Running head: Financial Literacy: “Do we know enough”
Financial Literacy: “What do College Students Know?
Dioan Johnson
University of South Florida
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Running head: Financial Literacy: “Do we know enough”
Abstract
The purpose of this research is to gage the awareness and knowledge of first generation
college students about the financial aid process and financial literacy. The research will
give a gage to what is known of the financial aid process and the literacy and how it affects
the student academically and ultimately how it affect student success.
Keywords: literacy. Finances. First generation. Financial aid
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Running head: Financial Literacy: “Do we know enough”
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First Generation Students:
What is their Knowledge of Financial Literacy?
Purpose
As I talk with some students and parents all feel that financial literacy is important but feel
their knowledge was lacking. There is an alarming number of students that are unaware of
all the details of the financial aid process. We can assume that the parents not having the
knowledge needed can be a factor. The research shows there is a correlation between first
generation student and those that are not first generation and the knowledge of financial
aid. Students in general are not known to be financial responsible. According to Supiano
(2013), nearly eighty percent of student said they frequently worry about debt. This is a
staggering number. Students who have to borrow loans to pay for college need to have a far
better awareness of financial literacy. We must find a way that will ensure parents are
preparing students and students are utilizing the tools available to make informed decision
when it comes to their finances.
There is a need to make students more aware of several areas of finance and some
include budgeting, savings and smart spending. On the University level and with the rise of
the cost of tuition, economic downturns they have a responsibility to do what we can to
sharpen the knowledge of students. When there is economic success, there is academic
success. The research will help to understand factors related to student being financial
illiterate and why student are not aware of their financial responsibilities.
According to Domonell (2011), “now more than ever financial literacy is crucial.
Record unemployment levels mixed with an unprecedented amount of student loan debt
could be a recipe for disaster for recent college graduates if they don’t know how to
manage their money”. The average student will leave with at least $25,000 of loan debt.
Implementing a financial literacy program at a university is essential to curve this behavior.
First-generation College Students
The first generation college students are students whom parents never received a
college degree. Are these students more susceptible to lack of knowledge about financial
literacy compared to students with parents with college degrees? Parents that have
experiences understanding the price of college and what it takes to pay for it have better
grasps on the whole financial literacy idea. Parents with prior knowledge can give way to
budgeting and saving or do they really? Will a parent that knows they are not financially
stable to help their student find out all the information that is needed in order for their
student to gain financial literacy? There are a large number of FGCS in higher education.
We would tend to think that with an education there comes financial stability but that is
not always the case. According to Chen (1992) found that twenty two percent of students
who enter college were first generation college students and twenty four percent of them
actually graduate. There may be a connection to this because according to the U.S.
Department of Education’s National Center for Education Statistics (1998) reports many
first generation college students were older, had lower income, had dependents, enrolled
part time, and had lower persistence in completing their degrees. Financial literacy plays a
major role in the success of these FGCS, I will try to examine some instances if both first
generation and those whom are not first generation. I can attain a real sense of the why’s
and the why not’s to their own financial literacy.
Running head: Financial Literacy: “Do we know enough”
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Work Plan
Over the next few months I will interview some undergraduate students, mainly first
generation, to gage their financial literacy. I will collect what information is known about
the financial aid process. I will try to develop reason for the lack of knowledge or if they
have they knowledge of financial literacy. I will also compare if they are first generation or
not and the impact it has on financial literacy. I will also try to find out if the parents have a
plan in place to pay for their student college expenses.
I will create a survey with a list of questions:
 Single family home?
 Parental education level
 Ages of parents?
 Student’s age?
 Ethnicity
 Gender
 Family History
 Personal Income
 Household Income? (if willing to share)
 If they are first generation?
 Are they aware of how much college cost per year?
 How much do they know of the Financial Aid process?
 How are their skills in budgeting, saving and spending? (From both parent and
student)
 What are the next steps they will take to be informed?
I will compile the information and explain the results for the students interviewed. As I
go into the summer semester maybe I can interview the potential student’s family
background. Does race or even gender have an effect on the financial Literacy of the
students? Also does it affect the graduation rates of these students? I will also give
examples of what a university can do to help students improve or be more aware of
finances.
Financial Literacy
What is Financial Literacy? Financial literacy is the ability to use knowledge and skills to
manage financial resources effectively for a lifetime of financial well-being. According to
Financial Literacy Definition (2013) defines financial literacy as: “possessing the skills and
knowledge on financial matters to confidently take effective action that best fulfills an
individual’s personal, family and global community goals.” Financial literacy can give freedoms
to do what you want financially.
Purpose
To understand the financial literacy knowledge of first generation college students and to
understand the factors contributing to what is known or not known about being financially
responsible.
Background
Running head: Financial Literacy: “Do we know enough”
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The purpose of my research is to describe incoming college students’ financial literacy,
with particular focus on first generation college students. At most universities there is a class
geared to college success and help students get acclimated to college life. In these types of
courses, financial literacy can be added to the curriculum if this is found to be an issue of
importance. In my continued research I will try to understand some of the factors into which
students are not being taught about finances. The data collected will give us a better
understanding of the needs of the student, parents and even to what extent high schools or
university can help with financial literacy. In my experience, I see this as a growing problem as I
have worked within the financial aid profession for nineteen years and I see no significant
change to the mindset of freshman. What can parents, schools, and students do to alleviate the
problem? There should be more done to lessen the lack of awareness about our financial future.
In this review of literature three major topics are addressed. First, is financial literacy.
What is Financial Literacy? Financial literacy is the ability to use knowledge and skills to
manage financial resources effectively for a lifetime of financial well-being. According to
(Financial Literacy Definition, 2013) defines financial literacy as: “possessing the skills and
knowledge on financial matters to confidently take effective action that best fulfills an
individual’s personal, family and global community goals.” Financial literacy can give freedom
to do what you want financially. Financial literacy affects all aspects of life including the home,
education, credit and even retirement. Managing money is so important and it is clear that more
people need to become financial literate. The old saying goes “when you know better you are
supposed to do better”. In the research the level of understanding between the two groups of
students is vastly different. Why are there so much of difference in financial literacy between the
groups of students? We can explore many components such as household size, educational
background, family dynamics and more to have a clearer picture of the differences. The more
that is learned about financial literacy, the better decision can be made regarding school,
financial matters or just overall for sustaining life. According to (NewsBlaze, 2010) it is
becoming increasingly clear that the lack of financial literacy among America's youth is the next
major crisis that will plague the economy in the future if we don't act now as a nation. In most
states you can get a credit card faster than you can get a driver’s license, so why not offer
information about financial education.
Next is First Generation Students Knowledge of Financial Literacy. First generation
student are described as students whom their parents never attended or graduated from college.
In discussing these students will the financial literacy be different than a continuing education
student? According to (Barone, McMillion, Tyn, & Webster, 2004) students whose parents did
not attend college are more likely not to be financial literate. According to (Payne, 2007) firstgeneration students experience are financial obligations and barriers. In research done on this
population highlights that they tend to be from families with lower incomes than non-firstgeneration students, which affects their retention rates. The parents of these students don’t know
how to explain to their children about being financially sound if they don’t have the tools to
guide them in the right direction. In most cases these families are low income and minorities. As
stated by the National Center for Education Statistics, low-income, first-generation students were
nearly four times more likely – 26 to 7 percent – to leave higher education after the first year
than students who had neither of these risk factors NCES (2002). First generation students fall
below the standards for being informed of financial literacy. As stated by (Barbeau, 2010) first
Running head: Financial Literacy: “Do we know enough”
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generation college students have a higher dropout rate , because they typically have less financial
and emotional support from their family. It is often hard for their parents to relate to the obstacles
they face in college or offer well-informed advice. In research family background influences
decisions made by the student. According to (Fusch, 2012) students who have no family history
of higher education and who attended high schools serving primarily lower-income populations
may be unaware of expectations around class participation and how to navigate an academic
environment. Sociologist Annette Lareau's research on parenting styles in Home Advantage:
Social Class and Parental Intervention in Elementary Education (2000) and Unequal
Childhoods: Class, Race, and Family Life (2003) revealed that:


Many low-income children are not taught the same skills of self-advocacy that higherincome children are taught.
Low-income parents are likely to teach their children to be more deferential toward
teachers and toward authority generally.
The final topic is financial literacy and the importance of being educated. As I began
researching, I found some important factors to why our youth should be financially literate.
According to Creative Wealt, (2002) money is the number one cause of problems in America’s
society. There are less than ten percent of high school graduates receiving financial education in
high school. Undergraduates are in more debt over the past five years. Americans are living
month to month because of their finances. Many Americans have been left with the
responsibility in supplementing their own retirement and also there is debate of social security
benefits going away.
The purpose of the research project is to describe the extent of first-generation in college
students’ financial literacy. The project also seeks to identify some factors that contribute to the
financial literacy of this particular group of students. The report will also gauge how financial
illiteracy affects the students academically and their overall success while in college and beyond.
Action Research Method
Action Research
The action research is to understand and gather information about a problem, collecting the data
and then to analyze. There is a need for a better understanding of the financial literacy of
freshman entering college.
Action Research Method
I will use survey research to gather data to understand the participants and their understanding of
financial literacy. In my research I will try to gauge the factors to the knowledge of students
about financial literacy. The research can show where the need for more programs about
financial literacy that will be benificial for the students.
Organizational Context
The research will be conducted at a community college that has a College Success program. The
course is geared toward helping new freshman transition to college life. The CSP is designed that
Running head: Financial Literacy: “Do we know enough”
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all first time freshman take the course. It is built in to the curriculum. The course is designed to
teach student on campus life, employment in the area, career decisions for undeclared students.
Participant
The research will be conducted with 50 students from the CSP program. The groups would
consist of first time freshmans and student with family history of attending college. I will also
group them by ethnicity. A survey will be giving to the professor and the professor will give it to
students to complete. The survey is strictly vonluntary.
Data and Data Sources
I will be using a survey of my own. The survey was creating as I research other survy such as a
version on the Consumer Financial Literacy survey done by Virginia Tech and as well as Harris
Interactive. Harris interactive conducted a survey on cunsumer financial literacy. My questions
are as follows:
 Single family home?
 Parental education level
 Ages of parents?
 Student’s age?
 Ethnicity
 Gender
 Personal Income
 Household Income? (if willing to share)
 If they are first generation?
 Are they aware of how much college cost per year?
 How much do they know of the Financial Aid process?
 How are their skills in budgeting, saving and spending?
I will also survey the Instructor with a list of questions:
 What understanding do they have about financial literacy?
 What changes do they believe will help the students with financial literacy?
 Will a curriculum change really help?
Procedures
The data will be collected by first asking for approval from the instructor to do a survey. The
survey will be given to freshman in the University Experience course. This course is designed to
help students acclimate to college life. I will give the survey to at least two different classes
asking the question listed above. This survey will be strictly voluntary.
Analysis
Survey data will be analyzed using descriptive statistics such as mean and percentages to
characterize the extent of financial literacy. In the analysis, I will also seek to describe students’
background, social and economic factors and trends connected to their financial literacy. In
particular, I will establish a descriptive comparison of the perspectives on financial literacy
between first-generation and traditional college students.
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Running head: Financial Literacy: “Do we know enough”
Method
The method I used was survey. I emailed one professor at Hillsborough Community
College. The professor printed and passed out the survey to two of his classes. The professor
teaches HCC College Success course. The survey was sent via email and the professor passed
out he survey to his class. The students were instructed to complete the survey but it was not
mandatory that they complete the survey. I wanted all four of his classes to receive the survey to
complete but he agreed to only two for this academic year. The professor was instructed to
collect the surveys and scan them to his email, then email them to me. I received only 30 surveys
from the professor. The other didn’t submit them back to the professor.
Once the data was collected I compile a table for each question and produced a
graph of the results. In the survey I also ask a question about each student understanding of
financial literacy, where they can explain in their own words. Below is a copy of the survey.
Financial
Literacy
Survey
Age
Ethnicity
Gender
Single
Family
Home
Parent’s
Income
Personal
Income
1st
Generation
Awareness
College Cost
Financial
Aid Process
Y
N 0-10,000 10,000- 30,00030,000 50,000
50,000
Above
Knowledgeable
No Knowledge
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Running head: Financial Literacy: “Do we know enough”
Budget,
Savings and
Spending
Results
As I processed the surveys, I categorized the responses based upon first generation student
versus continuing or legacy students.
25
20
15
Minority
White
10
Single Family
Financial Literate
5
0
1st Generation
students
Legacy Student
The results showed that the student whom where legacy students had a vast
knowledge of financial literacy versus the first generation students. There was also the
knowledge of financial literacy was down amongst minority students versus white
students. As reading the responses to the overall question of the understanding of financial
literacy most student understood only what was taught to them by their parents. In most
cases the student start getting some knowledge once the FAFSA form was being filled out.
The income of the household plays a vital role in what types of aid the student will receive.
The participant express knowledge to the professor that they did want to no more but had
no real avenues to get the information.
Conclusion
The results show that there is a gap in the knowledge of financial literacy between the
first generation student and the legacy students. The knowledge is different amongst minorities
and white student. As I suspected, students are not learning any financial literacy information
while attending school. The only knowledge that they are aware of is what is given at home. In
most cases that is very little.
The data shows that students need some form of education on financial literacy. Financial
education is vital for people to sustain a healthy living environment. Student should be learning
about financing at home but because they aren’t getting the information they need, schools can
and should add it to the curriculum for students starting as early as middle school. Schools as
Running head: Financial Literacy: “Do we know enough”
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they prepare students for college and also career placement a course in financial literacy can be
added in as part of many courses already in place. In CTE it can be a primary focus when
guiding students in a field of study. In education financial literacy can be taught at the university
level as well. There is a college success program at most major colleges and community
colleges. Financial literacy can be added to these programs as well.
Financial literacy should be taught at early as possible so implementing a curriculum
change in middle school and going forward would help students tremendously.
In moving forward, I would like to survey more student at the university level and gain a better
picture on what are the factors leading up to the knowledge of students about financial literacy.
In the summer, I want to focus more at the University of South Florida and the University
experience courses. I would like to see if the education about finances can be added and then
gage the growth of knowledge by all students who take the course.
Running head: Financial Literacy: “Do we know enough”
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Reference:
Chen, X. (2005). First generation college students in postsecondary education: A look at their
college transcripts (NCES 2005-171). U.S. Department of Education, National Center for
Education Statistics. Washington, DC: U.S. Government Printing Office.
Financial Literacy Definition. (2013). National Financial Educators Council.
Supiano, B. (2013). To Foster Financial Literacy, Students Need More Than Information, Report
Says. ('Money Matters on Campur'). The Chronicle of Higher Education , 26.
U.S. Department of Education, National Center for Education Statistics. (1998). National Postsecondary Student Aid Study: 1995-96. Washington, D.C: National Center for Education
Statistics. Retrieved September 14, 2006 from http://nces.edu.gov/pubsearch/pubsinfo.asp7p
ubid=98074
Consumer Financial Literacy Survey:
https://www.nfcc.org/newsroom/FinancialLiteracy/files2013/NFCC_NBPCA_2013%20FinancialLi
teracy_survey_datasheet_key%20findings_032913.pdf
Financial Literacy Survey for College Students: http://scholar.lib.vt.edu/theses/available/etd10162007-143627/unrestricted/CSFLC_Survey.pdf