Financial Health and Community College Students

Millions of Americans are struggling financially, including more than seven million community college students. Unlike their traditional counterparts at four-year institutions, community college students often juggle family responsibilities, several jobs, and other personal demands. These students are more likely to be immigrants, underemployed, and the first generation in their families to go to college. The financial complexities of their lives can be overwhelming and may have negative consequences for achieving their academic goals.

Through formal and informal surveys of administrators, faculty, and students, as well as secondary research, Achieving the Dream (ATD), a national community college reform network, and the Center for Financial Services Innovation (CFSI), an authority on consumer financial health, have identified three prominent financial health challenges that community college students face.

Challenge One: Managing Cash Flow and Income Volatility. Juggling multiple income streams alongside irregular and often unexpected expenses makes money management an overwhelming task for anyone, and particularly for those who are also trying to focus on academics.

Challenge Two: Lacking a Financial Cushion. Without a cushion of savings, many community college students are one financial emergency away from dropping out and struggling to return to college.

Challenge Three: Accessing and Building Credit. Community college students, like other consumers, rely on access to credit to manage cash flows, fill short-term gaps, and pursue long-term opportunities. However many students have thin, or damaged credit files, forcing them to rely on high-cost, and sometimes predatory, loans.

Students who are struggling financially can improve their financial health and ultimately impact their academic success. In fact, financial health, defined as what comes about when daily systems help a person or family build resilience and pursue opportunities, must be seen as an integral component of student success. Through cross-sector partnerships, collective investments, and internal commitments, colleges have an opportunity to offer services that will improve their students’ financial well-being. Achieving the Dream is committed to promoting and supporting efforts that improve student success based on knowledge emerging from its Working Students Success Network (WSSN), a group of 19 colleges working under ATD’s leadership to help low-income students build financial stability and prepare to move up the economic ladder. The WSSN has advanced an innovative framework that strategically integrates and bundles three distinct but related services: education and employment advancement, income and work supports, and financial services and asset building.

Integrated efforts, bolstered by products and services like those described in this report, can be powerful tools for creating long-term student success. Fortunately, an increasing number of providers are innovating and designing with consumer success in mind. Yet navigating this landscape can be difficult for those without expertise in financial products. In this report, CFSI uses its Compass Principles, guidelines prepared for the U.S. financial services industry, which affirm standards of excellence in the design and delivery of basic tools that people use to manage their daily financial lives.

Because financial products and services are generally not designed uniquely for the community college student, the entire financial services ecosystem was reviewed to identify products and services that would meet students’ needs. The tools are meant to be illustrative only and do not constitute an endorsement of a particular product, provider, or program. Students and colleges should ensure they understand any associated fees with any financial product they choose to use.

Read the full report below.

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