Graduation is an exciting time, students have worked hard to earn their degree and they finally get their diploma and walk across the stage. But do students think about the financial aspects that they need to know once they graduate? Do they know about finances? Statistics are discussed and an NCC professor has some tips for students who are graduating.
Statistics
Forbes talks about a research paper that is called Financial Literacy and Student Debt: Survey of College Students. The amount of college students who were a part of this survey were 31,000. There was a total of six questions and out of the six only 14.5% of students answered all of them right. 46.2% of college students got four answers right. 2.6 is what the average comes out to for the number of questions answered correctly by students who have loans. It’s 3.1 for students who don’t have loans.
It looks like students could be doing much better with their knowledge of finances. Per an email interview Dr. Ryan Decker, an NCC associate professor of economics and finance and the director for the Center for Financial Literacy at NCC, is here to help.
Decker’s advice
Decker discussed the financial aspects of jobs and that when you start earning income you want to figure out what your goals are so you can reach them. You want to know how much you are taking home with you, additional benefits you have and anything else that will affect ones take home pay. After that you can make a budget.
“Start thinking about what your short, medium, and long-term goals are. No one can advise you on what to do with your money unless they know where you want to go. Also start planning for your actual paycheck – what is deposited into your bank account. Look into the impact taxes, employer provided retirement savings, and other benefits will have on your take home pay. From there combine a top-down budgeting approach (e.g., 50/30/20) with a bottom-up approach (e.g., what fixed expenses do you currently have/ need),” Decker said.
Furthermore, Decker talks about paying off loans. He discussed what your first steps should be and it is to, “create a debt tracker.” The information you should include in this debt tracker is: how much your debt is, who you owe and the interest rate of your debt. Know how you are going to repay your student loans. Are you eligible for Public Service Loan Forgiveness (PSLF)? If you aren’t eligible, is an income driven repayment plan something that is necessary for you? Additionally, he says to take a look at the interest rate of the debts you owe. You first want to pay off the debt with the interest rate that is the highest. Decker continued saying:
“Depending on the interest rates, you will need to balance saving for your shorter-term goals, investing for longer term goals, and aggressively paying down debt,” Decker said.
Further, Decker said that at the very least you want to pay the minimum of your bill so you’re still making a payment.
” … these are part of your bottom-up budgeting approach and should be planned for before you spend your money on other things,” Decker said.
Decker gave additional advice about goals that you have and habits to make.
“It’s important to plan for your goals but also remember that this is an exciting time in your life where you may be living on your own and have disposable income for the first time. Create good healthy financial habits. But don’t grow up too fast,” Decker said.
A student’s financial knowledge
Do students know about finances? This was Nicasio Damon Leobardo Quiroga’s, ’25, response when asked if he knows about finances:
“Yes, thanks to Dr. Decker and First Gen [Generation],” Quiroga said.
To add, he said that First-Generation had luncheons and Decker was there discussing finances. Quiroga learned about finances at the luncheon his junior year and at two this year. Quiroga said that students received Decker’s presentation slides so they have the information.
To sum up, it’s an exciting time and maybe even a little nerve-racking once you graduate from college. But with your new knowledge of finances it can make it a little less overwhelming. It can make you feel ready for what comes next.
