Consider two incoming, hypothetical, freshmen applying for student loans.
Joe borrows for the course he likes without considering how much he needs to pay.
Mark took his parent’s advice and went for a pre-med degree in Biology. Then he’ll go into medical school and specialize as a neurosurgeon. Unlike Joe, he knows he’ll get buried in debt after graduation but he’s confident everything will work out because he’ll be earning a six-figure salary after residency.
Millions of students act like Joe and Mark—taking out student loans they don’t understand without considering the terrifying consequences. In fact, according to the most recent data 44.4 million Americans carry a student loan debt and about 11% are delinquent.
Loan interest, repayment terms, potential salary, living expenses, and job market competition—these are just a few things students fail to consider when borrowing money.
To be fair, that’s a ton of research and decision making to put in the hands of a high-school senior.
They need guidance.
Making Budgeting and Personal Finance Relatable to College Students
Created by the American Student Assistance (ASA) organization, Salt’s program teaches current and incoming students how loans work, how to repay them, and all the budgeting skills they’ll need to avoid crushing debt.
Salt combines one-on-one guidance, online videos, and articles into a powerful financial education platform based on ASA’s 50+ years of experience working with millions of student borrowers.
What makes them different is their strategy for getting students interested in personal finance.
Allessandra Lanza, Director of Corporate Communications at ASA says, “Salt employs a ‘right information, right time’ approach.”
Familiarizing students with the ins and outs of their student loans make sense. But in reality, they’re just not interested because they don’t have to worry about it until they graduate. That’s an awful long time between the lesson and application.
Instead, Salt prioritizes financial lessons immediately applicable to the student’s life.
One example is “paying attention to what they spend on daily ‘fixes,’ like coffee and candy, and applying for scholarships to reduce the amount they’ll borrow,” says Lanza.
Holistic Personal Finance for Students and Graduates
Step one is to get students interested, accomplished through their ‘right information, right time’ approach.
Step two is where it gets complicated.
Salt’s educational materials focus on four goals:
- Master Money
- Repay Student Debt
- Pay for School
- Find a Job
Not so fascinating topics for college students.
The challenge is to keep the information applicable to their daily lives, while avoiding the fight or flight tendency triggered when students get overwhelmed.
“We try to strike a balance so our tone is fun and engaging but not patronizing,” says Lanza. Because of this, all their materials are bite-sized. Some articles take as little as two minutes to read, while lessons and e-books take about 30 to 60 minutes—just like a regular class period.
To complement the program’s educational materials, each campus adds their own initiatives to rev up student engagement. Some colleges encourage students to sign-up, while others already made it a requirement.
Of course, Salt’s founders already know self-studying online lacks a critical component: accountability.
To solve this, they work with student counselors to conduct group sessions on personal finance, and one-on-one talks with students who feel like approaching them.
You might think no student will ever listen to their classmate’s advice about money. What does another student know that they don’t?
One counselor’s experience proves otherwise.
“In several cases, my lessons on financial literacy and student debt were completely packed. Dozens of students would fill a room to learn from me, and I felt inspired to share my knowledge and firsthand experience with them”
Students aren’t interested in what their professors, parents and bursar’s office have to say. But they pay attention when it’s a classmate or a friend. Andrew Brown realized this after working with Salt and Howard University’s financial aid office.
If talking to a fellow student about money is embarrassing for you, Salt has online counselors, too.
Whether online or in-person, having someone to talk gives students much needed guidance and accountability in managing their finances.
Student Loans or Exams? Can’t Fight with Competing Priorities
Of course, Salt’s program isn’t perfect for everyone.
“Some students are so scared to manage their money, they stick their head in the sand and don’t ask for help,” says Lanza.
While students who went through the program were three times less likely to default on a loan, Lanza was quick to acknowledge that some students abandon the program before seeing its practical application.
“Sometimes they put it off until they graduate. Sometimes students get overwhelmed with their studies,” she says.
Partnering with Universities and Non-Profits to Shape Financial Savvy Graduates
Universities are the most logical partner for Salt. They have the most to gain from reducing student loan defaults, after all. They also work with non-profits such as the Boys & Girls Club, United Negro College Fund, and South Carolina Legal Services.
Non-profits and universities aren’t the only ones that will gain from supporting Salt’s mission. The whole economy would be better off if people knew how to juggle student loan payments on top of their living expenses.
“Both government and private sector employers will flourish with a college-educated workforce that can contribute in the economy as smart consumers not crushed by student debt.”
A College Education for Everyone
By 2025, Salt wants to ensure no student fails to continue or complete their college education for financial reasons.
It’s a steep goal. But with over 300 partners, and dozens of success stories of students paying huge student loans and winning scholarships, this daunting goal is starting to sound feasible.