Bridging the Financial Literacy Gap

Access to higher education does not translate into graduation for a significant number of students in the United States. More students from low-socioeconomic backgrounds, often minority students, have access to higher education than at any time in the past. Unfortunately, these students fail to graduate in disproportionally higher rates than their White, often wealthier, counterparts. A sizable body of literature, often based on surveys, have identified that a lack of financial literacy contributes to the problem. I used the frameworks of Family Resource Management Theory, Social Learning Theory, and Cultural Capital to help me answer three research questions: What financial knowledge do college students need to persist in college? How and where did students learn about financial literacy before entering college? How do students acquire new financial knowledge while in college? Six focus group sessions were held with 20 ethnically diverse upper-division undergraduate students who volunteered to participate. This study identified a clear link between students’ life experiences and their demonstrated level of financial literacy. Financial knowledge is gained by the life choices a student makes regardless of the student’s race or whether their parents attended college. Contrary to the Cultural Capital expectation that students from higher level social classes would have higher levels of financial literacy, I found that White students and second- generation students had fewer life experiences and demonstrated lower levels of financial knowledge. Students of color repeatedly showed higher levels of financial knowledge. This research supports the Family Resource Management and Social Learning theories based on the way the students learned from their family, friends, and personal experiences. Insight gained from this research has been used to develop a financial literacy survey that will be conducted this fall at California State University, East Bay (CSU East Bay) to expand on this research effort by measuring the life experiences and basic financial literacy of the incoming freshmen students.