Best Practices for

Financial Literacy and Education

at Institutions of

Higher Education

U.S. Financial Literacy and Education Commission

Diploma

&

U.S. Financial Literacy and Education Commission

2019
Members of the Financial Literacy

and Education Commission 

Department of the Treasury (Treasury), Chair

Consumer Financial Protection Bureau (CFPB), Vice Chair

Department of Agriculture (USDA)

Department of Education (ED)

Department of Defense (DoD)

Department of Health and Human Services (HHS)

Department of Housing and Urban Development (HUD)

Department of the Interior (DOI) 

Department of Labor (DOL)

Department of Veterans Affairs (VA)

Board of Governors of the Federal Reserve System (FRB) 

Commodity Futures Trading Commission (CFTC)

Federal Deposit Insurance Corporation (FDIC)

Federal Emergency Management Agency (FEMA) 

Federal Trade Commission (FTC) 

General Services Administration (GSA)

National Credit Union Administration (NCUA)

Office of the Comptroller of the Currency (OCC)

Office of Personnel Management (OPM)

Securities and Exchange Commission (SEC)

Small Business Administration (SBA)

Social Security Administration (SSA)

White House Domestic Policy Council (DPC)
U.S. Financial Literacy and Education Commission

U.S. Financial Literacy and Education Commission

2019

Best Practices for

Financial Literacy and Education

at Institutions of

Higher Education

Diploma

&

Table of Contents iii

Table of Contents

Executive Summary 1

Introduction 1

The Scope of This Report 2

Review of the Process for This Report 3

Summary of Issues and Recommendations 3

Section 1:

Best Practices for Delivery of Financial Literacy to the Public 7

Introduction 7

Know the Individuals and Families to be Served 7

Provide Actionable, Relevant and Timely Information 8

Improve Key Financial Skills 8

Build on Motivation 8

Make It Easy to Make Good Decisions and Follow Through 9

Develop Standards for Professional Educators 9

Provide Ongoing Support 10

Evaluate for Impact 10

Section 2:

Best Practices for Delivery of Financial Literacy

at Institutions of Higher Education 12

Introduction 12

Issues and Recommendations 12

Providing Clear, Timely, and Customized Information

to Inform Student Borrowing 12

Effectively Engaging Students in Financial Literacy and Education 18

Targeting Different Student Populations by use of

National, Institutional, and Individual Data 21

Communicating Importance of Graduation

and Major on Repayment of Student Loans 24

Preparing Students to Meet Financial Obligations upon Graduation 29

Exhibits 31

Exhibit A: Participants in the Engagement Process 31

Exhibit B: Summary of Recommendations 34

Exhibit C: Section 603 P.L. 115-174 36

Executive Summary 1

Executive Summary

Introduction

1. As defined in §102 of the Higher Education Act of 1965, 20 U.S.C. 1001. See section 102, at: https://www2.ed.gov/policy/

highered/leg/hea98/sec101.html.

2. Ma, Jennifer, Pender, Matea, and Welch, Meredith, “The Benefits of Higher Education for Individuals and Society”, The College 

Board, 2016, available at: https://trends.collegeboard.org/education-pays.

3. Carnevale, Anthony P., Smith, Nicole and Strohl, Jeff, “Recovery: Job Growth and Education Requirements through 2020”, 

Georgetown University Center on Education and the Workforce, 2013, available at: https://cew.georgetown.edu/cew-reports/

recovery-job-growth-and-education-requirements-through-2020/#full-report.

4. A recent report identifies the following “behaviors appropriate for students:” maintain a transactional account, track cash flow, 

review financial standing, manage bills, maintain a personal records system, maintain an emergency plan, work toward a financial 

goal, seek unbiased and accurate information for big financial decisions, protect against identity theft, balance present and future 

financial needs, and sleep on it. See “The Financial Transition from Student to Employee: Implications for Higher Education 

and Employers”, Coalition of Higher Education Assistance Organizations, 2017, available at: http://www.coheao.com/wp-content/

uploads/2011/04/COHEAO-Financial-Wellness-White-Paper-2017.pdf.

5. “Digest of Education Statistics”, U.S. Department of Education, National Center for Education Statistics, 2016, summarized in 

Fast Facts 2018, available at: https://nces.ed.gov/fastfacts/display.

6. U.S. Department of Education, “Federal Student Loan Portfolio Summary”, Q 1. 2019, available at: https://studentaid.ed.gov/sa/

sites/default/files/fsawg/datacenter/library/PortfolioSummary.xls.

7. “Report on the Economic Well-Being of U.S. Households in 2017”, Federal Reserve Board, 2018, available at: https://www.

federalreserve.gov/publications/files/2017-report-economic-well-being-us-households-201805.pdf.

Institutions of higher education1 play an important role in our society and our economy, developing educated citizens and skilled workers who are vital to America’s 

well-being. In addition to this broad benefit, postsecondary education is valuable to 

many individuals, resulting in higher earnings and less unemployment across their 

lives.2 The impact of higher education is expected to grow, as an increasing number 

of jobs in the future are expected to require some kind of postsecondary credential.3

Along with preparing the workforce, institutions of higher education can prepare their 

students to make financial choices throughout their lives that enable them to effectively participate in our economy, build wealth, and attain their goals. Critical decisions that students and families make before, during, and after their postsecondary 

education influence their financial future. These include choices around selecting an 

institution and degree, managing money while studying, planning for the completion 

of their education, and managing student debt post-completion.4

The complex financial choices students must make are compounded by the fact that, 

for decades, the cost of college has been rising far faster than incomes. Between 2004-

05 and 2015-16, prices for undergraduate tuition, fees, room, and board at public institutions rose 34 percent, after adjustment for inflation.5

 Students and their families 

have increasingly taken on debt to pay for college. Currently, most student debt consists of federal government loans, which now totals more than $1.5 trillion, owed by 

43 million individuals, or over $33,000 per borrower on average.6 This rising cost of 

tuition and student debt is even more troubling when considering recent survey data 

that found one in five adults who attended college believe the cost of their education 

exceeded the financial benefit it produced.7
2 Best Practices for Financial Literacy and Education at Institutions of Higher Education

The level of student debt impacts the broader economy. People with significant student 

debt may feel constrained in their choice of career and where they live, refrain from 

starting a business, and delay starting a family and purchasing a home.8Additionally, 

as more people carry student debt later in life (for themselves or family members), 

they may face challenges in adequately saving for retirement.9 While these impacts 

may be felt widely, with nearly seven million student loan borrowers delinquent or in 

default,10 the burden of unsustainable debt is disproportionately borne by lower-income individuals.11 Similarly, one-third of all women, and more than half of AfricanAmerican women who were in student loan repayment, report that they had been 

unable to meet essential expenses.12

Helping students and their families avoid the pitfalls associated with financing higher 

education, and empowering them to make optimal financial choices, should be a priority of all institutions of higher education. In order to provide guidance to these 

institutions, this report establishes best practices for teaching financial literacy and 

providing information about making financial decisions.

8. Chakrabarti, Rajashri, Gorton, Nicole, and van der Klaauw, Wilbert, “Diplomas to Doorsteps: Education, Student Debt, 

and Homeownership”, Liberty Street Economics, Federal Reserve Bank of New York, April 2017, available at: https://

libertystreeteconomics.newyorkfed.org/2017/04/diplomas-to-doorsteps-education-student-debt-and-homeownership.html. Mezza, 

Alvaro, Ringo, Daniel, and Sommer, Kamila, “Can Student Loan Debt Explain Low Homeownership Rates for Young Adults?”, 

Consumer & Community Context, Federal Reserve Board, 2019, available at: https://www.federalreserve.gov/publications/2019-

january-consumer-community-context.htm.

9. Rutledge, Matthew S. et al., “Do Young Adults with Student Debt Save Less for Retirement?”, Center for Retirement Research at 

Boston College, 2018, available at: http://crr.bc.edu/wp-content/uploads/2018/06/IB_18-13.pdf.

10. As of 2017, Federal Reserve Bank of New York, 2018 Student Loan Update, available at: https://www.newyorkfed.org/

medialibrary/interactives/householdcredit/data/xls/sl_update_2018.xlsx.

11. “The Financial Returns from College across Generations: Large but Unequal”, The Demographics of Wealth, 2018 Series, 

Essay No. 1, Federal Reserve Bank of St. Louis, 2018, available at: https://www.stlouisfed.org/household-financial-stability/thedemographics-of-wealth/the-financial-returns-from-college-across-generations; Addo, Fenaba R., “Are Student Loans Contributing to 

Racial Wealth Gaps?” On the Economy Blog, Federal Reserve Bank of St. Louis, July 2018, available at: https://www.stlouisfed.

org/on-the-economy/2018/july/student-loans-contributing-racial-wealth-gap; and Addo, Fenaba R., “Parents’ Wealth Helps Explain 

Racial Disparities in Student Loan Debt”, In the Balance, Issue 19, Federal Reserve Bank of St. Louis, March 2018, available at: 

https://www.stlouisfed.org/~/media/publications/in-the-balance/images/issue_19/itb19_march_2018.pdf.

12. “Deeper in Debt: Women and Student Loans”, American Association of University Women, 2017, available at: https://www.

aauw.org/resource/deeper-in-debt/.

13. The Financial Literacy and Education Commission (FLEC) was established by law in 2003. Chaired by the Secretary of the 

Treasury, the FLEC is made up of the heads of 22 federal agencies and the White House Domestic Policy Council. The purpose 

of the FLEC is to “improve the financial literacy and education of persons in the United States through development of a 

national strategy to promote financial literacy and education”, which provides for participation by the public and private sectors. 

See, 20 U.S.C. §§ 9702, 9703(f ).

14. Pub. L. No. 115-174, section 603, 132 Stat. 1367-1368 (2018), (20 U.S.C. § 9703(a)(3)). 

The Scope of This Report

The Financial Literacy and Education Commission (FLEC)13 prepared this report in 

response to Section 603 of P.L. 115-174, the “Economic Growth, Regulatory Relief, 

and Consumer Protection Act”,14 which requires the FLEC to establish best practices 

for institutions of higher education regarding methods of teaching financial literacy 

and providing information to assist students with borrowing decisions. 
Executive Summary 3

Review of the Process for This Report

15. “Effective Financial Education: Five Principles and How to Use Them”, Consumer Financial Protection Bureau, June 2017, 

available at: https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/201706_cfpb_five-principles-financial-well-being.pdf.

For this report, the FLEC solicited input from institutions of higher education, higher 

education associations, and other entities that focus on postsecondary students. The 

team consulted extensively with a wide range of stakeholders, including academics, 

nonprofit financial education providers, private sector financial services firms, state 

and local governments, and others with relevant knowledge. The team also held listening sessions at the 2018 Federal Student Aid Training Conference hosted by the 

U.S. Department of Education (ED). The FLEC also reviewed a wide range of data, 

research, and published material from both public and private sector sources. A list of 

organizations and individuals who provided input in connection with the preparation 

of this report is set forth as Exhibit A and is followed by a summary of the report’s 

recommendations in Exhibit B.

Summary of Issues and Recommendations

The recommendations in this report can be summarized in the following categories:

• Identification of best practices for evidence-based, effective financial education 

programs. 

• Identification of specific best practices for institutions of higher education to 

address teaching financial literacy and improving decisions related to student 

borrowing, including: 

• Providing clear, timely, and customized information to inform student 

borrowing

• Effectively engaging students in financial literacy and education 

• Targeting different student populations by use of national, institutional, and 

individual data 

• Communicating the importance of graduation and major on repayment of 

student loans

• Preparing students for financial obligations upon graduation

Best Practices for Delivery of Financial Literacy to the Public

This report recommends the adoption by financial education practitioners of the 

Consumer Financial Protection Bureau’s (CFPB) “Five Principles of Effective 

Financial Education”15: 

• Know the Individuals and Families to be Served. Financial education, information, 

and delivery methods must be tailored to the circumstances and needs of the user. 
4 Best Practices for Financial Literacy and Education at Institutions of Higher Education

• Provide Actionable, Relevant, and Timely Information. Financial information 

that is delivered in an actionable, relevant, and timely manner results in greater 

likelihood of retention and action. 

• Improve Key Financial Skills. Financial literacy and education can be more 

effective when they help develop skills, rather than transmitting knowledge of 

particular facts about financial products and services. 

• Build on Motivation. Effective financial literacy and education programs capitalize 

on people’s motivations. 

• Make It Easy to Make Good Decisions and Follow Through. The environment 

or context can make it easier for people to carry out their intentions. For example, 

changing the options presented, removing hassles and barriers, and adding supports 

can help people bridge the gap between intentions and actions. 

The report also recommends the adoption of three additional best practices that have 

been added based on outreach to stakeholders: 

• Develop Standards for Professional Educators. Financial literacy and education 

providers should demonstrate a high level of quality, including knowledge of the 

content and how to deliver it effectively. 

• Provide Ongoing Support. Financial literacy and education providers should 

provide ongoing support, including one-on-one financial coaching.

• Evaluate for Impact. Financial literacy and education providers should evaluate 

their programs for impact and develop a culture of continuous improvement by 

establishing methodologies, procedures, reporting, and metrics for measuring 

program effectiveness. 

Best Practices for Institutions of Higher Education

In addition to the eight best practices for delivery of financial literacy to the public, 

the FLEC recommends the adoption of the following five categories of best practices specific to postsecondary education: 

Providing Clear, Timely, and Customized Information to Inform Student Borrowing

The cost of higher education can be difficult to understand due to the lack of consistency and transparency in information provided to potential students. The difficulty 

may be compounded by lack of relevant, transparent and timely information. Notably, 

financial aid offer letters (often known as award letters) and annual debt notification 

letters (debt letters) are effective tools in communicating an individual’s cost of college 

and financing options, so that students and families are empowered to make comprehensive and informed decisions. Unfortunately, award letters are sometimes unclear, 

leaving students with inadequate information to make financial decisions.

The FLEC recommends that institutions of higher education adopt the following 

best practices for financial aid offer letters:
Executive Summary 5

• Present an itemized and sub-totaled cost of attendance. 

• Differentiate aid offers by type. 

• Highlight critical details and distinctions by aid type. 

• Calculate the cost after grants and scholarships are applied.

• Do not include Parent PLUS loans as part of student’s loan package. 

• Provide actionable next steps.

The FLEC also recommends that state lawmakers and institutions of higher education consider broader adoption of debt letters with the following best practices: 

• Provide information tailored to the student. 

• Make it easy to find additional information and support.

• Time the issuance of debt letters when students are motivated to act.

• Pair debt letters with other financial literacy strategies. 

Effectively Engaging Students in Financial Literacy and Education

A lack of financial education and financial literacy is common among the student 

population. Institutions of higher education can address this challenge by effectively engaging students in financial literacy and education. The FLEC recommends 

that institutions of higher education require mandatory financial literacy courses, 

deploy well-trained peer educators, integrate financial literacy into core curricula, and 

communicate with students about financial topics more often than during required 

entrance and exit counseling. 

Targeting Different Populations by use of National, Institutional, and Individual Data 

There is a significant amount of data that institutions of higher education can collect, evaluate and use to target financial literacy efforts for different student populations. This is especially important for more vulnerable students, including older and 

other non-traditional students, low-income students, first-generation students, and 

students of color. These students are more likely to face difficult hurdles on their paths 

to college completion and financial security. The FLEC recommends that institutions 

of higher education understand their students’ personal and financial circumstances 

and goals by using national data, institutional data and individual data, consistent 

with appropriate privacy practices, to better know the population they intend to serve.

Communicating the Importance of Graduation and Major on Repayment of 

Student Loans

There is a strong correlation between not finishing a degree program and failing to 

repay student loans. In addition, matching a student’s abilities as well as their aspirations to a degree can improve their chances of completing a degree. Completing a 

degree in a timely manner can reduce the amount of debt that a student takes on and 

increase their lifetime earnings by entering the workforce sooner. 
6 Best Practices for Financial Literacy and Education at Institutions of Higher Education

The FLEC recommends that institutions of higher education provide incentives that 

spur students toward completion, including banded tuition, reduced summer tuition, 

and extended enrollment periods. The FLEC also recommends that institutions advise 

students on loans, majors, and obstacles to graduation and make available emergency 

aid to help bridge gaps between financial aid and the resources students need to complete their education. 

Preparing Students to Meet Financial Obligations upon Graduation

Many students do not fully understand student loans or available repayment plans. 

The last semester before graduation and the “grace period” before student loan repayment begins are a crucial time for students to begin to prepare to repay their loans, 

understand their options, and plan for their financial future. Informing students of the 

importance of understanding their repayment obligations before leaving or graduating may help students to focus on their financial obligations along with other major 

life decisions. The FLEC recommends that institutions of higher education help students: understand loan repayment options and obligations, build a budget to set a 

repayment goal, identify and connect with their student loan servicer, and assess the 

costs and benefits of graduate and professional studies. 
Section 1: Best Practices for Delivery of Financial Literacy to the Public 7

Section 1:

16. Id. 

17. “Measuring financial well-being: A guide to using the CFPB Financial Well-Being Scale”, Consumer Financial Protection 

Bureau, December 2015, available at: https://www.consumerfinance.gov/data-research/research-reports/financial-well-being-scale/.

Best Practices for Delivery of 

Financial Literacy to the Public

Introduction

Based on extensive review of the research and consultations with experts, the FLEC 

has noted a number of themes regarding effective financial literacy and education. 

These themes point to best practices for incorporating financial education into 

diverse situations, with various populations, covering a number of key topics. They 

are cross-cutting, rather than subject-specific, and thus can be used to inform financial education policy and practice whether at home, in a community program or educational institution, or setting policy. 

The FLEC has identified the following eight best practices for effective financial literacy and education programs. The first five best practices are consistent with the 

principles identified by CFPB in its study entitled the “Five Principles of Effective 

Financial Education.”16 The additional three best practices have been added based on 

engagement with stakeholders. 

Know the Individuals and Families to be Served

Financial education, information, and delivery methods must be tailored to the circumstances and needs of the user. “Knowing the population” happens at two levels: 

understanding the demographic context of the individual, and assessing the individual’s own needs, barriers, skills, and motivation.

Several studies are already produced by government agencies to help understand 

different populations. Some examples include the Federal Deposit Insurance 

Corporation’s National Survey of Unbanked and Underbanked Households and the 

Federal Reserve Board’s Survey of Household Economics and Decisionmaking and 

Survey of Consumer Finances. Other organizations provide more specialized understanding of distinct populations, such as the Department of Defense’s Status of Forces 

Surveys of Active Duty Members.

The effective educator must also understand the individual and his or her unique situation and mindset. Attitude and needs assessments can help the educator and consumer identify gaps and motivations in order to customize the financial education 

approach. For example, CFPB developed a Financial Well-being Scale17 which helps 

assess a person’s perceptions about their financial well-being. 
8 Best Practices for Financial Literacy and Education at Institutions of Higher Education

Provide Actionable, Relevant and Timely Information 

18. Fernandes, David, Lynch, John G. and Netemeyer, Richard G., “Financial Literacy, Financial Education, and 

Downstream Financial Behaviors”, Management Science, August 2014, available at: https://www.researchgate.net/

publication/259763070_Financial_Literacy_Financial_Education_and_Downstream_Financial_Behaviors.

19. Choice architecture is used to mean the design of the context in which decisions are made. See, Thaler, R. H., Sunstein, C. R., 

& Balz, J. P . Choice architecture. In E. Shafir (Ed.), The behavioral foundations of public policy (pp. 428-439). Princeton, NJ: 

Princeton University Press, 2013.

20. US Social Security Administration, Create your personal my Social Security account today, website, available at: https://www.ssa.

gov/mysocialsecurity.

21. The CFPB has developed a scale to measure financial skill, see Consumer Financial Protection Bureau, “Measuring financial 

skill: A guide to using the Bureau of Consumer Financial Protection’s Financial Skill Scale,” 2018, available at: https://www.

consumerfinance.gov/data-research/research-reports/measuring-financial-skill/.

Although the academic community has an ongoing debate on the effectiveness of 

financial education alone, there is agreement that when financial information is delivered in an actionable, relevant, and timely manner, people are more likely to retain the 

information and act on it.18 For example, a body of evidence indicates that financial 

education alone has had a small impact on financial behaviors, in part because financial knowledge decays within two years of the lesson. On the other hand, some academics point to the need for behaviorally based strategies, such as nudges or designed 

choice architecture,19 and information provided in close time proximity to when consumers are making financial decisions, known as “just in time financial education.” 

This type of relevant, timely, and actionable information should include concrete steps 

for the consumer and be directly applicable to a financial decision about to be made. 

For example, pre-purchase housing counseling takes advantage of what is important 

to the person seeking information and is typically delivered close to the purchase of 

a home. In another example, the benefit estimates in the Social Security statement, 

accessible with a my Social Security account20 and provided to individuals near to 

retirement age have been found to help people make more informed decisions about 

when to claim Social Security benefits, thus impacting their income in retirement. 

Improve Key Financial Skills

Financial literacy and education can be more effective when they help people develop 

skills in knowing how to achieve specific goals, rather than transmitting knowledge 

of particular facts about financial products and services. Effective financial literacy 

approaches are structured to help consumers: (1) know when and how to locate information for making financial decisions; (2) understand how to interpret information 

for decision-making; and (3) have skills and confidence to take action and implement their decision.21

Build on Motivation

Effective financial literacy and education programs capitalize on people’s motivations. 

People driven by intrinsic values, desires, interests, or aspirations are more likely to stay 

focused (because they want to learn) than those forced into learning through extrinsic 
Section 1: Best Practices for Delivery of Financial Literacy to the Public 9

pressures (because they have to learn). This best practice highlights the importance 

of financial educators who use empathy and identify learners’ specific goals, understand the learners’ financial conditions and help learners achieve their own goals. For 

example, people who are strongly motivated by values of a particular faith may find 

programs that build on those values, such as those developed by a faith-based organization, to be particularly helpful. Similarly, one-on-one coaching and peer support 

have also proven effective at turning motivation into action.

22. “Five Key Factors for Effective Financial Education”, National Endowment for Financial Education, available at: https://www.

nefe.org/Who-We-Help/Educators/Five-Key-Factors-for-Effective-Financial-Education.

23. Grist, Nicky, “The Professionalizing Field of Financial Counseling: A Journal of Essays from Expert Perspectives in 

the Field”, Citi Community Development and Cities for Financial Empowerment Fund, available at: http://www.

professionalfincounselingjournal.org/assets/cfe-fund-professionalizing-field-of-financial-counseling-and-coaching-journal.pdf.

Make It Easy to Make Good Decisions and Follow Through

This best practice acknowledges that it can be hard for people to stick with their goals, 

but the environment or context can make it easier for people to carry out their intentions. Even small adjustments to a process, such as nudges and defaults, can help make 

it easier for people to make sound choices. Changing the options presented, removing 

hassles and barriers, and adding supports can help people bridge the gap between their 

intentions and what they actually do. This best practice also highlights that programs 

can be designed to make it easier for people to get financial education by, for example, integrating financial education into programs and places where people already are, 

like their job. For example, institutions of higher education are uniquely positioned to 

influence how education-related financial choices are presented, made, and executed, 

such as through financial aid offers, and can provide financial education through various venues and times to engage students during their education. 

Develop Standards for Professional Educators

According to the National Endowment for Financial Education (NEFE): “The educator needs to be confident, competent, and knowledgeable about the topic of personal 

finance in order to create a learning environment that is ideal for student-learning. 

Fundamentally, educators should demonstrate high levels of understanding—both 

with the content and the pedagogy—of the topics that espouse the tenets of financial 

capability.”22 However, there are few standards or designations to denote the quality 

or qualifications of financial educators. This lack of standards may result in uneven 

quality of delivery, and makes it difficult for consumers, funders, and policymakers to 

select appropriate providers. 

Many stakeholders point to the need for clearer guidelines and, possibly, standards23 to 

make financial education a more serious, evidence-based endeavor. The Government 

Accountability Office’s (GAO) 2011 report assessing the feasibility of a federal financial literacy certification process determined that a federal certification process was 
10 Best Practices for Financial Literacy and Education at Institutions of Higher Education

feasible, but a number of challenges need to be considered. These include the cost and 

staffing of certification, lack of consensus on definitions and standards, and uncertainty that certification would improve quality and be valued by consumers. The GAO 

noted ways to improve quality without full certification, including voluntary certification and specific guidelines provided to federally-funded financial education 

programs. Financial education standards would provide a baseline for developing curriculum, include core competencies for both consumers and educators, and provide a 

common platform for evaluation and measurement.24

24. “Financial Literacy: A Federal Certification Process for Providers Would Pose Challenges”, GAO-11-614, U.S. Government 

Accountability Office, June 28, 2011, available at: https://www.gao.gov/products/GAO-11-614.

25. “Financial Coaching: Review of Existing Research,” Center for Financial Security, University of Wisconsin-Madison, Issue 

Brief 2017-3.1, March 2017, available at: https://fyi.extension.wisc.edu/financialcoaching/files/2015/10/Financial_Coaching_

Review_3-2017.pdf.

26. Id. at 22.

Provide Ongoing Support

Financial education is most effective when it is not a one-time strategy, but rather 

enables continuing opportunities for people to build their knowledge and confidence, 

set goals, and receive feedback as action is taken. For example, there is a growing 

body of research pointing to the positive potential of one-on-one financial coaching 

and counseling as a method for teaching financial literacy and education and assisting clients with taking action to strengthen their financial health and well-being.25

Trained professionals collaborate with and guide clients in reaching the client’s financial goals, which may involve overcoming setbacks (like too much debt) and creating 

action plans (saving for a child’s education or starting a business). 

Evaluate for Impact

NEFE and other national stakeholders have stressed the importance of supporting 

research to identify and promote effective practices in financial literacy and education.26 The array of financial education providers (many of which are small in scale), 

the relative youth of the field, and the diversity of goals in financial education programs create a lack of consistency that makes data collection and evaluation challenging. Financial literacy and education providers should evaluate their programs 

for impact and develop a culture of continuous improvement by establishing methodologies, procedures, reporting, and metrics for measuring program effectiveness. 
Section 1: Best Practices for Delivery of Financial Literacy to the Public 11

Net Worth and Measures of Financial Health

27. Parker, Sarah, Castillo, Nancy, Garon, Thea, and Levy, Rob, “Eight Ways to Measure Financial Health”, Center for Financial Services Innovation, May 2016, 

available at: https://s3.amazonaws.com/cfsi-innovation-files-2018/wp-content/uploads/2016/05/09212818/Consumer-FinHealth-Metrics-FINAL_May.pdf.

28. For example, see Financial Literacy and Education Commission, “Promoting Financial Success in the United States: National Strategy for Financial Literacy 

2011”, available at: https://www.treasury.gov/resource-center/financial-education/Documents/NationalStrategyBook_12310%20(2).pdf.

29. “Financial Well-being: What it means and how to help”, Consumer Financial Protection Bureau, 2015, available at: https://www.consumerfinance.gov/

data-research/research-reports/financial-well-being/.

30. Id.

For many households, financial health is 

measured by income. While income is an 

important component of financial health, it is 

only part of the equation. Some experts and 

academics believe that net worth is a better 

measure of financial health than income. Net 

worth or wealth allows a family to deal with a 

financial crisis, such as the loss of employment or long-term sickness, and it also 

allows for investments in a home, small business and higher education. In other words, a 

household with no wealth may not be financially healthy despite a high salary. The type 

of assets held by a household also affects 

its financial health, with illiquid assets and 

short-term liabilities a greater potential risk 

than liquid assets and long-term debt. 

For many financial educators and households, assessing a household’s net worth is 

the start of the conversation. It allows financial educators and households to create a 

financial plan that considers assets and liabilities and leads to better financial health. 

Net worth considerations would also provide 

policymakers with a more accurate picture of 

financial health to assess middle class economic security across different demographic 

populations. 

There are other reasonable approaches to 

considering overall financial health or well-being. For example, the Center for Financial

Services Innovation (CFSI) looks at four components (spending, saving, borrowing, and 

planning) and eight indicators of financial 

health as well as data that can be collected 

to make the financial health assessment. The 

data collected to measure the financial health 

for each component range from the difference between income and expenses (for 

spending) to the debt-to-income ratio (for 

borrowing) to the type and extent of insurance coverage (for planning). The type of 

assets also matters for financial health. For 

example, CFSI distinguishes between liquid 

and illiquid assets by pointing out that liquid assets are “important for coping with an 

unexpected expense,” while [illiquid] longterm savings promote financial security.27

Financial well-being has been identified as a 

common outcome goal of financial education 

efforts.28 CFPB has developed a robust and 

validated scale to measure a person’s sense 

of financial well-being, which CFPB defines 

as the “state of being wherein a person can 

fully meet current and ongoing financial obligations, can feel secure in their financial 

future and is able to make choices that allow 

them to enjoy life.”29 While this measure is 

subjective, a number of trackable and objective factors are strongly associated with a 

person’s level of financial well-being, most 

notably having liquid savings.30
12 Best Practices for Financial Literacy and Education at Institutions of Higher Education

Section 2:

Best Practices for Delivery of 

Financial Literacy at Institutions 

of Higher Education

Introduction

This section puts forth a set of best practices developed by the FLEC for institutions 

of higher education to teach financial literacy skills and provide information to assist 

students with their borrowing decisions. These best practices supplement and complement the eight best practices discussed in Section 1 for delivery of financial literacy 

and education to the public. This section narrows the scope and addresses specific best 

practices related to topics of particular concern to institutions of higher education and 

their students. The FLEC has organized the best practices specific to higher education 

into the following five categories, which are discussed in more detail in this section:

• Providing clear, timely, and customized information to inform student borrowing

• Effectively engaging students in financial literacy and education 

• Targeting different student populations by use of national, institutional, and 

individual data 

• Communicating the importance of graduation and major on repayment of student 

loans

• Preparing students for financial obligations upon graduation

Issues and Recommendations

Providing Clear, Timely, and Customized Information to Inform 

Student Borrowing 

The cost of higher education can be difficult to understand due to the lack of consistency and transparency in the information provided to potential students, and the 

inherent challenge to comprehend long-term implications of borrowing. The difficulty may be compounded due to lack of relevant, transparent, and timely information. Notably, financial aid offers (sometimes known as award letters) and annual debt 

notification letters (debt letters) are effective tools in communicating an individual’s 

cost of college and financing options, so that students and families are empowered to 

make comprehensive and informed decisions. 
Section 2: Best Practices for Delivery of Financial Literacy at Institutions of Higher Education 13

Financial Aid Offers 

31. “Fast Facts: Financial Aid”, National Center for Education Statistics, 2015-16, available at: https://nces.ed.gov/fastfacts/display.

asp?id=31.

32. Bettinger, Eric, “How financial aid affects persistence”, NBER Working Paper Series: Vol. 10242, January 2004, available 

at: https://www.nber.org/papers/w10242; St. John, E. P. and Noell, J., “The effects of student financial aid on access to higher 

education: An analysis of progress with special consideration of minority enrollment”, Research in Higher Education, Volume 30, 

Issue 6, pp 563–581, 1989, available at: https://doi.org/10.1007/BF00992391.

33. Goldrick-Rab, Sara, and Kendall, Nancy, “The Real Price of College”, The Century Foundation, 2016, available at: https://tcf.org/

content/report/the-real-price-of-college/.

34. Burd, Stephen, Fishman, Rachel, Habbert, Julie, Keane, Laura, Barret, Ben, Dancy, Kim, Nguyen, Sophie, and Williams, Brendan, 

“Decoding the Cost of College: The Case for Transparent Award Letters”, New America and uAspire, 2018, available at: https://

www.uaspire.org/BlankSite/media/uaspire/Decoding-the-Cost-of-College.pdf.

35. “No Clear Winner: Consumer Testing of Financial Aid Award Letters- Summary & Report”, JBL Associates on behalf of 

the National Association of Student Financial Aid Administrators, 2013, available at: https://www.nasfaa.org/news-item/3451/

No_Clear_Winner_Consumer_Testing_of_Financial_Aid_Award_Letters_Summary_Report.

Financial aid offers are notifications sent by institutions to prospective students 

informing them about the financial aid options available through the institution, 

including federal student aid. The amount is generally based on the students’ Free 

Application for Federal Student Aid (FAFSA®) submission, and for most students 

(85 percent of students at four-year and 78 percent at two-year institutions)31 this 

financial aid is a necessary source to finance their degree.32 As a result, one of the most 

critical financial milestones related to higher education takes place when a prospective student receives a financial aid offer from an accepting institution.

Failure to choose an institution of higher education that is affordable for both the 

student and their family can have immediate and long-term financial consequences. 

These can range from the inability to meet basic food and housing needs;33 failure to 

enroll, persist, or complete a degree; and loan delinquency and default. Given these 

negative realities, students and families should be highly motivated to fully comprehend financial aid offers. Recent reports indicate that a majority of financial aid 

offers fail to provide students and families with the consumer information they need, 

including the cost of the institution and clarity about the types of aid being provided 

to the student.34 If critical information provided about the cost of attendance and aid 

available is not clear, students and families are not able to make optimized choices 

about colleges and compare their value propositions. A choice made based on incomplete information could result in over-borrowing or the inability to meet the full cost 

required for degree completion. 

A 2013 report by the National Association of Student Financial Aid Administrators 

found that students and families felt “overwhelmed and confused” about key financial 

information when reviewing a variety of aid offers during consumer testing.35 More 

recently, New America and uAspire conducted an analysis of 515 unique financial 

aid offer letters and found no standardized terminology, consistent definitions, content, or format of financial aid offers. For example, seven out of 10 institutions presented aid without differentiating by aid type such as grants/scholarships, federal 

student loans, private student loans, and work-study. Only 40 percent of aid offers 
14 Best Practices for Financial Literacy and Education at Institutions of Higher Education

calculated what the students should expect to pay, and those that did present a calculation did so using different methods, making comparison shopping impossible.36 The 

report found that the lack of common terms, calculations, and formats may impede a 

consumer’s ability to fully identify and evaluate college costs and make an informed 

financial decision.37 Similarly, a national study recently found that many students are 

unfamiliar with basic financial aid terminology, such as FAFSA, master promissory 

note, and entrance counseling.38

Financial aid offers can be a powerful tool to promote financial literacy and skill development for students when they clearly communicate the information students need 

to make a college investment decision.39 Additionally, the information can serve as a 

financial literacy tool that can assist students and families with planning and paying 

for college and beyond.

36. Id. at 34.

37. Id. at 34.

38. Taylor, Z. W., & Bicak, I., “What is the FAFSA? An adult learner knowledge survey of student financial aid jargon,” Journal of 

Adult and Continuing Education, 1-19, 2019, available at: https://doi.org/10.1177/1477971418824607.

39. “Issue Brief: Financial Aid Award Notifications”, National Association of Student Financial Aid Administrators, September 

2018, available at: https://www.nasfaa.org/issue_brief_award_notifications.

40. See, Consumer Financial Protection Bureau, “Paying for College”, website, available at https://www.consumerfinance.gov/

paying-for-college/.

41. See, “What does cost of attendance (COA) mean?,” Wondering how the amount of your federal student aid is determined?, 

Federal Student Aid website, U.S. Department of Education, available at: https://studentaid.ed.gov/sa/fafsa/next-steps/

how-calculated#cost-of-attendance.

Recommendations

Institutions of higher education should adopt the following best practices to ensure 

that their financial aid offer letters are clear, timely, and customized, and provide students with a clear sense of their investment and borrowing obligations.40 Higher 

education institutions should consider developing and testing additional interventions to improve students’ comprehension of their options for paying for college and 

should consider the promising practices below as a beginning framework to improve 

the financial aid offer. 

• Present an itemized and sub-totaled cost of attendance. Students need to know 

what specific costs are, who they are paid to, and when they need to be paid. Cost of 

attendance (COA), the institution’s estimate for tuition and fees, room and board, 

books, supplies, and other necessary costs,41 is essential to list on all aid offers. COA is 

best presented broken down by direct costs (what will need to be paid to the college) 

and indirect costs (estimated additional expenses). Each category should include an 

itemized list of specific components as well as a sub-total. Relevant assumptions used 

by the institution to set the COA should be clearly stated, such as the residency of 

the student (in-state or out-of-state) and attendance (full or part-time).

• Differentiate aid offers by type. Many students are new to borrowing and higher 

education financing options. Therefore, institutions should not assume that 
Section 2: Best Practices for Delivery of Financial Literacy at Institutions of Higher Education 15

students know the difference among grants, loans, and work-study. The word “loan” 

should always be included when referencing a loan. Differentiating aid offers by 

type, with clearly marked headings and short, user-friendly descriptions, is an 

easy way institutions can teach students financial literacy basics. Recommended 

category headings and descriptors include: (1) Grants and/or Scholarships (aid 

that does not need to be repaid); (2) Student Loans (borrowed money to be paid 

back with interest); and (3) Work-Study Employment (aid earned through a job). 

Furthermore, it is a best practice to clearly state the source of each aid type listed 

(federal, state name, or school name).42

• Highlight critical details and distinctions by aid type. Institutions can further 

educate students by providing the most relevant distinctions and/or requirements 

for each aid type. A brief, yet additional, layer of detail helps students assess which 

aid options are the best financial option for them and assists them to plan how to 

access and/or maintain that aid type. For example, for Grants and/or Scholarships, 

this means stating the term (such as one-year or renewable) and conditions (such 

as minimum credits and/or grades) and informing students how to maintain their 

aid. For work-study employment, describing that a campus-approved job must be 

first secured and then aid is disbursed as earned from a paycheck provides students 

key information for how to budget this amount accurately. 

• Calculate the cost after grants and scholarships are applied. Students and families 

read financial aid offers in order to determine the actual cost of attending the 

institution. The offer should show the costs the individual student would need to 

pay the institution directly and/or what the net cost will be to cover all relevant 

expenses. If the costs could change from the time of the aid offer to the time of 

billing, the letter should clearly state which costs are estimates. If exact costs will 

depend on individual student decisions, the letter should clearly state that the 

estimate is based on averages and actual cost will depend upon student choices.

• Do not include Parent PLUS loans as part of the student’s loan package (if 

applicable). Parent PLUS loans are made to the parent and not the student, and 

should be listed separately if at all. These loans require an additional application 

and approval process, include a higher origination fee, charge higher interest rates, 

and offer fewer repayment options.43 Since Parent PLUS loans are significantly 

different from student loans and carry greater risk, institutions of higher education 

should clearly disclose how they differ from student loans, and clearly differentiate 

them from the student’s aid, if they are included. 

• Provide actionable next steps. Financial aid offers should help students understand 

their next steps. It is therefore essential that each institution inform and teach 

42. Id. at 38. 

43. See, “PLUS Loans for Parents,” Federal Student Aid website, U.S. Department of Education, available at: https://studentaid.

ed.gov/sa/types/loans/plus/parent.
16 Best Practices for Financial Literacy and Education at Institutions of Higher Education

students the specific expectations and clearly outline the steps students need to 

take. Key items institutions should consider including are:

• Instructions about how to accept, decline, or adjust enrollment and aid offer 

elements with deadline(s); 

• Clear portal details with link and login information (if required to respond 

by a portal); 

• Specific details and explanation of tuition payment plan options (if applicable); 

• A budget planning form (by paper or a link to an online form) to help students 

map their resources to their needs and inform their enrollment and borrowing 

decisions for the current year and beyond toward degree completion; and

• Information on how to contact the financial aid office and other sources for 

additional assistance and resources.

Institutions should also consider a recent announcement from FSA on practices to 

avoid in financial aid offers.44

44. Federal Student Aid, US Department of Education, “Recommendations: What Postsecondary Institutions 

Should Work to Avoid When Issuing Financial Aid Offers,” April 15, 2019, available at: https://ifap.ed.gov/

eannouncements/041519RecWhatPostInstShouldWork2Avoid.html.

45. “Student Debt Letter Requirements Panorama”, Attigo, January 2019, available at: https://cdn2.hubspot.net/hubfs/4289644/

Debt%20Letter%20Resources/Student-Debt-Letter-Requirements-Panorama-handout.pdf.

46. “Amounts and numbers of student loans at Indiana University continue to fall”, Indiana University, October 2018, available at: 

https://news.iu.edu/stories/2018/10/iu/releases/11-amounts-numbers-student-loans-indiana-university-continue-to-fall.html.

Debt Letters

Debt letters are issued annually to students by some institutions of higher education 

to summarize what students have borrowed to date and how much they can expect to 

repay once they graduate. Although there is no requirement under federal law to provide debt letters to students, twelve states have passed legislation to create mandates for 

student debt letters. 45 Half of the twelve states with debt letter mandates also require 

information about non-federal loans and more than half require the letters to include 

information about the percentage of the borrowing limit used by the student to date.

Debt letters were created based on a growing body of research that suggests that students do not receive or digest a sufficient amount of information regarding their student loans. Since 2012, when Indiana University introduced debt letters along with 

other financial literacy strategies, the institution has seen the student loan volume for 

undergraduates decrease by 24.6 percent, or $99.2 million.46 In fact, the public release 

of the results at Indiana University is what led to the passage of debt letter legislation 

in the first two states, Indiana and Nebraska. 

In addition to helping students understand how much they will have to repay, debt 

letters can be used to encourage students to seek financial counseling and prepare 

for post-college financial decisions. For example, letters can compare the student’s 

expected monthly payment with the expected monthly salary for a person with their 
Section 2: Best Practices for Delivery of Financial Literacy at Institutions of Higher Education 17

degree and major. Debt letters are low-cost to deliver and can reach every student. 

It is important to note, however, that they appear to work best in combination with 

other strategies, such as one-on-one counseling. 

A recent study at the University of Missouri found that debt letters alone are “not sufficient to drive systematically different choices among students.”47 During in-depth 

interviews of students participating in the Missouri study, it was revealed that many 

students did not understand important financial terms and concepts, and did not 

know how to take action based on the information provided in the debt letters. 

However, in a study in the Montana University System, debt letters were: (1) sent 

to students with average or above average borrowing; (2) highlighted that students 

have the ability to take more courses (above 12 credits) without having to pay more 

tuition; and (3) contained information and incentives to attend one-on-one financial 

counseling.48 The Montana study found that students who received the debt letters 

slightly reduced their borrowing in the following semester compared to those who did 

not receive the letters. The letters also had an impact on academic outcomes, including an increase in grade point average, credits completed, and retention. The targeted 

letters and offer of one-on-one counseling appeared to result in some students either 

reducing their spending or finding alternative ways to finance subsequent semesters.

47. Darolia, Rajeev and Harper, Casandra, “Information Use and Attention Deferment in College Student Loan Decisions: Evidence 

from a Debt Letter Experiment”, American Educational Research Association, Educational Evaluation and Policy Analysis, 

October 2017, available at: https://journals.sagepub.com/doi/10.3102/0162373717734368.

48. “Know Your Debt” letters were sent to freshmen with more than $6,250 in loans as of the fall semester; sophomores with more 

than $12,000 in debt, juniors with more than $18,750 in debt; and any student with more than $25,000 in debt. Stoddard, 

Christiana, Urban, Carly, and Schmeiser, Maximilian, “Can targeted information affect academic performance and borrowing 

behavior for college students? Evidence from administrative data”, Economics of Education Review, February 2017, available at: 

https://www.sciencedirect.com/science/article/abs/pii/S0272775716306549.

Recommendations

Institutions of higher education should provide students with annual debt letters, 

which incorporate the following best practices, to ensure that students have a clear 

sense of their total borrowing obligations. State lawmakers should consider broader 

adoption of debt letters and a standardization of requirements. Higher education 

institutions and state lawmakers should consider developing and testing additional 

interventions to improve students’ comprehension of their future financial debt burden and should consider the practices below as a beginning framework to providing 

students with information through a debt letter. 

• Provide information tailored to the student. The letter should contain information 

most relevant to the student, including current borrowing levels to date (including 

private loans, if that information is known); estimated repayment amount at time 

of graduation based on available repayment programs; options for tuition plan 

payments; estimated accrued interest if student defers interest payments; average 

borrowing level for the student’s peers; and average entry salary of graduates in 

the student’s major or concentration.
18 Best Practices for Financial Literacy and Education at Institutions of Higher Education

• Make it easy to find additional information and support. The letter should contain 

a link to resources where students can find additional information and support, 

including websites and contact numbers. This section of the letter should be brief 

to ensure that students are not distracted from the relevant financial information. 

• Time it right. Students are more likely to engage or act on their student loans 

when timed to an event, such as before they register for courses and before the 

deadline to change their financial aid and borrowing levels for the subsequent 

semester. Letters should be provided to coincide with these times when students 

are motivated to act. 

• Debt letters should be paired with other financial literacy strategies. As shown 

by recent studies, debt letters can have positive outcomes when paired with 

encouragement and guidance on how to graduate on time and incentives to obtain 

financial counseling. Other financial education strategies could also be tested 

through such letters.

49. “Results from PISA 2015 Financial Literacy”, Organisation for Economic Co-operation and Development, 2015, available at: 

http://www.oecd.org/pisa/PISA-2105-Financial-Literacy-USA.pdf.

50. “Who has access to financial education in America today? A nationwide study of 13 million students across 

11,000 high schools”, Next Gen Personal Finance, 2017, available at: https://www.ngpf.org/blog/personal-finance/

ngpf-research-report-finds-that-only-1-in-6-high-school-students-nationwide-required-to-take-personal-finance-course-to-graduate/.

51. Anderson, Drew M., Conzelmann, Johnathan G., and Lacy, T. Austin, “The State of Financial Knowledge in College,” RAND 

Corporation, July 2018, available at: https://www.rand.org/pubs/working_papers/WR1256.html.

52. Urban, Carly, Schmeiser, Maximilian, Collins, J. Michael and Brown, Alexandra, “The effects of high school personal financial 

education policies on financial behavior”, Economics of Education Review, 2018, available at: https://www.sciencedirect.com/science/

article/abs/pii/S0272775718301699?via%3Dihub. 

Effectively Engaging Students in Financial Literacy and Education

According to a recent international assessment, more than one in five U.S. high school 

students failed to exceed a baseline level of financial proficiency.49 In addition, based 

on a recent study of 11,000 high schools, only 16 percent of high school students 

were required to take financial education.50 This lack of financial education is evident 

in the fact that only 28 percent of undergraduates surveyed in the 2015–16 National 

Postsecondary Student Aid Study (NPSAS:16) could answer three core financial literacy questions correctly.51

Courses taught by institutions of higher education can improve students’ financial 

knowledge, build key financial literacy skills, and promote sound financial actions 

during and after their education. Examples from higher education institutions are 

limited because there are few institutions with mandatory financial literacy courses. 

However, there is research supporting the impact of financial literacy from elementary and secondary school examples. Research shows that students from states with 

financial education provided in high school had higher credit scores and lower delinquency rates on consumer credit as they reached adulthood.52 College students who 
Section 2: Best Practices for Delivery of Financial Literacy at Institutions of Higher Education 19

took a personal finance course in high school were more likely to save and pay off 

their credit cards and less likely to max out credit cards.53

A number of institutions are also learning the value of peer financial education and 

counseling as a means of engaging students with education that provides basic information and motivates students toward positive action. The Ohio State University, 

for example, found that those who received one hour of peer coaching had a significant improvement in budgeting54 and confidence in money management. A number 

of institutions also provide substantial training – up to a full semester – to students to serve as peer coaches and educators, with students either paid (including 

through work-study) or volunteers. This means of delivery is relatively low-cost, provides financial education in an engaging manner, and can help train the future financial professionals with real-life experience. 

Beyond the direct impact, requiring financial education courses emphasizes the importance of financial skills, and demonstrates the value an institution places on students’ 

financial well-being. Well-executed courses could have positive ripple effects on students’ well-being, their engagement on campus, and academic success. 55

Some universities integrate financial education into orientation and first-year experience or “student success” courses intended to teach students how to manage their 

education, with the goal of improving academic success (grades), retention and graduation.56 For example, one faith-based four-year university integrates two weeks of 

financial education into a required Personal Responsibility and Wellness course.57

Two-year institutions (community colleges) and large four-year institutions are the 

most likely to address financial literacy in these programs.58

In addition to or instead of orientation or student success, financial education could 

also be part of courses to meet general education or distributional requirements, such 

53. Gutter, Michael and Copur, Zeynep, “Financial Behaviors and Financial Well-Being of College Students: Evidence from a 

National Survey”, Journal of Family and Economic Issues, December 2011.

54. “Scarlet and Gray Financial Coaching: Assessment Results”, Center for the Study of Student Life, Ohio State University, 

December 2016.

55. “Engagement Insights: Survey Findings on the Quality of Undergraduate Education”, National Survey of Student Engagement, 

2018, available at: http://nsse.indiana.edu/NSSE_2018_Results/pdf/NSSE_2018_Annual_Results.pdf#page=16.

56. Topics covered include motivation; overcoming procrastination; concentration; memory strategies; exam- and notetaking; strategic 

reading; asking for help; organizational skills; and connecting to resources. Hoops, Leah D., and Artrip, Ashley, “College Student 

Success Course Takers’ Perceptions of College Student Effectiveness”, Learning Assistance Review, 2016, available at: https://files.

eric.ed.gov/fulltext/EJ1114471.pdf.

57. Windham, Lottia, Chair, Financial Wellness Task Force, Coalition of Higher Education Assistance Organizations. Personal 

interview. November 13, 2018.

58. Young, Dallin George, and Reed, Rico, National Resource Center for the First-Year Experience and Students in Transition. 

Personal interview. February 8, 2019. Young, D.G., and Hopp, J.M., “2012-2013 National Survey of First Year Seminars”, 

National Resource Center for the First-Year Experience & Students in Transition, University of South Carolina, available at: 

https://sc.edu/nrc/system/pub_files/1532445588_0.pdf. See also: Young, D.G., Schreiner, L.A., and McIntosh, E. J., “Investigating 

sophomore student success: The National Survey of Sophomore-Year Initiatives and the Sophomore Experiences Survey”, 

National Resource Center for the First-Year Experience & Students in Transition, University of South Carolina, 2015, available 

at: https://eric.ed.gov/?id=ED560964; Young, D.G., Chung, J.K., Hoffman, D.E. and Bronkema, R., “2016 National Survey of 

Senior Capstone Experiences: Expanding our understanding of culminating experiences”, National Resource Center for The 

First-Year Experience & Students in Transition, University of South Carolina.
20 Best Practices for Financial Literacy and Education at Institutions of Higher Education

as quantitative reasoning and/or social studies. Some institutions noted that they are 

exploring a stand-alone financial education course that could meet a quantitative reasoning or social studies distribution requirement. Institutions could follow the lead 

of elementary and secondary schools by integrating financial education into math, 

economics, civics, other social studies, and business and family education courses.59

Current federal law requires that federal student loan borrowers receive student loan 

counseling when they take out their first loan, and again when they leave the institution. Analysis by the Federal Reserve, among others, has made it clear that these 

interventions are often not enough, and not well-timed, as students are focusing on 

many other concerns when they are starting and leaving their education.60 Rather, 

experts have noted that financial education should be provided prior to the start of 

classes, and as early as acceptance, and be provided in courses throughout the student’s 

educational experience. Some institutions require additional annual loan counseling 

using online, in-person, and written materials providing students information about 

their borrowing, their repayment, and how much they can expect to earn after completion.61 Finally, a number of experts indicated that an immediate touchpoint with 

students after they leave the institution, but prior to the end of their student loan 

repayment grace period, would be an appropriate time to encourage students to plan 

their repayment schedule if they haven’t already.

59. For example, CFPB has released resources for teaching high school students that show how financial lessons can be incorporated 

into a range of subjects, including career and technical education, English/language arts, math, social studies or history and world 

languages. See: “Teach the building blocks of financial capability”, Consumer Financial Protection Bureau, available at: https://

www.consumerfinance.gov/practitioner-resources/youth-financial-education/teach/.

60. Board of Governors of the Federal Reserve System, “Student Loan Counseling Challenges and Opportunities: Findings from 

Focus Groups with Financial Aid Counselors,” November, 2016, available at: https://www.federalreserve.gov/consumerscommunities/

files/student-loan-counseling-challenges-and-opportunities-2016.pdf. Fernandez, C., Fletcher, C., Klepfer, K., & Webster, “A Time 

to Every Purpose: Understanding and improving the borrower experience with online student loan entrance counseling”, TG 

Research, 2015. Available at: https://www.trelliscompany.org/portfolio-items/a-time-to-every-purpose-understanding-and-improvingthe-borrower-experience-with-online-student-loan-entrance-counseling/.

61. U.S. Department of Education staff. Personal interview and correspondence. December 2018 and February 2019.

Recommendations

In addition to the general best practices in Section 1, institutions of higher education should adopt the following specific best practices to engage students in financial literacy and education. 

• Mandatory Financial Literacy Courses. Institutions should require mandatory 

courses to teach students financial concepts and skills. Optional classes may not 

reach students who may be unaware of them or who do not value the benefits of 

financial education. However, institutions should make sure that quality doesn’t 

suffer in order to expand availability to all students, especially at large institutions. 

It may be challenging to find appropriate educators to teach a personal finance 

course to every student, given that the topic is not a focus of most institutions. 

Peer educators (trained students), other staff (such as financial aid officers), and 
Section 2: Best Practices for Delivery of Financial Literacy at Institutions of Higher Education 21

outside financial professionals have been used to deliver financial education in 

various programs. 

• Peer Educators. Institutions should deploy well-trained peer educators to provide 

financial education and coaching to help build financial knowledge and motivate 

students to take positive actions, such as making a budget, setting financial goals, 

and checking their credit report. Institutions can use student volunteers, workstudy students or other paid students, or recent graduates.

• Integration of Financial Literacy into Core Curricula. Rather than requiring 

a stand-alone financial education course, universities could integrate financial 

education into other mandatory courses.

• Enhance the Frequency and Timing of Communication with Students. 

Institutions should communicate with students about financial topics more often 

than upon entrance and exit. Financial education might be provided before the 

start of classes, and as early as acceptance, and be provided in courses throughout 

the student’s educational experience. Additionally, immediately after students leave 

the institution, but prior to the end of their student loan repayment grace period, 

would be an appropriate time to encourage them to plan their repayment schedule 

if they haven’t already.

62. While there is no precise definition of a non-traditional student, some factors include part-time students; students who are older 

than the average age, work full-time while enrolled, are considered financially independent for purposes of federal student aid, 

have dependents, or do not have a high school diploma. See: “Nontraditional Undergraduates/Definitions and Data”, National 

Center for Education Statistics, U.S. Department of Education, available at: https://nces.ed.gov/pubs/web/97578e.asp.

63. Students in low-income schools were much more likely to have low levels of financial proficiency than those from higher-income 

schools. See, “Results from PISA 2015 Financial Literacy”, Organisation for Economic Co-operation and Development, 2015, 

available at: http://www.oecd.org/pisa/PISA-2105-Financial-Literacy-USA.pdf. Minority students and those from low-income and 

low-asset households are substantially more likely to have trouble repaying student debt. See: Steinbaum, Marshall, and Vaghul, 

Kavya, “How the Student Debt Crisis Affects African Americans and Latinos,” Washington Center for Equitable Growth, 

February 16, 2016, available at: https://equitablegrowth.org/how-the-student-debt-crisis-affects-african-americans-and-latinos/. 

Servicemember and Veteran students may have unique needs, and institutions may work with DoD and VA to effectively build on 

their experience and address their needs. 

Targeting Different Student Populations by use of National, 

Institutional, and Individual Data 

There is a significant amount of information and data that institutions of higher education can collect, evaluate, and use to target financial literacy efforts for different student populations. This is especially important for more vulnerable students, including 

older and other non-traditional students,62 low-income, first-generation, and students 

of color. These students are more likely to face difficult hurdles on their paths to college completion and financial security.63

Institutions should understand their students’ personal and financial circumstances 

and goals. As a result, institutions should use national data, institutional data, and 

individual data, consistent with appropriate privacy practices, to better know the population they intend to serve.
22 Best Practices for Financial Literacy and Education at Institutions of Higher Education

National Data

64. “National Postsecondary Student Aid Study (NPSAS)”, National Center for Education Statistics (NCES), U.S. Department of 

Education, available at: https://nces.ed.gov/surveys/npsas/.

65. Id. at 51.

66. “Study on Collegiate Financial Wellness 2017 Key Findings Report”, The Ohio State University, Office of Student Life, 

College of Education and Human Ecology, 2017, available at: https://cssl.osu.edu/posts/632320bc-704d-4eef-8bcb-87c83019f2e9/

documents/2017-scfw-key-findings-report.pdf.

67. Id.

68. Information obtained from a student’s FAFSA may be subject to the limitations of 20 U.S.C. § 1090(a)(3)(E).

National-level data can provide a good starting point to understanding the overall student population. For example, the National 

Postsecondary Student Aid Study (NPSAS) examines the characteristics of students in postsecondary education and focuses on 

how they finance their education.64 The latest NPSAS study found 

that only 28 percent of students could answer three basic financial literacy questions correctly and few students could answer 

correctly basic questions about federal student loans, with lower-income students scoring worse than the average on both measures.65 This data shows that institutions should provide financial 

education broadly to all students, but also need to make sure they 

are reaching the most financially vulnerable students.

Field research and surveys are also a source of data about students’ challenges and barriers to success in higher education. For 

example, the Study on Collegiate Financial Wellness66 examines 

the financial attitudes, practices, and knowledge of students across 

the United States. In the most recent study, key concerns among 

participating students were worries about being able to pay for 

school (nearly 63 percent); worries about being able to afford their 

monthly expenses (nearly 43 percent); and stress about finances in 

general (nearly 69 percent). The study also found that a majority of participating students reported certain positive financial behaviors, such as monitoring account balances, planning ahead for major purchases, and tracking spending.67

Institutional Data

Institutions should use data available within their own institutions, as appropriate.68

For example, information on student and family incomes, amounts of aid received, 

amounts borrowed, and payment information, along with age, race, family status, 

and veteran status all can provide insights into who is likely to need additional help. 

Information that demonstrates behavior like delays in completing registration and 

paying bills also point to areas of need. Academic performance and the number of 

missed or incomplete classes can indicate a student who is struggling and can pinpoint 

Topics

Percentage of Students Answering All Questions Correctly

Student Loan

Questions

Student Financial 

Literacy Questions

100

90

80

70

60

50

40

30

20

10

0

Student Knowledge of

Financial Literacy Concepts

Source: U.S. Department of Education, National Center on Education Statistics, 

National Postsecondary Student Aid Study (NPSAS:16) Data, available at: https://

nces.ed.gov/datalab/powerstats/pdf/npsas2016ug_subject.pdf
Section 2: Best Practices for Delivery of Financial Literacy at Institutions of Higher Education 23

appropriate times to help these students69 as they are all indicators of potential problems in student retention or early withdrawal. Similarly, not declaring a major may 

also pose a risk of extending time to degree, and thus the cost of education.70

One example of the use of administrative data is Georgia State University (GSU), 

which uses a comprehensive analysis of student data to target resources to help students complete their degree programs. The university is able to track behaviors that 

indicate risk of dropping out (such as signing up for the wrong number of classes 

or changing majors), and provide assistance, including financial education and other 

resources. Over time, GSU reports it has increased its bachelor’s degree graduation 

rates from 32 percent to 54 percent and increased the number of bachelor’s degrees 

achieved by Pell Grant recipients by 33 percent (which was a 47 percent increase by 

African-American students and a 74 percent increase by Hispanic students).71

69. Eadie, Larry, “Designing an Effective Default Management Program”, proceedings of Federal Student Aid Conference 2018, 

Atlanta, GA.

70. Interviews with institution experts indicate that those students who have failed or delayed declaring a major are more likely to 

default on student loans.

71. Renick, Timothy. “Leveraging Technology and Data to Eliminate Postsecondary Achievement Gaps,” presentation, ED Tech 

Efficacy Academic Symposium, May 4, 2017, available at: https://studentarc.org/tools-and-resources/presentation/leveragingtechnology-and-data-to-eliminate-postsecondary-achievement-gaps. A Pell Grant is funding provided to undergraduate students 

who display exceptional financial need. See, “Federal Pell Grants,” website, Federal Student Aid, U.S. Department of Education, 

available at: https://studentaid.ed.gov/sa/types/grants-scholarships/pell.

72. Interviews with university experts (Indiana, Ohio State, and University of North Texas) November 2018.

Individual Data

A number of institutions of higher education collect individual data to provide customized assistance for students. Some institutions use a financial wellness checkup 

(online or in person) to identify a student’s primary sources of stress and tailor effective interventions. Tests taken before engaging in financial education or coaching 

can help identify a student’s financial knowledge and target education or counseling 

to specific areas for improvement. Customer satisfaction surveys and focus groups 

can help institutions identify what students are interested in and improve program 

delivery.72

Recommendations

Institutions of higher education should use national, institutional, and individual data 

to determine the specific financial literacy needs of their students. The use of data can 

allow the institution to meet the actual needs of students, identify students most at 

risk, and deploy resources effectively using an evidence-based approach. Institutions 

should also continue to collect and assess performance data to measure impact and 

reinforce a culture of continuous improvement. 
24 Best Practices for Financial Literacy and Education at Institutions of Higher Education

Communicating Importance of Graduation and Major on 

Repayment of Student Loans

73. Scott-Clayton, Judith, “The Looming Student Loan Default Crisis Is Worse than We Thought.” Brookings, May 15, 2018, 

available at: https://www.brookings.edu/research/the-looming-student-loan-default-crisis-is-worse-than-we-thought/.

74. For students entering repayment between 2009 and 2011. See: Sandy Baum et al., “Trends in Student Aid 2018”, The College 

Board, 2018, available at: https://trends.collegeboard.org/sites/default/files/2018-trends-in-student-aid.pdf. 

75. Id. 

76. Long, Bridget Terry, “The College Completion Landscape: Trends, Challenges, and Why It Matters”, Third Way, 2018, available 

at: https://www.thirdway.org/report/the-college-completion-landscape-trends-challenges-and-why-it-matters.

77. Hershbein, Brad, Harris, Benjamin H., and Kearney, Melissa S., “Major Decisions: Graduates’ Earnings 

Growth and Debt Repayment”, November 2014, available at: http://www.hamiltonproject.org/papers/

major_decisions_graduates_earnings_growth_debt_repayment/.

78. Id.

79. Georgia State increased their graduation rates by improving the percentage of students in majors that fit their 

academic abilities (up by 13 percent since the launch in 2011 of their strategic approach). See: “2017 Report: Georgia 

State University Complete College Georgia”, Georgia State University, 2017, available at: https://success.gsu.edu/

download/2017-status-report-georgia-state-university-complete-college-georgia/?wpdmdl=6471592&refresh=5c5318d73e

25f1548949719.

Researchers have found a strong correlation between not finishing a degree program 

and failing to repay student loans. A Brookings Institution analysis of ED data found 

that those without a degree and who were no longer enrolled had a default rate more 

than four times that of graduates with a bachelor’s degree (23.9 vs. 5.6 percent) and 

nearly twice that of graduates with an associate’s degree (23.9 vs. 14.0 percent).73

Research from the College Board reached a similar conclusion, finding that 67 percent 

of federal student loan borrowers who earned a credential at a four-year institution 

had paid down at least one dollar of their loan principal after five years. In contrast, 

the rate for students not completing a four-year degree was 41 percent.74 At two-year 

institutions, the repayment rates were 65 percent for those completing an associate 

degree and 46 percent for those who fail to complete their degree.75 Increased repayment rates among those completing degrees are likely linked to increased earnings 

from their credentials. For example, there is an annual earnings difference of $4,300 

for students who complete an associate degree and nearly $20,000 more annually for 

those who complete a bachelor’s degree when compared to those with no degree.76

A student’s chosen major and career path may also impact their earnings and is a factor to consider in their ability to repay student loans.77 A Brookings Institution study 

analyzed the relative percentages of total income needed to meet student loan obligations by major. Students graduating from majors such as drama and theatre needed 

to allocate 24 percent of earnings in the first year to repayment whereas engineering 

majors needed to allocate only 4 percent of their earnings to repayment in the first 

year. 78 In addition, matching a student’s abilities as well as their aspirations to a degree 

at the start of higher education can improve their chances of completing a degree.79

While graduation and major are factors in a student’s ability to repay student loans, 

it is also important to consider the timely completion of a degree. Approximately 

41 percent of students enrolled in four-year undergraduate programs complete their 
Section 2: Best Practices for Delivery of Financial Literacy at Institutions of Higher Education 25

degree within four years (considered to be “on time”), with another 20 percent of 

students taking up to six years.80 Students at two-year institutions appear less likely 

to complete “on time,” with less than one-third of those entering two-year institutions finishing within 150 percent of the expected time to complete their degree.81

Irrespective of whether a student is enrolled in a four-year or two-year program, graduating on time (or even earlier) can reduce the amount of debt that a student takes 

on and increase their lifetime earnings by entering the workforce sooner. 

80. Snyder, Thomas D. and de Brey, Cristobal, “Digest of Education Statistics 2017: 53rd Edition”, National Center for Education 

Services, U.S. Department of Education, 2017, available at: https://nces.ed.gov/pubs2018/2018070.pdf

81. Id. 

Incentives to Improve Completion

Institutions of higher education are using a variety of methods to encourage students 

to complete their degrees on time, or earlier, in order to reduce the amount of student 

debt. For example, some have introduced banded tuition, making the costs equivalent 

regardless if a student takes 12 to 18 credits. Others extend the enrollment period or 

reduce the tuition for summer to encourage students to study year-round. Some of 

these programs have shown success in reducing the time to complete a degree. 

Higher Education Completion (Full-Time Students)

Graduation 

Rate White Black Hispanic

Asian/Pacific Islander Amer.

Indian /

Alaska 

Native

Two or

more 

races

Total Total 

AAPI Asian Pacific Islander

4-Year Schools (2011 Cohort)

Within 4 

years

46.3 21.5 32.5 50.1 50.7 30.9 21.6 38.3 41.6

Within 5 

years

61.1 35.4 49.4 68.1 68.9 44.1 33.9 53.1 56.5

Within 6 

years

64.3 39.8 55.0 73.3 74.1 48.6 37.6 57.1 60.4

2-Year Schools (2014 Cohort)

≤150% 

normal time 31.6 33.5 25.3 30.9 37.4 37.6 34.6 28.1 26.2

Top section: Graduation rate from first institution attended for students at all 4-year postsecondary institutions, in percent.

Bottom row: Graduation rate from first institution attended within 150 percent of normal time at 2-year postsecondary institutions.

Source: U.S. Department of Education, National Center for Education Statistics, Digest of Education Statistics, 2018 Tables and Figures, Tables 326.10 

and 326.20, https://nces.ed.gov/programs/digest/d18/tables/dt18_326.10.asp?current=yes and https://nces.ed.gov/programs/digest/d18/tables/dt18_326.20.asp
26 Best Practices for Financial Literacy and Education at Institutions of Higher Education

Georgia State, for example, works with students to improve the likelihood of timely 

completion by providing advice and incentives to students to boost their grades and 

qualify for scholarships, thus helping students address both academic and financial 

barriers to completion. Additionally, the university has also helped students identify 

majors that meet their academic abilities, so that they are more likely to complete the 

degree. GSU’s combination of approaches has reduced the average time to complete 

a degree by half a semester per student and is estimated to have saved the graduating class of 2016 approximately $15 million in tuition and fees compared to tuition 

spent by earlier cohorts.82

82. Id. at 79. 

83. According to a report by the Wisconsin HOPE Lab, 56 percent of students at 70 community colleges are food insecure, half 

of students are housing insecure and 14 percent are homeless. The survey also found that a lack of finances could cause them to 

withdraw. See: “Making Ends Meet: The Role of Community Colleges in Student Financial Health”, Center for Community 

College Student Engagement, 2017, available at: https://www.ccsse.org/docs/Making_Ends_Meet.pdf.

84. Schneider, Mark, and Clark, Kim, “Completion Reforms That Work: How Leading Colleges Are Improving 

the Attainment of High-Value Degrees”, Third Way, 2018, available at: https://www.thirdway.org/report/

completion-reforms-that-work-how-leading-college-are-improving-the-attainment-of-high-value-degrees.

Dedicated Guidance to Help Students Overcome Obstacles to Completion

Students may face multiple roadblocks to completing a degree, including challenges 

that may be academic, financial, social, and cultural. While most students will face 

at least one of these obstacles, more vulnerable students (first-generation, minority, 

low-income) are more likely to experience one or more obstacles throughout their 

education.83 Given these complexities, many institutions have found it effective to 

provide one-on-one support to respond to individual needs. Some institutions take a 

holistic approach to meeting student needs by combining mandatory financial education with counseling or coaching. Advisors can help students address a spectrum 

of issues, including housing, social services, primary and mental health care, day care, 

and transportation. Using this holistic approach, institutions can improve a student’s 

chance of staying in school, ultimately achieving a degree or certificate and securing 

employment.

For example, a large East Coast public institution developed a program to provide 

dedicated counselors to new students whose academic records fall just below regular 

admissions standards. These counselors have comparatively low caseloads and advise 

the student throughout his or her college career on matters ranging from time management to selecting a major. Graduates of the program earn approximately $4,000 

more per year than students who did not complete the program.84 Also, by reducing 

time to graduation, the program lowers the cost per degree.

Emergency Assistance to Bridge Financial Gaps

Emergency aid, or completion aid, is intended to help students for whom financial 

constraints are the primary cause of non-completion, and for whom financial aid may 

not cover all the costs of attendance. This intervention, when paired with additional 
Section 2: Best Practices for Delivery of Financial Literacy at Institutions of Higher Education 27

counseling to help students improve their planning and ability to succeed, is increasingly common among higher education institutions, with a reported 40 percent now 

offering some sort of emergency assistance.85 This model is being replicated by a number of institutions around the country that find that the up-front outlay keeps students enrolled.86 This type of assistance not only helps students meet their short-term 

needs; it may also build a trusting relationship between students and the institution.87

For example, Georgia State provides grants up to $2,000 (average $900) to students 

who are about to drop out due to nonpayment. These grants are available to students who are otherwise making satisfactory academic progress toward graduation. 

Students are required to meet with financial counselors in order to receive the grant. 

These funds help students fill the unmet gap they may face between their financial 

aid and the cost of attendance. Eighty-two percent of recipients of this type of grant 

have either graduated or were still enrolled one year after receiving the grant, and 

approximately one quarter of bachelor’s recipients in 2017 had received some retention grants, significantly increasing the graduation rate.88

85. Kruger, Kevin, Parnell, Amelia, and Wesaw, Alexis, “Landscape Analysis of Emergency Aid Programs,” 

National Association of Student Personnel Administrators, 2016, available at: https://www.naspa.org/rpi/reports/

landscape-analysis-of-emergency-aid-programs.

86. Id.

87. Goldrick-Rab, Sara, and Cady, Clare, “Distributing Emergency Aid to College Students: Recommendations and Sample 

Distribution Protocol”, Wisconsin Hope Lab, September 4, 2017, available at: https://hope4college.com/wp-content/uploads/2018/09/

emergency-aid-distribution-sample-protocol.pdf.

88. Id. at 79. 

Recommendations

Institutions of higher education should adopt the following best practices to: (1) 

clearly communicate the importance of graduation and major on ability to repay debt; 

and (2) help students overcome obstacles to graduation.

• Provide incentives to complete on time (or earlier). Institutions of higher education 

can provide incentives that spur students toward completion, including banded 

tuition, reduced summer tuition, and extended enrollment periods.

• Dedicate staff to advise students on loans, majors and obstacles to graduation. 

Institutions should provide one-on-one guidance and advice to students at risk of 

non-completion to help them overcome academic, financial, social, and cultural 

challenges.

• Provide emergency financial assistance. Institutions should make available 

emergency aid or completion aid to help bridge gaps between financial aid and 

the resources students need to complete their education.
28 Best Practices for Financial Literacy and Education at Institutions of Higher Education

ED Resources to Serve Student Populations

89. See Title IV-A-2-1 of the Higher Education Act of 1965, 20 U.S.C. § 1070a–11 through 1070a-18. 

90. “Federal TRIO Programs – Home Page”, U.S. Department of Education, available at: https://www2.ed.gov/about/offices/list/ope/trio/index.html.

91. 34 CFR §694.22.

92. 34 CFR §694.21.

93. Magolda, Marcia Baxter, and Astin, Alexander W., “What Matters in College: Four Critical Years Revisited”, The Journal of Higher Education, January 

1993; Colvin, Janet W. and Ashman, Marinda, “Roles, Risks, and Benefits of Peer Mentoring Relationships in Higher Education”, May 2010; Keup, Jennifer 

R.; “Peer Leadership in Higher Education: New Directions for Higher Education”, March 2012; Newton, F.B. and Ender, Steven C., “Students Helping 

Students: A Guide for Peer Educators on College Campuses”, 2012.

94. Carnevale, Anthony P. and Smith, Nicole, “Balancing Work and Learning: Implications for Low-Income Students”, Center on Education and the Workforce, 

Georgetown University, McCourt School of Public Policy, 2018, available at: https://1gyhoq479ufd3yna29x7ubjn-wpengine.netdna-ssl.com/wp-content/uploads/

Low-Income-Working-Learners-FR.pdf.

95. See Federal Student Aid, “Introducing the myStudentAid mobile app” video, https://www.youtube.com/watch?v=ItnOr7n2ck4.

Several of the Federal TRIO Programs89

(Educational Opportunity Centers, Upward 

Bound and Student Support Services programs) directly or through connections (Talent 

Search) provide education or counseling services designed to improve the financial literacy and economic literacy of students or the 

students’ parents, including financial planning 

for postsecondary education. In addition, the 

TRIO Program provides training to applicants 

on delivering financial and economic literacy, 

student financial aid and related topics.90

In addition, to date, the Gaining Early 

Awareness and Readiness for 

Undergraduate Programs (GEAR UP)91 may 

provide financial and economic literacy education. The program also requires grantees to 

provide information on financial aid to eligible 

(low-income and at high-poverty schools) participating students and their families.92

Federal Work-study (FWS) Program is 

designed to meet the costs of higher education and provide meaningful work experience 

for students who demonstrate financial need. 

FWS funds can be used to provide qualified 

students the opportunity to improve their 

personal financial skills, give back to their 

peers, and develop relevant and in-demand 

professional skills and experience, by having students serve as peer financial educators, coaches or counselors. This approach 

can benefit students who learn from their 

peers and the student instructor.93 Relevant 

employment opportunities are especially 

important for low-income students, since 

these roles can help them to find employment opportunities that are more directly 

correlated to their long-term career goals.94

ED is also deploying administrative 

approaches to improve students’ understanding and interaction with federal financial aid tools. The myStudent Aid app makes 

it easier for students to complete their FAFSA 

form on a mobile device. In the near future, 

a student will be able to see how much he 

or she owes in federal student loans at any 

moment in time, what repayment options are 

available, and how those options will impact 

the total amount owed over time. One major 

goal of ED’s new efforts is to modernize the 

technology and operational components of 

federal financial aid programs and improve 

student financial literacy through use of customized data.95
Section 2: Best Practices for Delivery of Financial Literacy at Institutions of Higher Education 29

Preparing Students to Meet Financial Obligations upon Graduation

96. “A Financial System That Creates Economic Opportunities Nonbank Financials, Fintech, and Innovation,” U.S. Department of 

the Treasury, July 2018, available at: https://home.treasury.gov/sites/default/files/2018-08/A-Financial-System-that-Creates-EconomicOpportunities---Nonbank-Financials-Fintech-and-Innovation.pdf.

97. Serido, Joyce and Shim, Soyeon, “Approaching 30: Adult Financial Capability, Stability and Well-Being”, National Endowment 

for Financial Education and Great Lakes Higher Education Corporation & Affiliates, May 2017, available at: https://static1.

squarespace.com/static/597b61a959cc68be42d2ee8c/t/598a844ecd39c31515c51c7f/1502250072075/APLUS_WAVE4.pdf.

98. Over a third, 35%, of student loan holders believe they have a loan where the monthly payments are determined by their 

income. However, nearly one in five, 19%, did not know whether they had these types of loans. See: Lin, Judy T. et al., 

“Financial Capability in the United States 2016”, FINRA Investor Education Foundation, 2016, available at: http://www.

usfinancialcapability.org/downloads/NFCS_2015_Report_Natl_Findings.pdf. 

99. See, Consumer Financial Protection Bureau, Repay Student Debt, website, available at https://www.consumerfinance.gov/

paying-for-college/repay-student-debt/.

100. “Making Informed Choices about Loan Repayment: Valencia College”, ideas42, 2016, available at: https://www.ideas42.org/

wp-content/uploads/2016/12/I42-718_Brief_Valencia_Repayment_4.pdf; See also: “Insights and Opportunities: College Student 

Financial Health and Behavioral Science”, ideas42, August 2018, available at: http://www.ideas42.org/wp-content/uploads/2018/08/

ideas42_StudentFinHealth-1.pdf.

Student loan repayment is complex, with different types of loans, choices of repayment 

plans, and different servicers, as well as a program that looks quite different than other 

consumer loan products.96 A survey of 26 to 29-year olds, most of whom had attained a 

college degree, found that issues related to help from the servicer, complexity, and lack 

of knowledge about repayment options were bigger barriers to repayment than financial constraints.97 Similarly, another survey found that many student loan borrowers do 

not fully understand the types of loans or the available repayment plans.98

Most federal student loans provide a six-month grace period after students graduate, leave school or drop below half-time enrollment before repayment starts. The 

last semester before graduation and the “grace period” are a crucial time for students to begin to prepare to repay their loans, understand their options, and plan for 

their financial future. After graduation or leaving higher education, students may 

be focused on finding a job, relocating, or making other transformational choices. 

Informing students of the importance of understanding their repayment obligations 

before leaving or graduating may help students to focus on their financial obligations 

along with other major life decisions. 

Recommendations

Institutions of higher education should address student financial needs prior to leaving the institution. The key areas of focus for institutions should include: 

• Providing information to understand loan repayment options and obligations.99

Higher education institutions should provide simplified explanations of repayment 

options to make it easier for students to understand and remember the repayment 

features.100 When a federal student loan exits the grace period, the student will 

automatically be enrolled in a standard 10-year repayment plan that may not be the 

best financial fit for all student loan borrowers. Higher education institutions can 

provide a student with the different repayment options, including income-driven 
30 Best Practices for Financial Literacy and Education at Institutions of Higher Education

repayment plans and the difference among the plans and possible loan forgiveness 

options. 

• Building a budget to set a repayment goal. Students close to graduation who are 

deciding among jobs and career options may need guidance to develop a budget 

that considers their projected salary. Creating a budget and identifying all fixed and 

variable expenses and discretionary spending can assist a student loan borrower 

with developing a realistic view of their financial situation. Assessing a borrower’s 

discretionary income to put toward student loan payments can also help inform 

the borrower’s choice of repayment plan. 

• Helping students to identify and connect with their student loan servicer. It’s 

important for students to establish a relationship with their student loan servicer 

and provide updated contact information to ensure that they receive timely 

information on their loans. Higher education institutions can help student loan 

borrowers identify the type of loans they have, the student loan servicer for each 

of their loans, and where to find out about how to submit payments. Higher 

education institutions should also inform students about the role and services 

offered by a student loan servicer,101 including information such as that students 

never need to pay for help with student loans from their servicer.102 Information 

on how to spot the warning signs of a debt relief scam can prevent financial harm 

for students.103

• Enabling students to assess the costs and benefits of graduate and professional 

studies. Deciding on whether or not to pursue a graduate degree involves many of 

the same considerations as an undergraduate degree, including where to go, what 

degree to attain, and how much to spend.104 Graduate students who borrowed as 

undergraduates are twice as likely to borrow for their graduate degree.105 Students 

should understand the costs and resources available for post-graduate degrees, 

especially in light of significant outstanding debt. 

101. See, Consumer Financial Protection Bureau, “What is a Student Loan Servicer?,” available at https://www.consumerfinance.

gov/ask-cfpb/what-is-student-loan-servicer-en-583/.

102. See, Department of Education, “Beware: You never have to pay for help with your student loans,” available at https://

studentaid.ed.gov/sa/repay-loans/avoiding-loan-scams.

103. See, Consumer Financial Protection Bureau, “Consumer Advisory: Student loan debt relief companies may cost 

you thousands of dollars and drive you further into debt,” available at https://www.consumerfinance.gov/about-us/blog/

consumer-advisory-student-loan-debt-relief-companies-may-cost-you-thousands-of-dollars-and-drive-you-further-into-debt/.

104. Lee, Vivien and Looney, Adam, “Headwinds for Graduate Student Borrowers: Rising Balances and Slowing 

Repayment Rates,” The Brookings Institution, October 18, 2018, available at: https://www.brookings.edu/research/

headwinds-for-graduate-student-borrowers-rising-balances-and-slowing-repayment-rates/.

105. Denecke, Daniel, et al., “Financial Education: Developing High Impact Programs for Graduate and Undergraduate 

Students”, Council of Graduate Schools, 2016, available at: https://cgsnet.org/publication-pdf/3929/CGS_FinancialEdPub16_

web.pdf.
Exhibit A: Participants in the Engagement Process 31

Exhibit A:

Participants in the Engagement Process

Nonprofits and Professional and Trade Associations 

ACCION NY

Achieving the Dream

American Association of State 

Colleges and Universities

Association for Enterprise Opportunity 

Association of Community College Trustees

American Bankers Association

American Benefits Council

Association for Financial Counseling 

& Planning Education

Atlanta University Center Consortium

Career Education Colleges and Universities 

Center for Financial Services Innovation 

Center for Responsible Lending

Cities for Financial Empowerment Fund

Clarifi

Coalition of Higher Education 

Assistance Organizations

Council for Economic Education

Credit Builders Alliance

EARN

Earn to Learn

Education Finance Council

Family, Career and Community 

Leaders of America

Florida Prosperity Partnership

Higher Education Financial 

Wellness Association 

Homeownership Preservation Foundation

Hugh O’Brian Youth Leadership 

The Institute for College Access and Success

Insured Retirement Institute

International Foundation of 

Employee Benefits Plans

Jumpstart Coalition

Junior Achievement USA

Justine Peterson

Local Initiatives Support Corporation 

Lumina Foundation

MOHELA

National Association of Financial 

Aid Administrators

NASPA Student Affairs Administrators 

in Higher Education

National College Access Network

National Council of Higher 

Education Resources

National Endowment for Financial Education

NeighborWorks

Next Gen Personal Finance

Pacific Community Ventures

Parents Step Ahead

Pension Rights Center

Society for Financial Education and 

Professional Development 

SourceLink

Stewards of Affordable Housing for the Future

Uaspire

Women’s Institute for A Secure 

Retirement (WISER)
32 Best Practices for Financial Literacy and Education at Institutions of Higher Education

State and Local Government

City of San Francisco, Office of 

Financial Empowerment

Indiana Treasurer and Secretary of State

Mississippi Treasurer

Nevada Treasurer

Tennessee Treasurer, Financial 

Literacy Commission

Vermont Treasurer

Washington Department of 

Financial Institutions 

Wisconsin Department of Financial Institutions

Other Private Sector Entities

Azim Premji Foundation

Bank of America

Charles Schwab Foundation

Discover Financial Services

Edward Lowe Foundation

EverFi

Fidelity Investments

FICO

FINRA Investor Education Foundation

Ideas42

iGrad

Kauffman Foundation

LendEDU

Meredith Corp.

PayforEd

Pepsico

Prudential

Ramsey Education

Savingforcollege.com

Trellis Group

Vanguard

Think Tanks

Aspen Institute

New America

Urban Institute

Academics and Institutions of Higher Education

Alamo Colleges District, Palo Alto College

Babson College/Goldman Sachs 

10,000 Small Businesses

Boston College, Center for Retirement Research

Cabarrus College of Health Sciences

Center for Allied Health Education

Champlain College

Clark Atlanta University 

Cloud County Community College

Cuyahoga Community College

Duke University, Common Cents Lab

Front Range Community College

George Washington University, Global 

Financial Literacy Excellence Center

Georgia State University

Harvard College

Indiana University

Indiana Wesleyan University
Exhibit A: Participants in the Engagement Process 33

Iowa State University

Kansas State University

Lancaster Bible College

Loyola University Chicago

Maricopa Community College

Michigan State University 

Milwaukee School of Engineering

Minnesota State University Mankato

Montana State University

Morehouse College, School of Medicine 

Ohio State University

Oregon State University 

Portland State University

Prairie View A & M University

Ramapo College of New Jersey

Rutgers University 

Seton Hall University

Skyline College

Southern Utah University

Southwestern College & New Earth Institute

Southwestern Illinois College

Spelman College 

State University of New York 

Erie Community College

State University of New York Oneonta

Stockton University

Syracuse University

Texas Tech University

University of Colorado, Center for Research 

on Consumer Financial Decision Making

University of Kentucky

University of Maryland 

University of Miami

University of Montana

University of Montevallo

University of North Texas

University of South Carolina

University of Texas - Austin

University of Virginia

University of West Georgia

University of Wisconsin-Madison, 

Center for Financial Security

Utah State University 

Valencia College

Washington University in St. Louis, 

Center for Social Development

Western Governors University

William & Mary, Raymond A. 

Mason School of Business

Worcester Polytechnic Institute

Government-related Entities (other than FLEC members)

Federal Reserve Bank of Boston

Federal Reserve Bank of St. Louis, Center 

for Household Financial Stability

National Science Foundation – iCorps
34 Best Practices for Financial Literacy and Education at Institutions of Higher Education

Exhibit B:

Summary of Recommendations

Best Practices for Delivery of Financial Literacy to the Public

Recommendation Responsibility

The FLEC recommends that financial literacy programs adopt CFPB’s “Five 

Principles of Effective Financial Education”, which include:

• Know the Individuals and Families to be Served

• Provide Actionable, Relevant and Timely Information

• Improve Key Financial Skills 

• Build on Motivation

• Make It Easy to Make Good Decisions and Follow Through

Financial 

Literacy 

Programs

The FLEC recommends that financial literacy programs add these three best 

practices to the CFPB “Five Principles of Effective Financial Education”

• Develop Standards for Professional Educators

• Provide Ongoing Support

• Evaluate for Impact

Financial 

Literacy 

Programs

Best Practices for the Delivery of Financial Literacy and Education at Institutions of Higher Education

Recommendation Responsibility

Providing Clear, Timely, and Customized Information to Inform Student Borrowing

Institutions of higher education should adopt the following best practices to ensure 

that their financial aid offer letters are clear, timely, and customized, and provide 

students with a clear sense of their borrowing obligations. 

• Present an itemized and sub-totaled cost of attendance

• Differentiate aid offers by type

• Highlight critical details and distinctions by aid type

• Calculate the cost after grants and scholarships are applied

• Do not include Parent PLUS loans as part of a student’s aid package

• Provide actionable next steps

Institutions 

of Higher 

Education

Institutions of higher education should provide students with annual debt letters, which 

incorporate the following best practices, to ensure that students have a clear sense of 

their total borrowing obligations. State lawmakers should consider broader adoption of 

debt letters and a standardization of requirements.

• Provide information tailored to the student

• Make it easy to find additional information and support

• Time it right

• Debt letters should be paired with other financial literacy strategies.

Institutions 

of Higher 

Education
Exhibit B: Summary of Recommendations 35

Recommendation Responsibility

Effectively Engaging Students in Financial Literacy and Education

In addition to the general best practices in Section 1, institutions of higher education 

should adopt the following specific best practices to engage students in financial 

literacy and education. 

• Mandatory financial literacy courses

• Peer educators

• Integration of financial literacy into core curricula

• Enhance the frequency and timing of communication with students

Institutions 

of Higher 

Education

Targeting Different Student Populations by use of National, Institutional and Individual Data

Institutions of higher education should use national, institutional and individual data 

to determine specific financial literacy needs of their students. The use of data can 

allow the institution to meet the actual needs of students, identify students most at 

risk and deploy resources effectively using an evidence-based approach. Institutions 

should also continue to collect and assess performance data to measure impact and 

reinforce a culture of continuous improvement. 

Institutions 

of Higher 

Education

Communicating Importance of Graduation and Major on Repayment of Student Loans

Institutions of higher education should adopt the following best practices to: 1) 

clearly communicate the importance of graduation and major on ability to repay debt; 

and 2) help students overcome obstacles to graduation.

• Provide incentives to complete on time (or earlier) 

• Dedicate staff to advise students on loans, majors and obstacles to graduation. 

• Provide emergency financial assistance. 

Institutions 

of Higher 

Education

Preparing Students to Meet Financial Obligations upon Graduation

Institutions of higher education should address student financial needs prior to 

leaving the institution. The key areas of focus for institutions should include: 

• Providing information to understand loan repayment options and obligations

• Building a budget to set a repayment goal

• Helping students to identify and connect with their student loan servicer

• Enabling students to assess the costs and benefits of graduate and professional 

studies

Institutions 

of Higher 

Education

Best Practices for Higher Education, continued
36 Best Practices for Financial Literacy and Education at Institutions of Higher Education

Exhibit C:

Section 603 P.L. 115-174

The Economic Growth, Regulatory Relief, and 

Consumer Protection Act 

May 24, 2018

Section 514(a) of the Financial Literacy and Education Improvement Act (20 U.S.C. 

9703(a)) is amended by adding at the end the following:

“(3) BEST PRACTICES FOR TEACHING FINANCIAL LITERACY.— 

“(A) IN GENERAL.—After soliciting public comments and consulting with and 

receiving input from relevant parties, including a diverse set of institutions of higher 

education and other parties, the Commission shall, by not later than 1 year after 

the date of enactment of the Economic Growth, Regulatory Relief, and Consumer 

Protection Act, establish best practices for institutions of higher education regarding methods to— 

“(i) teach financial literacy skills; and

“(ii) provide useful and necessary information to assist students at institutions of 

higher education when making financial decisions related to student borrowing.

“(B) BEST PRACTICES.—The best practices described in subparagraph (A) shall 

include the following: 

“(i) Methods to ensure that each student has a clear sense of the student’s total borrowing obligations, including monthly payments, and repayment options.

“(ii) The most effective ways to engage students in financial literacy education, including frequency and timing of communication with students.

“(iii) Information on how to target different student populations, including part-time 

students, first-time students, and other nontraditional students.

“(iv) Ways to clearly communicate the importance of graduating on a student’s ability to repay student loans.

“(C) MAINTENANCE OF BEST PRACTICES.—The Commission shall maintain and periodically update the best practices information required under this paragraph and make the best practices available to the public.

“(D) RULE OF CONSTRUCTION.—Nothing in this paragraph shall be construed to require an institution of higher education to adopt the best practices required 

under this paragraph.”

U.S. Financial Literacy and Education Commission

www.mymoney.gov

Diploma

&