Forbes

Why Colleges Need To Invest More In Minority Millennials

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Growing up in a low-income Dominican household in Brooklyn, Yanely Espinal learned very little about managing her personal finances. Her parents didn’t own bank accounts and relied heavily on government assistance. Though she attended Brown University on a full scholarship and worked multiple jobs on campus, she took out loans to study abroad and graduated with nearly $10,000 in student debt and almost $4,000 in credit card debt.

“I started to feel like I had some income, and, therefore, I could spend on my credit card,” Espinal recalls. “I started swiping everything and anything. I just was out of control.”

As a minority millennial, Espinal is in a class of 20-somethings who have lacked proper financial education. When tested on their financial knowledge, 76% of millennials demonstrated a poor understanding of basic concepts, according to a 2016 PricewaterhouseCoopers study. A survey by the Financial Industry Regulatory Authority further revealed that 49% of African-American respondents and 41% of Hispanic respondents were late with student loan payments last year. They were also less likely than their whites and Asian American counterparts to answer financial literacy quiz questions correctly.

“Millennials, as a generation, did not grow up talking about financial issues,” says PwC principal Shannon Schuyler. “Many of them have seen their families and others close to them lose a lot of things, so they have a great distrust in the system. I think where we’ve seen this hit minorities the most is the whole notion around student debt.”

The figures are striking. A recent study by youth interest nonprofit Young Invincibles showed that college costs account for a majority of African-American and Hispanic family incomes. Approximately 70% of African-American families take out student loans to pay for college, accumulating an average debt load of $18,945. About 50% of Hispanic families apply for the same loans, borrowing a median amount of $15,572. Because many of these households rarely discuss budgeting, there is a burden on minority-serving institutions to emphasize financial literacy, says Theodore Daniels, president of the Society for Financial Education and Professional Development.

“You only have 17 states that require a personal finance or economic course to be taken before you graduate from high school, so that’s a large group of people who have no financial education,” says Daniels. “This is their last opportunity to gain knowledge in the area of personal money management.”

Since many colleges also don’t mandate financial instruction for students, their financial aid staffs are often tasked with outreach. At Morehouse College, for example, the financial aid department talks to students about taking loans and encourages them to apply for scholarships, especially those offered by the United Negro College Fund. As a member of the Atlanta University Center Consortium, an association of historically black colleges, Morehouse also provides financial literacy sessions on spending habits.

“For us, we have students that come from an environment where they haven’t had a lot of money available to them,” says Sheryl Turner Spivey, the school’s financial aid director. “When they come to school and have financial aid and may have a refund, we have to talk to them about how to spend responsibly.”

At California State University Dominguez Hills, the financial aid staff holds workshops that incorporate a budgeting exercise. Participants are taught “how to make their excess funds last for the semester by determining their five-month, four-week and seven-day spending estimates and limits,” says director Delores S. Lee. The biggest challenge, she admits, is getting students interested in attending.

In 2011, more than 100 MSIs gathered at a symposium held by the Institute for Higher Education Policy to examine ways to improve their financial literacy efforts. They identified nine areas of interest they could work on, including faculty development, cross-departmental partnerships, peer and faculty mentoring, a transitionary program for incoming students, campus orientations, social media engagement, workshops, entrance-and-exit counseling sessions and community involvement. The challenge is centralizing some of those efforts, says Dr. Terrance Martin, who teaches financial planning at the University of Texas Rio Grande Valley.

“We need to have academic expertise [in the field],” he says. “A lot of institutions have financial aid [liaisons] doing most of these things, but they’re not necessarily trained in the area of personal finance. I think we need a center, where you can set up personal finance workshops, clinics and seminars.”

Some professors have taken the matter into their own hands. At Miami Dade College, for instance, Ana M. Cruz instituted the Volunteer Income Tax Assistance program to complement her income tax course. While Miami Dade invites guest speakers and student trainers to talk about financial literacy, the program builds on that effort by teaching students how to prepare individual income tax returns not only for their peers but for the surrounding public as well.

“We’re educating them on how to comply with the IRS, that they have to file their returns on time, that they have to be prudent when they claim their expenses and so forth,” says Cruz. “That’s another way where, if you think about it, financial literacy is infused.”

Some minority millennials themselves have also taken initiative. Danielle Robinson, a junior economics major at Spelman College, says seeing other families go through foreclosure and unemployment during the Great Recession motivated her to become more financially literate. As president of the Community Foundation for Financial Literacy at Spelman and a member of the school’s Economics Club, Robinson has been involved in a number of on-campus workshops on investing, budgeting, saving and maintaining a good credit score.

“Volunteering at CFFL really taught me the importance of mentoring because I started volunteering with their FAST Track workshops, which are educational programs designed to teach local high schoolers about personal finance and professional development,” she says. “I was helping mentor high school students and also learning something about personal finance that I didn’t know already, which was really exciting for me.”

For postgraduate 20-somethings like Espinal, who started a YouTube channel called “MissBeHelpful” in 2015 to help young millennials avoid the mistakes she made, colleges can do more by explaining to minority students how financial illiteracy can lead to real-life consequences.

“Let [students] know, ‘This is actually directly affecting people like you and your friends. This is something that you need to wake up and learn about, and it actually impacts you whether you feel it or not,’” she says. “It’s real. It’s happening, and it exponentially more so affects people of color.”

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