National survey by Laurel Road finds that the lack of financial education is felt more acutely by women, who come up significantly short in retirement & emergency savings, as well as understanding of student debt financing
New York, NY – March 11, 2019 – Nearly all (94%) college-educated Americans think personal finance courses should be required to graduate either high school or college, according to a new report. Findings released today by national online lender Laurel Road uncover factors contributing to this demand for early financial education, which is often associated with a lack of fiscal confidence and significant savings gaps later in life, especially amongst women. In fact, three-quarters (75%) of respondents believe that personal finance education courses would be a more useful college graduation gift than a check for their first month’s rent.
Women (85%) are significantly more likely than men (67%) to believe that earlier is better – advocating for a personal finance graduation requirement in high school. This is likely influenced by that fact that men tend to learn more advanced skills than women before graduating. While women are more likely than men to learn about basic money management, such as budgeting (69% vs. 63%) and managing bank accounts (75% vs. 65%), men were more likely to understand common finance terminology (52% vs. 42%), retirement savings (32% vs. 28%), and the ins & outs of investing (35% vs. 23%) before graduation.
Lacking financial education strongly ties to student debt crisis
The survey also found that less than half (44%) of millennials with student loans fully understood their repayment timelines before taking on debt to pay for college. And more than 1/3 of millennials admit that they didn’t understand the basics of student debt before borrowing – including timelines, monthly payments, interest rates, tax implications, refinancing and evaluating lenders. This education gap is especially pronounced for women, who were nearly twice as likely as men (37% vs. 20%) to not understand the basics of student loans before they borrowed.
As public concern and attention around the student debt crisis increases, millennials’ confidence in their own knowledge has taken a hit. One-third (34%) of millennials report this year that they are not confident that they understood their college financing options, versus just 25% in 2018.
Additionally, more than half (54%) of debt-saddled millennials have received help in paying off their student loans in the past year. Of all respondents receiving help, just 34% were female, while nearly half (49%) male. Still, respondents believe they’ll be paying off student loans until age 49, on average, pointing to the fact that student loans present a decades-long burden, regardless of gender.
Millennials are significantly more invested in their finances
Perhaps in response to this increased awareness around the importance of taking control, 87% of millennials (and 75% of all respondents) have spent more time proactively managing their personal finances compared to one year ago. In fact, financial proactivity increased year-over-year in every category, with more people investing in retirement & stocks, meeting with a financial advisor, negotiating higher salaries, and taking personal finance courses. Women in particular saw the biggest year-over-year jump, with 90% reporting personal finance proactivity in 2019, versus only 83% in 2018.
Concerning gender disparity in retirement & emergency fund savings
Despite this increase in financial proactivity, there’s still a ways to go – especially for women. Less than 1/3 of respondents learned about saving for retirement before graduating college, which could be a factor as to why 30% of respondents (and 34% of millennials) do not have any money saved for retirement, while 46% have less than $1,000. Of all respondents, women have roughly $123,000 less in retirement savings, on average, than their male peers, and are nearly twice as like (37%) than men (20%) to not have any money saved for retirement.
Meanwhile, it’s a similar picture for emergency savings. Nearly two-thirds (61%) of millennials have less than $500 in an emergency fund. And, of all respondents, only 66% of females even report having a backup fund, with an average of $5,493 saved, versus 82% of males and $9,820.
“The data shows a clear need for improved personal finance education, the lack of which women especially are paying for later in life,” said Alyssa Schaefer, Chief Marketing Officer of Laurel Road. “But despite this obstacle, women today are more empowered than ever before, and don’t shy away from building their knowledge on financial matters. To share in this burden, Laurel Road will host an event series to educate, support and engage women in a deeper dialogue about financial health – and particularly the role student debt plays.”
Additional findings include:
- Earlier is Better: 77% of respondents think personal finance courses should be required to graduate high school.
- Back to Basics: The majority (61%) of college-educated Americans didn’t learn basic personal finance skills, such as budgeting, credit scores or investing, until they were 18 or older.
- For nearly 1/3 of respondents (29%), that number jumps to after age 22.
- Raise Up: Only 38% of working females requested a raise in 2018, versus 58% of males. Of those, only 86% of females were successful, vs. 95% of males.
About the Survey
The Laurel Road survey was conducted by Wakefield Research among 1,000 nationally representative college-educated U.S. adults, half of whom have earned a graduate degree, between January 31 and February 11, 2019, using an email invitation and an online survey. Quotas have been set to ensure reliable and accurate representation of the U.S. college-educated population 18 and older.
Results of any sample are subject to sampling variation. The magnitude of the variation is measurable and is affected by the number of interviews and the level of the percentages expressing the results. For the interviews conducted in this particular study, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 3.1 percentage points from the result that would be obtained if interviews had been conducted with all persons in the universe represented by the sample.
About Laurel Road
Laurel Road is a national online lending company and FDIC-insured bank, offering online student loan refinancing, personal lending and mortgage products as well as consumer and commercial banking services. Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with graduate and undergraduate degrees to refinance and consolidate more than $4 billion in federal and private school loans. With our low rates, borrowers have reduced their monthly payments and on average saved tens of thousands of dollars. For more information on potential savings, see laurelroad.com/student. Laurel Road Bank is a Connecticut chartered bank offering lending products in all 50 U.S. states, Washington, D.C. and Puerto Rico. The mortgage product is not offered in Puerto Rico. Laurel Road Bank is an Equal Housing Lender, Member FDIC. NMLS ID # 402942.