This blog was contributed by Vivi Friedgut, Founder and CEO of Blackbullion is a financial wellbeing platform on a mission to simplify the world of finance and access to funding for young people. Vivi is on Twitter @ViviFriedgut.
There’s no denying that the last academic year was another long one, full of more uncertainty and upheaval. Support staff across the country were of course impacted too, as they worked tirelessly to care for students and support their financial wellbeing.
The world of student finance is evolving rapidly. Recent reports that the Government plans to lower the income threshold at which graduates start repaying student loans, adds confusion to what has been a chaotic 18 months. For many universities and higher education providers, this brings a renewed commitment to the importance of financial wellbeing for students.
What has emerged in the last 18 months is that we are in a period of change when it comes to money. For universities, this means an opportunity to understand how this is impacting students and their behaviours, and how resources can be directed to ensure student financial wellbeing is both prioritised and supported.
Student money and mental health
Earlier this year we committed to unpacking the true impact of finances on student mental health in the context of the pandemic. In our survey, 48% of student respondents said they have considered, or were considering, dropping out or deferring a year due to money constraints; 75% said they worry about finances; and 67% said finances negatively impact their mental health. Digging further into this, of the students surveyed who say worrying about their finances negatively affects their mental health, 53% said this regularly triggers anxiety, stress (63%) and feelings of hopelessness (32%).
Students also reported a monthly budget gap of £329 between what they have to cover all expenses (including rent) and what they need to feel confident they will be able to complete their degree.
The pandemic put a spotlight on the different financial experiences of students, especially those with access to the Bank of Mum and Dad. Over two-fifths (44%) of those who had previously considered dropping out or deferring a year received financial support from their parent(s)/guardian(s), which changed their mind about dropping out or deferring a year due to money constraints. Meanwhile for the 20% who had previously considered it, receiving additional funding from their university meant they could stay at university or avoid deferring a year.
The new student money mindset
Students showed themselves to be hugely resilient throughout the pandemic, adjusting to online learning and hugely disrupted social lives. Attitudes towards personal finance have shifted too as students become more anxious about their financial futures. This anxiety has manifested in an increased interest in personal finance and a noticeable rise in students’ appetite for financial education.
There’s also a growing number of students using less traditional and more digital ways to build wealth. A significant rise in activities that carry high financial risk has been coupled with an increase in searching for financial guidance. This has led to young people often resorting to taking the advice of popular ‘finfluencers’ across major social media platforms — Instagram, TikTok and YouTube in particular. While these platforms also support many established figures offering credible advice — there’s an alarming flurry of ‘finfluencers’ lacking skills and experience, expounding the value of taking big financial risks and benefitting from the trust of their young audiences in terms of their own earning.
I’m a huge advocate of students seeking financial advice. What’s essential is an improved awareness to ensure they get it from approved, trusted and reliable sources.
Changing face of finance
The money landscape is changing fast. So it is vital that financial education reflects this. Students are moving towards newer, online ways to earn money, as more traditional issues, like payday lending and loan sharks, take a back seat. Examples of new digital activities include using online investment and getting involved with cryptocurrency, a particularly hot topic for students right now. Overall, it’s the second most popular way to make ‘quick cash’ among adults in the UK and 25% of students already own some, with a further 1-in-3 planning on buying soon. Yet, 72% of our student community recently told us they feel they lack knowledge about crypto.
It’s therefore key that students understand how these newer, online ways of making money work – cryptocurrency included – and that they are aware of the risks if they are thinking of getting involved. Support staff in the sector also need to stay on top of these shifts, to be comfortable having conversations with students around the key considerations and potential risks.
Digital-first student experience
Today’s digitally savvy student cohort has clear expectations around technology: they’re happy to allow it to do the heavy lifting as well as to be integrated into all areas of their life. Recent research showed that 67% of students want tech enabled financial support. This is true for all aspects of the university experience, from learning through to campus admin and managing their money, be it financial advice or accessing funding from their institution. Ensuring a seamless financial support offering is very much a part of this. At a top level, this means students are activated to learn. But they want this woven into all areas of their student life.
Despite this expectation around a digital-first experience, the uncertainty of the last two years has hit students hard. The sector can expect to see an increase in students turning to support staff for help and advice as they try to navigate towards a more empowered financial future.
Be mindful of nuanced money experiences
When it comes to financial support, we need to recognise that one size really doesn’t fit all. Returning to our money and mental health report, it emerged that female students experience more financial anxiety than male students, with 69% of female students saying worrying about money negatively impacts their mental health compared to 59% of male students.
Not only does the gap in financial confidence start before young women make their higher education choices but their monthly budgets are also 10% less than their male counterparts. As well as taking into account students’ preference for using technology, financial support from institutions also needs to reflect the subtleties between student groups and speak to the individual student.
Student experience is key to institutions’ objectives, as we seek new ways to accelerate and expand student satisfaction, making financial wellbeing an essential component. Future-focused organisations are those taking an integrated approach to mental health and financial wellbeing. By doing this they are shaping longer term strategies that drive inclusivity, accessibility and retention across the whole institution.