton, M. J. (2012). First-generation college students and college

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National Endowment for Financial Education (NEFE). (2019). What Financial

Educators Can Do to Help College Students Succeed.

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 Republic of the Philippines
City of Taguig
TAGUIG CITY UNIVERSITY
Gen. Santos Avenue, Central Bicutan, Taguig City

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