Financial Literacy for Education:Laying the Foundation for College Success

Michele ColsonProject Director, College & Career Counseling

Indiana Youth Institute

Our Learning Objectives

• By the end of the session, you will:– Understand the importance of financial literacy

for students as it relates to post secondary education readiness, access and success

– Learn ways to incorporate these concepts into your classroom activities

– Be aware of the resources available to assist you

Road Map for Today’s Session

• Barriers and Issues• Value vs. Cost of PSE• Educating the Students• Resources to Assist

Most Common Barriers

– Thinking that higher education is NOT an option– Not understanding the proper steps to prepare

for and get into institutions of higher education– Not knowing the different options for funding

higher education

Post Secondary Education SuccessWhat Do the Numbers Tell Us?

• 81.5% of Indiana HS students are graduating• 63% are going on to PSE*

– Only 34% of students entering PSE are prepared academically

– 4 Year Institutions• 29% finish in 4 years• 53% in 6 years

– 3-year community college graduation rate = 13%

*From the Indiana Commission for Higher Education “Reaching Higher” Key Indicators Dashboard

Post Secondary Education SuccessWhat Do the Numbers Tell Us?

• Reasons why students fail to finish college*– I needed to work and make money – 54%– I just couldn’t afford the tuition & fees – 31%

• Other stats– 45% work more than 20 hours per week– At community colleges, 6 in 10 work more than 20

hours per week, more than 25% work more than 35– 23% of college students have dependent children

*From The Public Agenda Report, “Myths and Realities About Why So Many Students Fail to Finish College.” Produced for the Gates Foundation.

College Access & Success

Personal Vision and Early Awareness

Preparation:Academically,

Socially, Financially

Access and Transition

Success: Persistence and

Completion

Value vs. Costs of Higher Education

“Show Me The Money $$$”

Personal Vision, The First Step

• Guiding the students through the process of knowing who/what they want to be and how to get there– Assessing likes and dislikes– Exploring possible career options– Understanding the skill sets needed– Middle and high school classes needed– Post-secondary credential needed to succeed

• Career exploration and planning

The Value of Education

Source: U. S. Census Bureau

The Value of EducationAverage Annual Earnings – Different Education Levels

Source: U. S. Census Bureau

$22.57

$18.84

15.04

Cost: The Other Half of the Equation

• How much will it cost?• How will the cost be funded?• What is the expected salary?• How much will monthly loan payments be if

education loans are needed?• Can the monthly loan payments be made

given the expected salary?• How can I minimize the total cost?

How Much Does PSE Cost?

School Cost Per Year Total Cost Institution Type

Indiana University $14,000 $56,000 Public

Taylor University $30,000 $120,000 Private

Rose-Hulman University $49,801 $199,204 Private

Ivy Tech State College $2,900 $5,800 Public

Must look beyond the “sticker price.” If a student is a good fit for an institution, public or private, the school will put

together the best financial aid package it can, leveraging available federal, state and institutional aid.

This must be balanced with a close look at all the factors….

Let’s Look A Little DeeperCareer Average Salary Public School

CostPrivate School

CostYears of PSE

Engineer $70,610 $69,392 $199,204 4

Teacher $46,280 $60,968 $107,840 4

Reg Nurse $54,400 $5,800* $12,680* 2

LNP $36,890 $2,900* $10,000* 1

Bank Teller $21,800 $0 $0 0

*No room and board

ConsiderationsExpected SalaryExpected debt

Demand for JobLife Style Considerations

Others?

Education Financial Literacy

• Types of money– Yesterday– Today– Tomorrow

• Financial Aid– Scholarships and Grants– Work Study Programs– Student Loans

Financial Aid Basics

• Scholarships/Grants: Scholarships and grants are considered gift aid that does not have to be repaid.

• Work-Study Programs: Provides students with part-time employment to help pay for college expenses.

• Student Loans: Funds that are borrowed to help pay for college expenses. Loans must be repaid, usually with interest.

Educating the Students

• Incorporate career exploration and college planning activities and lessons into applicable areas and courses– Guidance department– Family and consumer sciences– Business – Others?

• Will help with goals of the new financial literacy (personal financial responsibility) framework

Financial Literacy Framework

• Financial Responsibility and Decision Making• Relating Income and Careers • Planning and Money Management • Managing Credit and Debt Risk • Management and Insurance • Saving and Investing

College Access & Success

Personal Vision and Early Awareness

Preparation:Academically,

Socially, Financially

Access and Transition

Success: Persistence and

Completion

Free Resources• DriveOfYourLife.org

– Career exploration site• Interactive, video game-based

– Builds critical thinking skills needed for comprehensive career planning in a dynamic, interactive environment

– Sequences well with Trip to College and other free college planning resources

• TripToCollege.org– Step-by-step college planning site

• For use by student s and parents– Provides information, resources and age-specific

information and checklists to maximize college planning and preparation

Additional Resources• USA Funds Unlock the Future & Consejos

– Free programs that encourage middle-school students and their parents to plan for higher education. www.usafunds.org/access_and_outreach/early_awareness/index.htm

• Learnmoreindiana.org– Career and college planning

• KnowHow2GoIndiana– Four steps to college for middle & high school

• IN DOE– Financial Literacy Resources Listing