Student Union
Lessons in Finance Could Reduce Student Debt
Millions of student loan borrowers owe a collective $1.7 trillion in debt, but many commit to loans without knowing what they are signing up for, research shows.
Students lacking education in personal finance are more likely to underestimate future student loan payments, wrote Nikolaos Artavanis of Virginia Polytechnic University, and Soumya Karra of the University of Massachusetts.
Nearly 40% of borrowers who said they lacked understanding of how loans work underestimated their future payments by more than $1,000 a year, the researchers wrote in The European Journal of Finance in January 2020. Understanding their future financial commitment corrected their estimates by 17-18 percentage points.
And some borrowers concluded that although the educational benefits outweighed the disadvantages of taking on student debt, they would have borrowed less if they had understood the financial and mental strain those loans caused.
Student debt is a flashpoint for many Americans and a cause among politicians.
President Joe Biden has allocated $40 billion to help students with debt, emergency relief, tuition and housing.
Democratic Senator Elizabeth Warren and independent Senator Bernie Sanders have been vocal proponents of debt forgiveness for student borrowers.
How do students rack up debt?
Tuition and fees have been on the steady increase since the 1980s when state funding for higher education began a steady decline. Between 1995 and 2014, average annual borrowing by undergraduates increased about 75%. Among graduate students, average annual borrowing grew by 110%, according to a January 2020 Brookings Institution report.
While more than 40% of student loan borrowers leave school owing $20,000 or more, according to the Consumer Financial Protection Bureau (CFPB), Brookings has warned about attributing student debt as widespread.
In the student-loan landscape, 30% of undergraduates leave school with no debt and about 25% with less than $20,000, Brookings said.
“Despite horror stories about college grads with six-figure debt loads, only 6% of borrowers owe more than $100,000 — and they owe about one-third of all the student debt,” Brookings wrote.
And that 6% who owe more than $100,000 are typically borrowers who earned advanced degrees. Households with master’s, doctoral or other graduate degrees owed more than half of the outstanding education debt, Brookings reported in October 2020.
Medical school — which can cost $200,000 a year — is a prime example of a student borrower who owes massive amounts of debt.
Who needs the most help?
A lack of financial literacy is seen among first-generation students — the first in their families to go to college or university — and women, among all borrowers.
Of the nearly 40% in the Artavanis and Karra study who did not understand how the loans and their repayment worked, 33% were first-generation students, 26% were women, and 24% were minorities.
First-generation students lacking financial literacy are further hindered by language and culture to interpret and navigate student loan options and practices, according to Brookings.
Borrowers of federal loans are increasingly likely to be first-generation students, and first-generation borrowers were the most likely to default under crushing debt burdens, Brookings reported.
In the gender divide, a study by Lu Fan, assistant professor of personal financing at the University of Missouri, Columbia, and Swarn Chatterjee, professor of financial planning at the University of Georgia, in 2018 showed that women are less likely to be late on loans, but more likely to stress about it than men. Men are less likely to worry, even with a higher likelihood of being late on student repayments.
Younger borrowers showed the least financial knowledge, as did borrowers from underrepresented or lower socioeconomic backgrounds, according to Brookings.
Educating student borrowers
When students graduate or drop out of university, they have six months before they have to make payments on federal loans: 91.8% of student loans are issued by the federal government.
In 2020, approximately 20% of borrowers defaulted — or did not make a loan payment for 270 days — in the United States, according to a report by the Pew Research Center.
Even with various loan repayment options tied to income, such as Income-Contingent Repayment (ICR), Income-Based Repayment (IBR), and Pay as You Earn (PAYE), borrowers have reported they have not been informed of these options and have often gone to pay high monthly payments as a result, according to Fan and Chatterjee’s study.
“It is possible that adding a financial literacy component to the student loan repayment program could help the borrowers in making more informed student loan payment decisions in the future,” explained Fan.
Increasing financial technology education will have a positive impact on enhancing financial capability and increasing financial literacy, according to a study done by Georgios Panos of the University of Glasgow, and John Wilson of University of St. Andrews.
The researchers noted that financial literacy is important in maintaining a sound financial security and suggested that differences in financial learning acquired early in life, “can explain a significant part of financial and more general well-being in life.”
“In an era of mounting student debt, increased (digital) financial inclusion, and threats arising from instances of (online) financial fraud, financial education and enlightened financial advising appropriate policy interventions that enhance financial and overall well-being,” explained Panos and Wilson wrote in The European Journal of Finance in January 2020.
To encourage more financial literacy among borrowers, states have adopted changes in their legislation to encourage financial education, according to a 2020 report by the National Conference of State Legislatures. For instance, Arizona enacted a bill that allows a course in financial literacy to qualify as work activity. Additionally, Arizona has also appropriated $1 million to fund the provision of personal finance courses to high school students before graduation.
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College athletes push for voter turnout while largely avoiding controversy as election nears
Lily Meskers faced an unexpected choice in the lead-up to the first major election she can vote in.
The 19-year-old University of Montana sprinter was among college athletes in the state who received an inquiry from Montana Together asking if she was interested in a name, image and likeness deal to support Sen. Jon Tester, a three-term Democrat seeking re-election. The group, which is not affiliated with the Tester campaign, offered from $400 to $2,400 to athletes willing to produce video endorsements.
Meskers, who is from Colorado but registered to vote in Montana, decided against the deal because she disagrees with Tester's votes on legislation involving transgender athletes in sports.
"I was like, OK, I believe that this is a political move to try to gain back some voters that he might have lost," Meskers said. "And me being a female student-athlete myself, I was not going to give my endorsement to someone who I felt didn't have the same support for me."
Professional athletes such as LeBron James, Colin Kaepernick and Stephen Curry have taken high-profile stances on hot-button topics and political campaigns in recent years, but college athletes are far less outspoken — even if money is available, according to experts in the NIL field. Being outwardly political can reflect on their school or endanger potential endorsement deals from brands that don't want controversy. It can certainly establish a public image for an athlete — for better or for worse — or lead to tensions with teammates and coaches who might not feel the same way.
There are examples of political activism by college athletes: A Texas Tech kicker revealed his support for former President Donald Trump on a shirt under his uniform at a game last week and a handful of Nebraska athletes a few days ago teamed up in a campaign ad against an abortion measure on the Tuesday's ballot.
Still, such steps are considered rare.
"It can be viewed as risky and there may be people telling them just don't even take that chance because they haven't made it yet," said Lauren Walsh, who started a sports branding agency 15 years ago. She said there is often too much to lose for themselves, their handlers and in some cases, their families.
"And these individuals still have to figure out what they're going to do with the rest of their lives, even those that do end up getting drafted," she added.
College coaches are not always as reticent. Auburn men's basketball coach Bruce Pearl has used social media to make it clear he does not support Kamala Harris, Trump's Democratic opponent in next week's presidential election. Oklahoma State football coach Mike Gundy once caused a stir with a star player for wearing a shirt promoting a far-right news outlet.
Blake Lawrence, co-founder of the NIL platform Opendorse, noted that this is the first presidential election in the NIL era, which began in July 2021. He said athletes are flocking to opportunities to help increase voter turnout in the 18-to-24 age demographic, adding that one of his company's partners has had 86 athletes post social media messages encouraging turnout through the first half of the week.
He said athletes are shying away from endorsing specific candidates or causes that are considered partisan.
"Student-athletes are, for the most part, still developing their confidence in endorsing any type of product or service," he said. "So if they are hesitant to put their weight behind supporting a local restaurant or an e-commerce product, then they are certainly going to be hesitant to use their social channels in a political way."
Giving athletes a voice
Many college athletes have opted to focus on drumming up turnout in a non-partisan manner or simply using their platforms to take stands that are not directly political in nature. Some of those efforts can be found in battleground states.
A progressive group called NextGen America said it had signed players in Arizona, Michigan, Nevada, New Hampshire, Pennsylvania and Virginia to encourage voting among young people. Another organization, The Team, said it prepped 27 college athletes in Pennsylvania, North Carolina, Arizona and Michigan to lead volunteer voter participation opportunities for students. The organization also said it got more than 625 coaches to sign a nonpartisan pledge to get their athletes registered to vote.
The Team's executive director is Joe Kennedy, a former coach who coordinated championship visits and other sporting events at the White House during President Barack Obama's administration. In early October, it hosted a Zoom event during which panelists such as NCAA President Charlie Baker and WNBA players Nneka Ogwumike and Natasha Cloud gave college athletes advice about using their platforms on campus.
In its early days, The Team seized upon momentum from the record turnout seen in the 2020 election. The NCAA that year said Division I athletes could have Election Day off from practice and play to vote. Lisa Kay Solomon, founder of the All Vote No Play campaign, said even if the athletes don't immediately take stands on controversial issues, it's important for them to learn how.
"It is a lot to ask our young people to feel capable and confident on skills they've never had a chance to practice," Solomon said. "We have to model what it means to practice taking risks, practice standing up for yourself, practice pausing to think about what are the values that you care about — not what social media is feeding into your brain, but what do you care about and how do you express that? And how do you do it in a way that honors the kind of future that you want to be a part of?"
Shut up and play?
Two years ago, Tennessee-Martin quarterback Dresser Winn said he would support a candidate in a local district attorney general race in what experts said was very likely the first political NIL deal by a college athlete.
There have been very few since.
The public criticism and fallout for athletes who speak out on politics or social issue can be sharp. Kaepernick, the Super Bowl-winning quarterback of the San Francisco 49ers, hasn't played in an NFL game since January 2017, not long after he began kneeling during the national anthem at games.
Meskers, the Montana sprinter, said political endorsements through NIL deals could create problems for athletes and their schools.
"I just think that NIL is going to run into a lot of trouble and a lot of struggles if they continue to let athletes do political endorsements," she said. "I just think it's messy. But I stand by NIL as a whole. I think it's really hard as a student athlete to create a financial income and support yourself."
Walsh said it's easier for wealthy and veteran stars like James and Ogwumike to take stands. James, the Los Angeles Lakers star, started More Than a Vote — an organization with a mission to "educate, energize and protect Black voters" — in 2020. He has passed the leadership to Ogwumike, who just finished her 13th year in the WNBA and also is the president of the Women's National Basketball Players Association. More than a Vote is focused on women's rights and reproductive freedom this year.
"They have very established brands," Walsh said. "They know who they are and they know what their political stance is. They know that they have a really strong following that -- there's always going to be haters, but they're also always going to have that strong following of people who listen to everything that they have to say."
Andra Gillespie, an associate professor at Emory University who teaches African American politics, also said it is rare that a college athlete would make a significant impact with a political stand simply because they tend to have a more regional platform than national. Even celebrities like Taylor Swift and Eminem are better at increasing turnout than championing candidates.
"They are certainly very beneficial in helping to drive up turnout among their fans," Gillespie said. "The data is less conclusive about whether or not they're persuasive – are they the ones who are going to persuade you to vote for a particular candidate?"
Athletes as influencers
Still, campaigns know young voters are critical this election cycle, and athletes offer an effective and familiar voice to reach them.
Political and social topics are not often broached, but this week six Nebraska athletes — five softball players and a volleyball player — appeared in an ad paid for by the group Protect Women and Children involving two initiatives about abortion laws on Tuesday's ballot.
The female athletes backed Initiative 434, which would amend the state constitution to prohibit abortions after the first trimester, with exceptions. Star softball player Jordy Bahl said on social media that the athletes were not paid.
A University of Montana spokesperson said two athletes initially agreed to take part in the NIL deal backing Tester. The school said one withdrew and the other declined to be interviewed.
For Meskers, deciding against the offer boiled down to Tester twice voting against proposals to bar federal funds from going to schools that allow transgender athletes to play women's sports, a prominent GOP campaign topic. Tester's campaign said the proposals were amendments to government spending packages, and he didn't want to play a role in derailing them as government shutdowns loomed.
"As a former public school teacher and school board member, Jon Tester believes these decisions should be made at the local level," a Tester spokesperson said. "He has never voted to allow men to compete against women."
Meskers said she believes using influence as college athletes is good and she is in favor of NIL. She just doesn't think the two should mix specifically for supporting candidates.
"I think especially as student athletes, we do have such a big voice and we do have a platform to use," she said. "So I think if you're encouraging people to do their civic duties and get up and go (vote), I think that's a great thing."
