Majoring In Money 2019 - Sallie Mae

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2019 Majoring in Money2019Majoringin MoneyHow college studentsand other young adultsmanage their financesLet’s Make College HappenConducted by Ipsos Public AffairsSallie Mae Ipsos 1

2019 Majoring in MoneySallie Mae IpsosAbout Sallie Mae About IpsosSallie Mae’s purpose is to create opportunities,open doors, and provide access to what’snext. We’re here to provide the know-how andresponsible financing to help our customers makethose new possibilities a reality.Ipsos is a global independent market researchcompany ranking third worldwide amongresearch firms.Our mission is firmly grounded in helping families achievethe dream of a higher education. There is no single wayto achieve this task, so we provide tools, resources, andfinancing to produce our country’s future engineers,doctors, nurses, teachers, entrepreneurs, business leaders,and others, by offering A range of FDIC-insured savings products, including SmartyPig accounts, money market accounts, and certificates of deposit.* A variety of free online tips, tools, and resources that helpfamilies plan for college, including Scholarship Search,which offers free access to 5 million scholarships worth upto 24 billion, and the College Planning CalculatorSM. Competitive and responsible private student loans forundergraduate and graduate students, as well as the Sallie MaeParent Loan. Free online budgeting tools and information about how tomanage student loan payments and other types of credit, suchas Understanding Credit, a handbook published by Sallie Maeand FICO .When it comes to paying for college, we recommendfollowing a 1-2-3 approach:1. Start with money you won’t have to pay back. Supplementyour college savings and income by maximizing collegescholarships, grants, and work-study.We make our changing world easier and faster to navigate,and we inspire clients to make smarter decisions. We deliverresearch with security, speed, simplicity, and substance.We believe it’s time to change the game—it’s time forGame Changers!Our commitment to driving the industry with innovative, bestin-class research techniques that are meaningful in today’sconnected society is our primary goal.Focusing on six research specializations, our broad rangeof industry experts offer intimate understanding of brands,consumers, and markets. Whether testing advertising and media,bringing concepts to market, measuring customer loyalty, orsurveying public opinion, Ipsos is committed to working withclients to identify the right solutions to their specific challenges.It is this belief that enables us to ask and probe, to subject ourhypotheses to rigorous analyses, and, finally, to deliver reliabledata and the most effective recommendations in the shortesttime possible.Ipsos is committed to building an organization dedicated toa single endeavor: providing our clients with the best service,using qualitative or quantitative methods, at local, regional, andinternational levels.Ipsos Public Affairs2020 K Street NW, Suite 410Washington DC 200062. Explore federal student loans. Apply by completing the FreeApplication for Federal Student Aid (FAFSA).3. Consider a responsible private student loan. Fill the gapbetween your available resources and the cost of college.For more information on how Sallie Mae helps make collegehappen, visit SallieMae.com. Join the conversation on socialmedia with #MajoringInMoney.Sallie Mae300 Continental DriveNewark DE 19713Access a related infographic and additional information about this study at SallieMae.com/MajoringInMoney.* Deposit products are offered by Sallie Mae Bank, member FDIC. 2019 Sallie Mae Bank. All rights reserved. Sallie Mae, the Sallie Mae logo, and other Sallie Mae names are service marks or registered service marks of SallieMae Bank or its subsidiaries. FICO is a registered trademark of the Fair Isaac Corporation in the United States and other countries. PayPal and Venmo areregistered trademarks of PayPal, Inc. Apple Pay is a registered trademark of Apple, Inc. Google Pay is a registered trademark of Google, Inc. Samsung Pay isa registered trademark of Samsung Electronics Co. Square is a trademark of Square, Inc. All other names and logos used are the trademarks or service marksof their respective owners. SLM Corporation and its subsidiaries, including Sallie Mae Bank, are not sponsored by or agencies of the United States of America.SMSM MKT14161 0419

2019 Majoring in MoneySallie Mae IpsosTable of contentsAbout this study . 7Discussion of findings. 8Introduction .8Money management outcomes .9Self-perceptions of ability to manage finances and of current credit standing.9Knowledge and practice of positive or negative credit behaviors. 11Resources used and interest in learning more about managing money. 13A comparison of completers and non-completers by income . 14Financial literacy put to the test. 15The quiz questions . 16How college students, completers, and non-completers pay for things. 19Payment methods vary by group and by type of purchase . 20Role of credit cards among college students, completers, and non-completers. 22Credit card usage. 22Payment habits. 23Spending habits. 24Why young adults want credit cards. 25Non-card holders. 28How credit card users and those without credit cards differ. 29How college students pay for things: 2019 vs 2016. 32Changes in college students’ relationship with credit cards. 35Changes in college students’ financial literacy skills. 36Conclusion. 37Data tables.39Technical notes.61

2019 Majoring in MoneySallie Mae IpsosTable of figuresFigure 1 Self-identified Money Management Skill Level. 8Figure 2 FICO Score Estimates. 9Figure 3 Credit Qualification Amount. 10Figure 4 Perception of How Behavior Affects Credit Score. 11Figure 5 Resources for Learning Money Management. 12Figure 6 Topics of Interest for Learning More. 13Figure 7 Quiz Scores. 15Figure 8 Quiz Question Results. 17Figure 9 Quiz Scores by Perceived Skill Level. 18Figure 10 Payment Methods Used. 19Figure 11 Debit Card Type. 19Figure 12 Mobile Payment Platforms. 20Figure 13 Payment Method by Purchase Type. 21Figure 14 Proportion with Credit Cards. 22Figure 15 Number of Credit Cards. 22Figure 16 Credit Card Average Balances. 23Figure 17 Payment Habits. 23Figure 18 Typical Credit Card Use. 24Figure 19 Reasons for Wanting First Credit Card. 25Figure 20 Reasons for Choosing First Credit Card. 26Figure 21 Reasons for Getting More Than One Credit Card. 27Figure 22 Reasons for Not Having a Credit Card. 28Figure 23 Self-identified Money Management Skill Level by Credit Card Use. 29Figure 24 Quiz Score by Credit Card Use. 30Figure 25 Payment Methods Used by College Students, Year-over-Year. 32Figure 26 Mobile Payment Platforms Used by College Students, Year-over-Year. 33Figure 27 College Students’ Payment Methods by Purchase Category, Year-over-Year. 34Figure 28 Student Use of Credit Cards, Year-over-Year. 35Figure 29 Credit Card Balances, Year-over-Year. 36

2019 Majoring in MoneySallie Mae IpsosTable of tablesTable 1 Non-Mobile Payment Methods Used. 39Table 2 Mobile Payment Methods Used. 39Table 3 Preferred Mobile Payment Method. 40Table 4 Type of Debit Card. 40Table 5 Type of Credit Card. 40Table 6 Average Age Credit Card Steps Happen. 41Table 7 Reasons for Using Mobile Payment. 41Table 8 Reasons for Using Preferred Mobile Payment Method. 42Table 9 Account Linked to Mobile Payment. 42Table 10a College Students’ Payment Methods Used, by Purchase Type. 43Table 10b Completers’ Payment Methods Used, by Purchase Type. 44Table 10c Non-completers’ Payment Methods Used, by Purchase Type. 45Table 11 Purchases for which Credit Cards Are Typically Used. 45Table 12 Number of Credit Cards Owned. 46Table 13 Mean Number of Credit Card Type Owned. 46Table 14 Reasons for Obtaining a Credit Card. 47Table 15 Parent Involvement in Credit Card Selection. 47Table 16 Reasons for Choosing Specific Credit Card. 48Table 17 Reasons for Multiple Credit Cards. 48Table 18 First Credit Card Status. 49Table 19 Credit Card Rewards Preferences. 49Table 20 Loan Payment Rewards Preference. 49Table 21 Average Credit Card Balance. 50Table 22 Credit Card Bill Payer. 50Table 23 Shared Payment Responsibility. 50Table 24 Typical Monthly Credit Card Payment. 51Table 25 Charging Purchases without Ability to Pay. 51Table 26a College Students’ Attitudes toward Credit Card Debt, Scale 1 – 5. 52Table 26b Completers’ Attitudes toward Credit Card Debt, Scale 1 – 5. 52Table 26c Non-completers’ Attitudes toward Credit Card Debt, Scale 1 – 5. 52Table 27 Reasons for Not Having a Credit Card. 53Table 28 Intent to Obtain a Credit Card. 53Table 29 Perception of Money Management Skills. 53Table 30 Presumed Credit Eligibility. 54Table 31 Estimated FICO Score Range. 54Table 32 Viewed Credit Report. 54

2019 Majoring in MoneySallie Mae IpsosTable of tables, continuedTable 33a College Students’ Perception of Behaviors as Positive, Negative, or Neutral for Credit Standing. 55Table 33b Completers’ Perception of Behaviors as Positive, Negative, or Neutral for Credit Standing. 55Table 33c Non-completers’ Perception of Behaviors as Positive, Negative, or Neutral for Credit Standing. 55Table 34 Putting Financial Management into Practice. 56Table 35 Preferred Financial Management Tool Features. 56Table 36 Financial Management Education Resources. 57Table 37 Preferred Financial Management Topics. 57Table 38a College Students’ Perceptions about Credit Cards. 58Table 38b Completers’ Perceptions about Credit Cards. 58Table 38c Non-completers’ Perceptions about Credit Cards. 59Table 39 Quiz Question: Interest Accumulation. 59Table 40 Quiz Question: Impact of Payment Behavior on Cost. 59Table 41 Quiz Question: Impact of Repayment Term on Cost. 60Table 42 Quiz Question: Define Interest Capitalization. 60Table 43 Googled “Interest Capitalization”. 60Table 44 Proportion of Correct Answers to Quiz Questions. 60

2019 Majoring in MoneySallie Mae Ipsos 7About this studyMajoring in Money 2019 focuses on the payment methods,financial habits—including an in-depth look at credit cards—andoverall financial literacy of three groups of young adults: collegestudents, college graduates or “completers,” and those whobegan college but did not complete.This report looks back to the Majoring in Money studyconducted in 2016, and compares the financial habits of collegestudents then to today—how they pay for purchases, theirknowledge and use of credit, their perception of their moneymanagement skills, and their desire to have more informationabout and opportunities to improve their credit and moneymanagement.In addition to studying the behavior of enrolled collegestudents ages 18 – 24, this year’s study looks at young adultswho have left college, ages 21 – 29—both those who haveearned a degree (completers) and those who left beforefinishing their degree (non-completers). By examining the outof-school young adults, we can shed light on potential growthin credit management skills that may lie ahead for currentcollege students and whether gaps in financial literacy closeafter college.Sallie Mae has again partnered with Ipsos to conduct thisstudy. Online interviews were conducted in English betweenDecember 21, 2018 and January 16, 2019. The survey samplecomprised a cross-section of key demographic variables for thefollowing groups 810 college students, ages 18 – 24 804 young adults who have graduated from college(completers), ages 21 – 29 805 young adults who have left college without a degree(non-completers), ages 21 – 29This report includes a full set of response tables associated witheach itemized question. Percentage amounts may not sum to100 percent due to rounding.For details on methodology, including sampling, weighting, andcredibility intervals, see the technical notes section at the end ofthis report.Breakdown of survey particpants2,419 adults between the ages of 18 and 29810collegestudentsages 18 – 24804collegecompletersages 21 – 29805collegenon-completersages 21 – 29

2019 Majoring in MoneySallie Mae Ipsos 8Discussion of findingsIntroduction71%Money management skills are typically introduced in childhood—often first learned from parents—and they continue to buildas children grow to adulthood. The college experience can beinfluential in shaping money management skills as young adultsmake more significant decisions about spending and using credit ontheir journey to independence. To examine the depth and evolutionof those skills, we interviewed three groups of young adults:of college grads think ofthemselves as excellent orgood at dealing with money,followed by 59% of collegestudents and 42% ofnon-completers. “College students” ages 18 – 24, who are currently enrolled “College completers” ages 21 – 29, former students who earned adegree, graduated, and perhaps continued their education beforejoining the workforce “College non-completers” ages 21 – 29, former students whoaltered their path and left college to pursue other goals withoutearning their degreeThis study examines the money management skills, paymentbehaviors, and financial literacy of college students, completers,and non-completers. Key findings include: Young adults from all three segments are optimistic abouttheir ability to manage money. The majority demonstrate fiscalresponsibility in a number of ways, including paying bills on time,tracking their spending, and not spending more than they have. The importance of having a good credit record is top of mind forthis population. College students are taking steps to establishgood credit. The majority of those no longer in college proactivelymonitor their credit, having viewed their credit report and beinghighly conscious of their credit score. Parents are the most influential resource in teaching young adultsto manage finances, both those in college and those who haveleft. All three groups realize they need to learn more, but thefinancial education topics in which they are most interested aredriven by current life stage needs. When quizzed on several basicfinancial topics such as interest capitalization, a large portion ofyoung adults were unsure. When it comes to paying for purchases, debit cards are nearlyuniversal, and are the most frequently used payment method.Mobile payment usage among students and completers is similarto their debit card possession rates, but is used by fewer noncompleters. The majority in all three populations have a creditFigure 1Self-identified Money Management Skill Level100%1%7%1%3%4%10%80%24%32%44%60%Not very %StudentsCompleters Non-completers

2019 Majoring in MoneySallie Mae Ipsos 9card, though a higher ratio of completers have them. Despitethe number of alternative payment methods available, cashstill matters, especially when paying for low-cost purchases. While young adults with at least some college experiencefeel an overall sense of optimism and confidence related tomoney management, there is a tangible difference in behaviorand perception of financial skills between college students,college graduates, and those who started college but didn’tcomplete it. The data suggests a relationship betweencompleting college and financial management success.College graduates show more favorable financial outcomesthan others on a number of measures, including perceptionof money management skills, self-reported FICO Score, andtheir attitude toward credit cards.Figure 2FICO Score Estimates 100%2%2%3%19%80%13%7%8%2%7%24%18%7%60%32%College students express a desire to manage their moneysuccessfully, but may lack the knowledge and experiencerequired to do so. Young adults no longer in college arepresumed to be better equipped at managing money as theyhave transitioned to living in the “real world.” Experience in thereal world alone, however, doesn’t automatically lead to success.Completers typically report more favorable money managementoutcomes than both students and non-completers.300 50026%10%501 650651 75040%751 85027%20%40%14%Students26%8%Money management outcomes were examined on three levels: Self-perceptions of current credit standing and ability tomanage financesDon’t have oneNot sure4%Money management outcomesPrefer notto answerCompleters Non-completers Knowledge and practice of positive or negativecredit behaviors Resources used and interest in learning more aboutmanaging moneySelf-perceptions of ability to manage finances and of currentcredit standingEach of the three groups—students, completers, and noncompleters—convey a positive view of their ability to managemoney. Differences among the three groups, however, showcollege students are more likely to perceive their skills asaverage to high; completers believe their skills are on the highend; and non-completers are more likely to believe their skillsare average. Students most typically rate their financial management skillsas good (39%) or average (32%), but 20 percent rate their skillsas excellent. Eight percent rate themselves as not good/poor. Completers are the most confident group with three-quartersrating their skills as either good (44%) or excellent (27%).2 in 5students say they either don’t knowtheir FICO Score (24%) or theydon’t have one (19%).

2019 Majoring in MoneyTwenty-four percent rate their money management skills asaverage and very few, 4 percent, rate their skills as not verygood/poor. Non-completers are less confident in their skills. They aremore likely than completers and students to rate their skills asaverage (44%) and less likely to rate themselves as good (34%)or excellent (8%) and, compared to the other two groups,they are more likely to report their skills as not very good/poor (14%).When asked about their FICO Scores,1 students,notwithstanding the large portion who are unaware, report scoreranges between those of completers and non-completers. Two in five students say they either don’t know their FICO Score (24%) or they don’t have one (19%). Of those whoreported a FICO Score, most report it in the mid-range, 651 –750 (27%). Fourteen percent report it in the high range, above750, and an equal proportion report it in the low range, below650 (14%).Sallie Mae Ipsos 10Completers expect to qualify for much higher credit lineamounts than either students or non-completers, with only 3percent saying they wouldn’t qualify for a credit card. Nearlytwo-thirds expect to qualify for amounts greater than 2,500. 1,000 (10%) 1,000 – 2,500 (15%) 2,500 (63%, including 21 percent who say they wouldqualify for 10,000 or more)Non-completers are significantly more likely to say they wouldnot qualify for a credit card today (13%). Among those whobelieve they would qualify, more of them expect to fall in thelowest credit line amount range and fewer in the highest rangecompared to the other two groups. 1,000 (33%) 1,000 – 2,500 (16%) 2,500 (23%) Completers are most likely to be aware of their FICO Score(13% are unaware) and least likely to say they don’t haveone (3%). Three-quarters report a score in either the mid- orhigh-range (32% and 40%, respectively). Only 9 percent reportscores in the low range, below 650. O ne-quarter of non-completers report either not knowing theirFICO Score (18%) or not having one (8%). One-quarter saytheir scores are mid-range, 651 – 750 (26%), fewer than the 33percent who say their scores are below 650. Only 8 percentreport scores in

2019 Majoring in Money Sallie Mae Ipsos 1 2019 Majoring in Money How college students and other young adults manage their finances Le

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