Studies Show Higher Education Executives and Faculty Need Financial Literacy Training Just Like Student-Athletes
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Financial Literacy For All: Studies Show Higher Education Executives and Faculty Need Financial Literacy Training Just Like Student Athletes
Executive Summary
Financial literacy is a major point of emphasis for student-athlete development programs on campus.
Financial literacy, accounting, and taxes have become highlighted topics for student-athletes in light of name/image/likeness (NIL) income opportunities.
Student-athlete life-skills programming on campuses have focused on personal, athletic, and academic development as well as career, community service, and financial literacy
Studies have shown faculty and non-faculty employees on college campuses also face financial literacy shortcomings and need tutelage in budgeting, debt management, and investing
Studies show faculty and non-faculty administrators on college campuses have consternation on how confident they are in preparing for retirement, their acumen for investing, and, in some instances, covering basic expenses
Although places in life and career may be different, student-athletes and faculty and non-faculty university employees may share some common ground in seeking to improve their financial literacy
Seeking Financial Literacy Emeritus Status
Five years ago, Versta Research, an independent firm based in Chicago, conducted a survey among 1,000 benefits-eligible employees who work at U.S. colleges or universities.
Respondents were screened for current employment status, benefits eligibility and for having at least some involvement in household investment decision-making. The sample included 348 employees at private institutions and 652 employees at public institutions, of whom 203 were employed at two-year institutions and 797 were employed at four-year institutions; of the 1,000 employees, 375 were faculty. Of note, approximately two-thirds of respondents work at public two-year and four-year colleges and about a third of them were faculty members.
The findings from that study revealed that a majority of professors fear they could outlive their retirement savings while on-campus administrative employees are more concerned about shorter-term issues such as paying off debt and meeting their monthly household expenses.
Professors gave themselves an average grade of B in judging their financial knowledge about matters ranging from budgeting to investing, with older instructors -- those born from 1946 to 1964 -- rating themselves a B-plus. When asked about the biggest gaps in their financial literacy, professors cited understanding Medicare/health-care costs (34 percent) and choosing specific investments (32 percent), and a full third described themselves as "beginners" when it comes to investing.
A solid plurality of professors (42 percent) listed saving for retirement as their top financial priority and instructors on average reported that their average total savings rate for retirement (including employer contributions) is 15 percent of their income.
The administrators and staff members surveyed reported a solid total savings rate of 13 percent. But when asked about their top financial priorities, 38 percent said paying off debt and 24 percent said paying their daily or monthly household expenses – implying nonfaculty employees are facing more immediate financial challenges.
Reinforcing that finding, nearly two-thirds of nonfaculty employees (64 percent) say they often worry about their financial situation compared to 44 percent of professors.
Nearly one third (29 percent) of professors reported they aren’t sure of the investment mix of their retirement savings, suggesting they don’t know if the investments they selected align to a specific financial goal and timeline.
The study identified three important insights on how educators feel about their financial knowledge and areas where they could use assistance:
Despite Advanced Degrees, Many Professors Feel Like Novice Investors: While they have mastered certain subjects in their professional lives, when it comes to investing, 37 percent of professors see themselves as “beginners.” Not surprisingly, this sentiment is greater for younger professors with 47 percent of Gen X faculty (born 1965-1980) feeling inexperienced.
Worried Retirement Savings Won’t Make the Grade: While saving for retirement is the top financial priority for professors (42 percent) and their reported average total savings rates for retirement (employee + employer contributions) is a strong 15 percent, more than half (54 percent) of faculty members are concerned that they could outlive their retirement savings. This indicates a need for employees to be more engaged in the retirement savings process as early in their careers as possible.
Extra Help Needed: When asked about where they need financial help, the top responses for professors are understanding Medicare/health care costs (34 percent) and choosing specific investments (32 percent).
When it comes to the financial wellness of non-faculty employees, 64 percent say they often worry about their financial situation, compared to 44 percent of professors.
Both faculty and non-faculty members said they feel confident they will have enough money to pay for basic expenses in retirement – 87 percent for professors and 80 percent for non-faculty members. Yet there are opportunities to build upon this progress, learn more, and get help from a financial professional when needed.
Financial Literacy and the Student-Athlete
Researchers from the University of Texas-Austin and Kansas State University conducted a study called “Enhancing Financial Literacy Among Student-Athletes” with the stated goals of identifying the level of financial literacy among student-athletes, how they spend their money and the best way to reach them.
Data was collected from both institutions, which offer two types of programs for student-athletes early in their enrollment: summer bridge (a transition program for new students the summer before their first full-time semester of enrollment) and a freshman course offered to student-athletes (University Experience for Student-Athletes at KSU, Gameplan for Winning at Life at UT).
These programs included activities such as: completing a log tracking monthly spending in categories like transportation, meals, cell phone bill, car insurance; participating in a survey about general spending, financial literacy and financial education preferences; participating in focus groups on spending, budgeting and preferred modes of financial education.
During exit interviews with the Director of Student-Athlete Development, KSU seniors were asked about their knowledge of spending habits, debt, credit scores, etc. Similarly, UT student-athletes were asked similar questions in focus groups and exit interviews and even took a pre-test and post-test on financial literacy at the beginning and end of summer bridge and freshman transition courses.
Could faculty and other non-faculty employees on campuses across the country be facing similar challenges and financial literacy “blind-spots” as the students (including athletes) on their campuses?
Key takeaways from the student-athlete financial literacy survey found that:
Of the 21% who had a monthly budget, 92% followed it.
47% experience anxiety when managing money.
When monthly spending was tracked, over 46% of transactions were food
7.26 was the average ranking when asked to identify their interest in financial literacy from a scale of 1 to 10 (1: not interested at all, 10: fully interested).
60% did not receive financial education in high school. 65% did not receive financial education at college orientation
The study noted that enhancing financial literacy among student-athletes could be achieved by hosting class once a week in-person, having support from coaches, former student-athletes, and/or other role models, or personalizing content to student-athletes and their specific needs. The study also noted that one-on-one financial counseling was the most preferred method for financial education. Peer financial counseling is also desirable because of how students can relate to one another.
The study’s authors noted financial counseling could be offered during required student hours or student-athlete development sessions. If establishing a peer financial counseling center is not achievable, housing an alternative center under a related department such as Business Administration or Financial Planning could be an option.
Are faculty and non-faculty campus employees also eating on the run?
Almost half of the monthly transactions logged involved eating out. 24% of spending went to gas and fuel costs, which was second to housing costs. The researchers suggested that athletic departments could host workshops that teach student-athletes how to cook affordable, nutritious meals and provide information on how they can save on purchases through rewards programs, rebates, and discounts.
Interestingly, in 2015, faculty members from the University of Alabama-Huntsville provided nutritional insights in response to news that, for the first time ever, Americans spent more in bars and restaurants than at the grocery store.
Do faculty and non-faculty employees know where to find financial literacy and retirement resources offered by their university employer? And is the migration to virtual learning impacting our ability to improve our financial literacy?
The KSU/Texas study included focus groups of student-athletes which yielded some interesting results. None of the participants knew about the available NCAA video modules on financial literacy.
Overwhelmingly, student-athletes in the focus groups preferred one-on-one personal financial counseling for two reasons: it is personalized and catered to their specific needs, and would hold them more accountable than taking an online class for no credit. Students explained that such courses caused them to “go through the motions,” much as they did during required alcohol and sexual assault prevention training courses. Additionally, student-athletes from both institutions who are business majors felt it was not necessary to learn about personal finance separately from information they learn in school.
A Study of the Broader Pre-Retiree Population
According to a Bank of America Merrill Lynch study, there are major gaps in retirement readiness. Among pre-retirees, the survey discovered that half don’t have any positive financial role models and consider finance topics too taboo to discuss openly.
Financial decisions are the most second-guessed of any major life decisions, and people are more concerned about their personal economy than the overall economy. The study also explores a vast range of lifestyle and financial trade-offs and course corrections people would be willing to make to help achieve a more financially secure future.
The study, “Finances in Retirement: New Challenges, New Solutions”, is the capstone of eight studies conducted in partnership with Age Wave. Key findings from this latest survey of more than 4,800 respondents include:
While most Americans realize retirement will be the biggest purchase of their lifetime, costing 2.5 times the cost of an average home, 81 percent say they do not know how much money they will need to fund their retirement.
While most people say they want to live to the age of 90, only 27 percent of pre-retirees age 50+ feel financially prepared to fund a retirement that lasts 10 years, let alone 20-30 years.
Americans are saving only a fraction of what they think they should: 5.5 percent1 vs. 25 percent of their annual income (after taxes).
More than half of millennials feel a secure retirement is beyond reach, compared to 30 percent of baby boomers who feel this way.
Millennials expect 65 percent of their retirement income to come from personal sources, including savings and continued employment, far more than earlier generations.
The three biggest retirement-related financial worries for most Americans are 1) a costly health issue impacting them or loved ones; 2) inflation – the rising cost of life; and 3) not having enough money to do what they would like.
People say the cost of basic expenses and prioritizing paying down debt are the two biggest barriers to saving more for retirement. And they are far more concerned about “their” personal economy than “the” economy.
Are we overconfident in our financial literacy? And do student-athletes, faculty, and non-faculty employees at universities in the Midwest have a leg-up in financial literacy?
According to a 2021 smartasset.com article, the Financial Industry Regulatory Authority (FINRA) Foundation said in a recent national financial capability survey that roughly 71% of American adults believe they have a high level of financial literacy. However, when tested on personal finance topics, respondents struggle. On average, adults surveyed were able to answer only half of the literacy questions correctly.
Further, Midwestern states perform well with financial literacy while Southern states fall behind. More than half of the 10 most financially literate states are in the Midwest: North Dakota, Minnesota, Nebraska, South Dakota, Kansas and Wisconsin. All of them rank in the top 10 states for our financial knowledge & education index. At the other end of the study, Southern states rank in the bottom 10: West Virginia, Louisiana, Georgia, Texas, Tennessee and Delaware. All of these except Tennessee rank in the bottom 20 states on our financial knowledge & education index.
Whether a student-athlete is preparing for the first stages of their career upon graduation or tenured faculty or long-term non-faculty university employees are dialing-in their focus on retirement readiness -- financial literacy, in many respects, is about tapping into available campus resources, asking for help, and preparation.
Ben Franklin taught us that ‘a penny saved is a penny earned’, yet one of his other timeless adages applies to both finances and sport --- ‘failing to prepare is preparing to fail.’
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