Academic journal article Journal of Financial Counseling and Planning

Financial Stress and Financial Counseling: Helping College Students

Academic journal article Journal of Financial Counseling and Planning

Financial Stress and Financial Counseling: Helping College Students

Article excerpt

Financial education and counseling are often considered to be methods for improving financial behaviors with the assumption that financial education and counseling lead to increased financial knowledge and consequently improved financial behaviors. For the most part, this assumption has gone untested, particularly for long-term knowledge and improved behavior retention. An important exception is from Collins and O'Rourke (2010) who reviewed over 40 studies showing that financial education and counseling hold promise in improving financial knowledge and facilitating behavior change among adults. Peer counseling appears to be especially effective at changing behaviors (Newton & Ender, 2010).

This study has two objectives-first, to determine what factors are most predictive of students with the highest financial stress and secondly, to compare baseline and two month responses to financial knowledge, attitudes, stress, and behavior questions of college students who sought help from a free financial counseling center on-campus. The unique aspect of this study is being able to utilize data collected two months post-session to evaluate changes in clients' knowledge, attitudes, stress, and behaviors. Determining the effectiveness of financial counseling efforts is critical from a budgetary and personnel decision-making process. University administrators have reported that more students drop out of college due to financial stress than from academic failure (Borden, Lee, Serido, & Collins, 2008). Financial stress has even been tied to suicide (Holub, 2002) and reduced mental health status (Roberts, Golding, Towell, & Weinreb, 1999) in some university settings. If financial counseling efforts are associated with improvements to financial behaviors and reductions in financial stress, the case will be made for further counseling and education programming.

Financial Counseling Center Operations

For generalizability purposes, it is necessary to understand how the particular financial counseling center used in this study operates. The financial counseling center is a free, peer-based program located in the center of a Midwestern university campus. Peer influence on financial behavior has been noted in a variety of formats. Peers can influence positive retirement savings behavior-if peers are saving, it is likely that individual savings will increase as a result (Duflo & Saez, 2002). In a college setting, Newton and Ender (2010) noted that peer counseling is effective because peers can relate on a generational level and show positive behavior through example (i.e., positive peer pressure).

The center is directed by a full-time professional who provides training for students to become peer financial counselors. Students are made aware of the financial counseling center through new student orientation, a visit from a staff member during one of their classes, posters around campus, or word of mouth. Students are not mandated to attend financial counseling, so all students who receive counseling do so voluntarily. Students schedule their counseling session online, indicate their "presenting issue" or primary reason for scheduling the appointment, and complete a brief intake questionnaire. The top three presenting issues included student loan questions, budgeting advice, and questions about saving for the future. Students are then matched with a trained peer financial counselor who has knowledge in the presenting issue indicated on the intake questionnaire. Other data gathered on the intake questionnaire include personal and financial background information.

Students are required to give consent for their intake questionnaire (stripped of identifying information) to be used for research purposes. Approximately 55% of clients elected to have their data used for research and analysis, which is the sample retained for this study. There is a possibility that students who elected not to have their data used for research purposes differ from the sample retained for research analysis, although it is not possible to test this hypothesis because the researchers did not have access to any data for the 45% of clients who opted not to have their data used for research. …

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